<PAGE>

                                  FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended January 31, 2000

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from _______ to _______

                         Commission File No. 33-4460-NY

                     --------------------------------------

              TASTY FRIES, INC. (FORMERLY ADELAIDE HOLDINGS, INC.)
  ----------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

NEVADA                                    65-0259052
------------------------------            -------------------------------
State or other jurisdiction               (I.R.S. Employer
incorporation or organization             Identification No.)

650 SENTRY PARKWAY, SUITE ONE
BLUE BELL, PA                              19422
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (610) 941-2109

                            -----------------------

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None

            Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 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 there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not 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-KSB
or any amendment to this Form 10-KSB [X]

State issuer's revenues for its most recent fiscal year: None The aggregate
market value of the common voting stock held by non-affiliates as of April 26,
2000: Not Determinable.

Shares outstanding of the registrant's common stock as of April 26, 2000:
30,983,902 shares.
<PAGE>

PART I

ITEM 1.                     DESCRIPTION OF BUSINESS.

(A)                       GENERAL BUSINESS DEVELOPMENT

            Tasty Fries, Inc. (the "Company") was incorporated under the laws of
the State of Nevada on October 18, 1985, under the name Y.O. Systems, Ltd. The
Company was organized to raise capital and then seek out, investigate and
acquire any suitable assets, property or other business potential. No specific
business or industry was originally contemplated. The Company was formed as a
"blank check" company for the purpose of seeking a business acquisition without
regard to any specific industry or business.

            The Company was unsuccessful in certain business proposals and began
actively looking for a business acquisition during 1990.

            Effective July 29, 1991, the Company issued 13,500,000 shares of
restricted common stock (after giving effect to a 1 for 50 reverse stock split)
to the stockholders of Adelaide Holdings, Inc., a private Delaware corporation
incorporated in April, 1990 (hereafter referred to as "AHI"). The 13,500,000
shares represented approximately 80% of the 16,845,370 shares of common stock of
the Company outstanding after the acquisition.

            The Company also amended its Articles of Incorporation to include a
provision that officers and directors of the Company are not liable for damages
as a result of a breach of fiduciary duty except in certain specified instances
under Nevada law. In September 1993, the Company amended its Articles of
Incorporation changing its name to Tasty Fries, Inc.

            On December 16, 1996, a majority of the issued and outstanding
voting securities of the Company, by written consent, approved a 1 for 20
reverse split of the Company's common stock and authorized an amendment to the
Company's Articles of Incorporation to change its authorized common shares to
25,000,000 shares of common stock and its par value to $.001 per share. The
Amendment was filed with the Nevada Secretary of State on December 18, 1996 and
the reverse stock split was effective on December 23, 1996.
<PAGE>

(B)                          BUSINESS OF THE COMPANY

            GENERAL

            The Company has developed a patented French fries vending machine
(the "Machine"). The Company intends to manufacture and market the machine in
both domestic and international markets through a combination of exclusive,
territorial distributorships and traditional sales to established companies in
the vending industry. The Company may also own and operate machines itself. The
Machines are expected to be located in high-traffic locations that have
historically been successful for vending operators, such as universities,
airports, bus and train stations, high schools, military bases, industrial
locations and recreational venues.

            The Company has also developed a related proprietary potato product
for the production of French fries in the Machine (the "Potato Product").
Although the Company has developed its own potato product, the Company presently
intends to purchase a comparable potato product, for use in the machine, from a
third party. This strategic determination is driven by the high costs associated
with establishing a production line to produce its own, proprietary Potato
Product. At such time as the economics of the business and the success of the
machine warrant the capital investment of a production line, the Company may
manufacture its own, proprietary Potato Product or license the product to a
contract manufacturer.

            The Company's basic business strategy is to market the machines and
the ancillary products that are required to prepare each serving of French
fries. These ancillary products include the potato product, vegetable cooking
oil and serving cups (with salt and ketchup packets attached). The Company's
long-term profitability and success will be driven primarily by the revenue and
accompanying profit to the Company associated with each and every vended portion
sold from its installed base of Machines.

            The Company had previously received a federally registered trademark
for its former name and logo, "Adelaide." The Company has subsequently federally
registered its name and logo, "Tasty Fries," as a federal trademark on the
Supplemental Register and has been marketing the Machine and its products under
that name.

DESIGN AND MANUFACTURING

            In 1992, persons then associated with the Company filed a U.S.
patent application with respect to a device for the vending of fresh French
fried potatoes (the original machine), which was assigned to the Company on
October 9, 1992. In January 1993, the Company entered into a manufacturing
agreement with Premier Design, Ltd. ("Premier") for the production of its
vending machine (the "Premier Agreement"). The Premier Agreement provided that
Premier would refine and manufacture the original machine. The Agreement called
for the Company and Premier to share the development costs of the project; such
costs were to include design, engineering and initial manufacturing costs
projected over the initial quantity of production machines. The Agreement also
provided for Premier to manufacture any additional or similar machines for the
Company. The Premier Agreement could not be terminated by either party so long
as Premier provided the Machines as required by the Company. Pursuant to the
terms of the Premier Agreement, the first initial production of machines was to
be delivered by June 15, 1993.
<PAGE>

            As one element of the process undertaken by Premier, an engineering
review of the machine was to be performed. Mr. Harry Schmidt, president of
Premier, retained the services of Mr. Edward C. Kelly to perform said
evaluation. In February 1993, Mr. Kelly submitted the findings of his
evaluation. Mr. Kelly's study found the device failing to perform as anticipated
and his review identified significant and numerous mechanical and design
problems. Mr. Kelly and Premier's recommendation to prior management was that
the existing machine should be abandoned completely. Prior management, none of
whom are presently connected with us, believed they had developed a viable
production model French fry vending machine. They decided to abandon the
original device. We retained Premier Design to design and develop a machine
based on new and different technology. Kelly and Premier began the process of
designing a new machine in March 1993.

Premier is a private company owned by Mr. Schmidt.  Mr. Schmidt was
subsequently appointed to the Company's Board of Directors in May 1993, but
did not stand for reelection to the Board in September 1995.  At the time of
the original Premier Agreement, neither Mr. Schmidt nor Mr. Kelly had any
affiliation with the Company.  Edward C. Kelly joined the Company as
Executive Vice President in January 1994 and was subsequently appointed to
the Company's Board of Directors in February 1994.  In June of 1994, he was
named President of the Company.

            In December 1994, having completed much of the design and
development of the new Machine, the partners amended the original manufacturing
contract (the "Premier Amendment"). The Premier Amendment described the terms
under which Premier would manufacture the 10 prototype models of the new machine
and begin manufacture of the production units.

            In July 1996, a U.S. patent was issued in Mr. Kelly's name for the
Machine. Mr. Kelly assigned the patent rights for the Machine to Premier based
upon the terms of the Premier Amendment and the express understanding between
Premier, the Company and Mr. Kelly (individually) that: (i) upon issuance, the
patent would be assigned 100% to Premier as consideration for the significant
funds expended by Premier in the development of the machine; (ii) Premier would
immediately assign the Company a 50% interest in the patent upon payment to
Premier by the Company of one-half of the total development costs.

            The Company's 50% share of the development costs were later
determined to be $650,000 (not including the $350,000 paid by the Company for
the 10 prototype machines). The Company subsequently made payments of
$100,000 each in July 1996, July 1997 and January 1998. The balance due of
$350,000 was satisfied by issuing 700,000 shares of common stock to Premier
in January, 2000. Premier will also receive $250 per Machine manufactured by
a third party. Management and the Board of Directors agreed to these terms
with Premier based upon the potentially prohibitive costs to the Company
resulting from protracted litigation (monetary and otherwise) and the
agreement of Premier to waive any rights it may have to manufacture the
machine.

            In the spring of 1996, the Company and Premier agreed that Premier
would be unable to manufacture the Machines under the terms of the Premier
Amendment. On June 17, 1996, the Company announced its intention to award the
manufacturing contract for the Machine to S&H Electronics of Robesonia,
Pennsylvania ("S&H"), an unaffiliated third party, and subsequently entered into
a non-exclusive manufacturing agreement with S&H for such purpose. S&H is a
contract-manufacturer, which specializes in the assembly and testing of
electro-mechanical assemblies and equipment. In January 2000, the Company opened
an assembly facility in Portsmouth, New Hampshire and are hiring subcontractors
to produce the first 25 units. These first 25 units will be produced by
subcontract manufacturers located in Portsmouth, New Hampshire.
<PAGE>

PRE-PRODUCTION TOOLING

            The pre-production tooling stage for the machine is a critical
element of the process of getting the machine into commercial production.
Consider that the Tasty Fries device is comprised of approximately 3,100
individual parts. A portion of these parts are basic, "off-the-shelf"
manufacturing components such as hardware, lighting and electrical components.
However, approximately 75% of the components are customized parts that require a
subcontract supplier to manufacture specifically for Tasty Fries. Because of the
costs associated with manufacturing these custom-designed parts, the most
critical components have been designed to be tooled, molded or cast by the
various suppliers. While very costly and time-consuming in the front-end of a
project, the tooling of various component parts will: (a) ensure the consistency
and quality of the machine's critical parts and (b) greatly reduce the unit
costs of both the individual parts and the overall machine, as production volume
increases. As with our overall business plan, the tooling process itself has
been delayed over the past 12-18 months due to the lack of capital available to
complete the process.

            The pre-production tooling stage is complete. The Company is
considering, but has not made a determination to produce a table top model of
the machine. Modifying the existing machine for table top use and ordering
tooling would cost approximately $200,000 to $300,000. Customized parts will be
marketed to operators of the machine, be they owners or leasees. No third
parties will have any interest in the sale of the parts. The Company is unable
to estimate when sale of the parts might commence but when they do, revenues are
not expected to be significant.

THE MACHINE

            The Machine is designed to produce quality, freshly-made French
fries utilizing a unique method that automatically converts a dehydrated potato
product into rehydrated potato mix, delivers this mix into a proprietary forming
and cooking cycle, and finally into complete, high-quality, freshly-made French
fries. The potato product can be stored at room temperature, has a shelf-life of
between 12 and 24 months (depending on storage conditions), requires no
refrigeration or freezing, and occupies less storage space than frozen fries,
thereby offering greater storage capacity than competing technologies which use
frozen French fries. The French fries are delivered to the consumer in a 4-ounce
serving of 32 French fries. From the time currency is deposited, the total vend
time for an order of fries from the final production model Machine is estimated
to be approximately one and one-half minutes. The utilization of a
state-of-the-art combination of computer driven mechanics makes this possible.
Attached to the bottom of the vended cup are individually prepackaged portions
of ketchup and salt.

            The design of the Machine involves the use of a vegetable oil
enabling the process to deliver a cholesterol-free product. Each vend contains
French fries which are crisp and golden brown. The quality of the product is
consistently uniform in each vend. The Machine has the capacity to produce 500
vends before any refill of potato product or other ingredient is required. The
Machine is computer-controlled and communicates with the consumer from the time
the money is deposited into it until the time the vended cup of fresh French
fries is delivered. The Machine can accept dollar bills, coins or any
combination thereof, depending on the vend charge, which can be changed at
anytime by simply reprogramming the currency mechanism.
<PAGE>

            The Machine requires a 220-volt electrical connection and is
equipped with modern computer technology using microprocessors and sensors. If
the machine operator desires, the Machine can communicate with a central data
base, via modem, to make available immediate information on product levels,
service issues or currency levels. The machine's cash management program enables
it to monitor the cash position at any time and the amount of vends, which
allows for spontaneous and immediate cash reporting to the vending operator.

            The Machines have been designed to be repaired on-site without the
necessity of being returned to the manufacturer. It is anticipated that ongoing
maintenance will be limited, and the majority of an operator's labor
expenditures will involve the replenishment of products into the Machines. At
such time, oil and water will be replaced and additional cups (with condiment
packages attached) will be restocked. Water will also be changed at such time
unless the Machine is directly attached to a plumbing supply, which is not
necessary for the Machine's operation. The frequency with which the Machine must
be restocked depends completely upon the number of vends dispensed daily.

            There will be 2 certifications that will provide independent
confirmation of the uniform quality of our product - Underwriter's Laboratory
("UL") and National Automatic Merchandising Association. The Company has
undergone preliminary testing from UL and our pre-production models have met
with their approval. However, neither group will award certification pending
examination of commercial production. The Company expects to receive approvals
with commercial production.

THE POTATO PRODUCT

            The Company's proprietary Potato Product for use in the Machine was
developed in 1995 by a third party contractor. Management estimates that the
cost to establish a manufacturing line to produce the Potato Product is
significant. Due to the considerable costs involved and the current availability
of another potato product that is comparable with the Company's Potato Product
for use in the Machine, the Company does not currently intend to establish a
manufacturing line for the production of its own product. SEE "AVAILABILITY OF
RAW MATERIALS."

MARKETING

            The Company has historically marketed the Machines and the products
exclusively through territorial distributorships. The Company currently intends
to market its products in both domestic and international markets through a
combination of exclusive, territorial distributorships and traditional sales to
established companies in the vending industry. The Company may also own and
operate machines itself.

            The existing distributorship agreements vary from territory to
territory, but essentially require an up-front payment and minimum annual
payments usually over the life of the contract. Most distributors must also pay
a specified sum per Machine purchased as a credit toward the minimum annual
payments. Most distributorship agreements require a minimum number of Machines
to be purchased per year.
<PAGE>

            The Company has sold or granted an aggregate of 15 territorial
distributorships. In the course of normal business, some of these
distributorships have been reacquired by the Company and others have been
terminated due to default on behalf of the distributor. There are currently 7
distributorships, which have not been terminated or reacquired. Termination of a
distributorship territory requires refund of the distribution deposit. The
Company has complied with all refund requests. The distributor's obligations to
make further payments, after tendering the initial deposit required upon
execution of the distributorship agreement, are conditioned on our ability to
ship its Machines and related products. Management believes that once commercial
production of Machines is commenced and distributors notified and required to
place orders for Machines, some of such distributors may be financially unable
to do so or may simply elect not to purchase Machines and effectuate their
respective agreements.

            The Company has retained the services of Claridge Capital
Corporation to assist with the Marketing and Sales of the Machine. Claridge has
been instrumental in developing and maintaining the Company's web site
(www.tastyfries.com [http://www.tastyfries.com/]) and introducing the Company to
the marketplace.

CALIFORNIA FOOD & VENDING, INC.

            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.

LEASE FINANCING

            In September 1996, the Company entered into a vendor agreement (the
"Vendor Agreement") with Forrest Financial Corp., a leasing company, to provide
lease financing to distributors and others who may wish to lease Machines rather
than purchase them outright. The Vendor Agreement provides that up to $15
million will be made available to qualified lessees for this purpose. The
Leasing Company has since qualified approximately 1,400 vending companies, which
it believes have the financial capability and experience to lease Machines from
the Leasing Company and place them in geographically desirable locations. The
Company believes that lease financing will be an important element of its
strategic plan, as leasing is a very prevalent financing structure used in the
vending industry.
<PAGE>

COMPETITION

            The technology in Tasty Fries' machine has been awarded U.S. patent
#5,537,916 issued June 23, 1996. Other attempts to bring a French fry vending
machine to market have not utilized the Company's patented technology. Tasty
Fries process of using dehydrated potato is the difference between us and the
competition. Most attempts use either a frozen or pre-cooked potato and are
heated by microwave or convection oven. Our patented process is unique and we
believe produces the best tasting product. The Company faces competition from
other suppliers of French fries, including fast food outlets. The Company is
aware of other companies which have test marketed French fry vending machines or
are in the process of developing such machines. Certain of the companies may be
viewed as competitors or may become competitors in the future. Tasty Fries is
aware of at least three competitors in the French fry vending machine business:

Ore-Ida, TEGE and Vendotech.

            Ore-Ida, a U.S.-based major manufacturer and distributor of frozen
potato products, has developed a machine that uses frozen, precut French fries,
which are heated by a hot-air system. Ore-Ida has spent many years and
considerable capital in the development of their machine. They have been
marketing their machine domestically and abroad for a number of years. Ore-Ida
has produced 500 machines of which approximately 100 are installed in the United
States and Europe. Vendotech, a European company, also utilizes a frozen, precut
French fry, which it cooks in oil. Vendotech has a marketing alliance with
McCain, a large Canadian potato producer. Vendotech has no readily available
information regarding placement or performance of their machines. TEGE uses a
dehydrated potato powder, which is formed into French fries, and cooked in oil.
TEGE installed one machine in a department store in Europe but subsequently
removed it due to technical difficulties. TEGE's current marketing strategy is
focused on four primary European markets. Ore-Ida, Vendotech and TEGE have had
substantially greater financial resources to obtain market share for their
products.

            Management believes, although no assurances are given, that due to
current demand for French fried potatoes, that there may be additional
competition in the future in the area of French fry vending.

AVAILABILITY OF RAW MATERIALS

            The raw materials or inputs used by the machine in the production of
each serving of fries are: potato product, cooking oil, water and serving cups
(with ketchup and salt packets attached to the bottom). Management believes that
the oil, condiments and serving cups used in the dispensing of French fries are
readily available from its current suppliers. In the event that one or more of
these materials were to be unavailable from a current supplier, the Company is
confident that comparable substitute products would be available from other
suppliers. We presently purchase potato product from two unrelated sources. We
currently have no contract (exclusive or otherwise) or licensing rights to
purchase the potato product from any supplier. At such time in the future as may
be warranted by the success of our business, we may elect to enter into the
production of our own proprietary potato product or enter into contract
manufacturing for the same. SEE "POTATO PRODUCT."
<PAGE>

PATENTS AND PROPRIETARY RIGHTS

            The Machine's inventor, Edward C. Kelly, is Tasty Fries' President
and Chief Executive Officer and was issued a patent by the U.S. Patent and
Trademark office in July 1996. In addition, the Company is seeking, but has not
yet received, patent protection in Canada, Japan, Israel, Brazil and the
European Patent office (which currently represents 17 European countries). The
Israel patent has been granted; the Company is awaiting examinations of the
European and Brazil applications; the Canada and Japan applications have been
deferred, the Company can not estimate when these patents will be granted.

            The Company intends to seek patent, trademark and related legal
protection in the future where it deems the same to be beneficial. However,
legal protections and precautions do not prevent third party development of
competitive products or technologies. There can be no assurance that the legal
precautions and other measures taken by the Company will be adequate to prevent
misappropriation of our proprietary technology. Notwithstanding the foregoing,
the Company does not intend to be solely dependent upon patent protection for
any competitive advantage. The Company expects to rely on its technological
expertise and the early entry into the marketplace of its Products to further
enhance its position as a leader in the field and protect its technologies.

GOVERNMENTAL APPROVALS AND REGULATIONS

            The Machine was designed and developed in consideration of
applicable governmental and industry rules and regulations. Management believes
that the Machine's design complies with National Sanitation Foundation ("NSF")
guidelines as well as Underwriter's Laboratory ("UL") standards. The Machine
will receive UL and NSF approvals prior to sale and installation. The Company
has requested that the Machine be inspected and expects to have the Machine
inspected by various regulatory agencies during the production process but prior
to sale and installation. In this regard, management has begun the process of
obtaining UL certification. The Company is also seeking certification from the
National Automatic Merchandising Association ("NAMA"). Management has been
advised that all certifications and approvals should be applied for upon
commercial production and would not issue until such time. Management believes,
although no assurance is given, that the required approvals from UL, NAMA and
the various regulatory agencies are obtainable and is not currently aware of
anything that will delay the necessary approvals.

            Management is not aware of and does not believe that there are any
specifically applicable compliance requirements under state or federal
environmental or related laws relating to the manufacture and operation of the
machine.

RESEARCH AND DEVELOPMENT COSTS

            For the fiscal years ended January 31, 2000 and 1999, the Company
incurred $144,403 and $460,417, respectively, in costs and expenses relating to
the research and development of its machine.

            The Company could incur additional research and development costs
over the next year should a counter top model of our French fry vending machine
be introduced. No decision has been made regarding introduction of such a model.
Projected costs to design, develop and manufacture this model should not exceed
$300,000 as much of the technology can be transferred from the standard vending
machine.
<PAGE>

PERSONNEL

            As of January 31, 2000, the Company had a total of two full-time
employees. Additional employees are expected to be hired during the next 12
months if the Company's proposed plan of operation is successful and there is
sufficient cash flow from operations, if any, which remains constant to support
such additional expense. If hired, such additional employees may include a
director of marketing, a chief financial officer, and sales and marketing
personnel. At the present time, management is unable to estimate how many
employees will be needed during the next 12 months.

ITEM 2. PROPERTIES.

            The Company owns no significant properties. Since June 1994, it has
leased executive office space at the premises located at 650 Sentry Parkway,
Suite One, Blue Bell, Pennsylvania 19422. The Company's current lease
commitments total approximately $2,085 per month until May 31, 2000. At the
present time, management believes that this office space is sufficient; however,
the Company may require additional space during the next 12 months.

ITEM 3. LEGAL PROCEEDINGS.

            On August 28, 1996, the Company, Edward C. Kelly and Premier Design,
Ltd. were added as defendants to a civil law suit 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 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

            No matter was submitted to a vote of security holders through
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year covered by this Report.

PART II.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.

            The common stock of the Company is quoted on the OTC Bulletin Board,
under the symbol "TFRY." The following table sets forth the highest and lowest
bid prices for the common stock for each calendar quarter during the last two
years and subsequent interim periods as reported by the National Quotation
Bureau.
<PAGE>

            The prices set forth below represent inter-dealer quotations,
without retail markup, markdown or commission and may not be reflective of
actual transactions.

<TABLE>
<CAPTION>
                                                High Bid         Low Bid
                        FISCAL 1998
<S>                                               <C>              <C>
                        First Quarter             $ .95            $ .51
                        Second Quarter            $ .85            $ .45
                        Third Quarter             $1.30            $ .38
                        Fourth Quarter            $ .59            $ .32

                        FISCAL 1999

                        First Quarter             $ .87            $ .25
                        Second Quarter            $ .78            $ .42
                        Third Quarter             $ .84            $ .35
                        Fourth Quarter            $ .73            $ .34

                        FISCAL 2000

                        February 1 through
                        April 27                  $ .73            $ .38
</TABLE>

(B)              HOLDERS.

            The approximate number of record holders of the Company's common
stock as of April 26, 2000 is 1,186.

(C)              DIVIDENDS.

            The Company has not paid any cash dividends to date and does not
anticipate or contemplate paying dividends in the foreseeable future. It is the
present intention of management to utilize all available funds for the
development of the Company's business.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION.

            PLAN OF OPERATION

            The Company's basic business model is to market the Machines and the
ancillary products that are required to prepare each serving of French fries.
These ancillary products include the potato product, vegetable cooking oil and
serving cups (with salt and ketchup packets attached). The Company's long-term
profitability and success will be driven by a significant degree by the revenue
and accompanying profit to the Company associated with each and every vended
portion sold from its installed base of Machines.

            With that business model in mind, the Company's current plan of
operation is to manufacture an initial quantity of 25 Machines. Management
currently estimates that a portion of these initial Machines will be sold to
third parties (existing distributors and others) and a number of them will be
owned and operated by the Company. Tasty Fries intends to place its Machines in
locations within the greater Portsmouth, New Hampshire area.
<PAGE>

            Management believes that, once in full production, the business
cycle of the Company will allow it to operate in a cash positive fashion. That
is, the Company will require a significant advance payment from its customers
with receipt of each order; therefore providing a good portion of the capital
necessary to fund the procurement of essential component parts for machine
production. If management is incorrect in this assumption, the Company's capital
needs for manufacturing may be greater than currently anticipated. In this
event, the Company will be required to raise additional funds. There can be no
assurances given that any funding, including that which may be required to be
advanced, will be available or if available, on terms satisfactory to the
Company.

            Based upon the Company's internal projections, the Company should
receive sufficient cash flow to support the modest expansion of operations over
the next 12 months. Although management cannot assure the ultimate success of
its plan, it is reasonably confident that it will enable the Company to continue
its business and grow modestly.

Liquidity and Capital Resources

            Since its inception, the Company has had no revenues from operations
and has relied almost exclusively on stockholder loans, limited distribution
deposits and sales of securities to raise working capital to fund operations. At
January 31, 2000, the Company had approximately $10,703 in cash.

            In June 1997, the Company received $1,000,000 from three non-"U.S.
Persons," as defined in Regulation S, in exchange for notes convertible into the
Company's common stock. The financing was completed pursuant to Section
903(c)(2) of Regulation S under the Securities Act of 1933. Pursuant to the
terms of the financing, the Company issued 1,142,857 shares of common stock to
be held in escrow, pending the potential conversion of notes. The notes bear
interest at 7% annually and have a maturity date of May 14, 2000. In connection
with the financing, the Company also issued 250,000 common stock purchase
warrants. In September 1997, the note holders converted an aggregate of $397,679
of principal into 700,000 shares of common stock. In November 1997, the Company
issued an additional 380,000 shares of common stock to be held in escrow for
potential conversion of notes. As of January 31, 1998, the aggregate outstanding
principal balance of the convertible notes was $602,321. The remaining 822,857
shares of common stock in escrow were not deemed to be outstanding as of January
31, 1998. In February 1998, an additional 444,000 shares of common stock were
issued into escrow, pending conversion of the notes. During the year ended
January 31, 1999 the Company issued 1,480,280 shares of common stock in
satisfaction of the remaining $602,321 of convertible notes.

            In November 1997, in a separate transaction, the Company received
$1,600,000 from six non-"U.S. persons," as defined in Regulation S, in exchange
for notes convertible into the Company's common stock. The financing was
completed pursuant to Section 930(c)(2) of Regulation S under the Securities Act
of 1933. Pursuant to the terms of the financing, the Company issued 2,400,000
shares of common stock to be held in escrow, pending the potential conversion of
notes. The notes bear interest at 6% annually and have a maturity date of
November 5, 2000. In connection with the financing, the Company also issued
720,000 common stock purchase warrants. As of January 31, 1998, the aggregate
outstanding principal balance of the convertible note was $1,600,000. The
2,400,000 shares of common stock in escrow were not deemed to be outstanding as
of January 31, 1998. In February 1998, an additional 960,000 shares of common
stock were issued into escrow pending the conversion of the notes. During the
year ended January 31, 1999 the Company issued 4,105,870 shares of common stock
in satisfaction of these convertible notes.
<PAGE>

            In January 1998, the Company and a private investment corporation, a
former investor in the Company from April 1996, terminated the stock purchase
agreement that had been the basis for the original investment in 1996, due to
lack of performance on the investor's part. SEE "CONSULTANTS & ADVISORS."

            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 post-split shares of common stock as consideration.
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 the shares were issued into escrow,
pending funding. As of January 31, 2000, the Company has received $1,050,000 of
the total $1,500,000 financing and 2,100,000 of the total 3,000,000 shares have
been released. SEE "SUBSEQUENT EVENTS."

            Although management currently estimates that the April 1998
financing will allow it to proceed with its current plan of operation, the
Company will need to raise additional capital to enter into full-scale
production. If the Company is unable to obtain the desired funding from any
source, it is highly unlikely that it will be able to generate a sufficient
amount of cash to support its operations during the 12 months following the date
hereof, unless it is able to obtain the necessary funds from the sale of debt
and/or equity during such period. 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.

            On October 5, 1999, pursuant to a promissory note, we borrowed
$900,000 from Amreet Trading Co., LLC. Repayment of the sum is due June 30,
2000 with interest at 18% per annum. Prior to borrowing the money from
Amreet, we had no prior relationship with Amreet. The  proceeds of the loan
were used to pay in full our obligation to California Food & Vending, Inc.

            Subsequent to January 31, 2000, the Company has issued additional
shares and warrants to purchase common stock to various parties as payment for
services rendered. The Company intends to continue this practice.

Results of Operations, Fiscal Years ending January 31, 1999 & 2000

            The Company had no revenues for the fiscal years ended January 31,
1999 and 2000. From fiscal 1998 to 1999, travel and entertainment expenses
decreased approximately 9% from approximately $57,656 in 1998 to approximately
$52,434 in 1999 primarily due to moderate decrease in business related travel.
Consulting expenses increased from approximately $172,600 in fiscal 1998 to
$1,737,432 in fiscal 1999. The increase in consulting expenses was primarily due
to the Company's increased dependence on consultants to provide financial,
business and marketing expertise. Payroll and payroll taxes decreased
approximately 31% from approximately $573,814 in fiscal 1998 to approximately
$395,700 in fiscal 1999. The decrease payroll and payroll tax expense resulted
primarily from the release of personnel in 1999. Legal fees increased
approximately 220% from approximately $200,750 in fiscal 1999 to approximately
$641,575 in fiscal 2000 due to the defense of various lawsuits and additional
filings with SEC in association with registration statement. Management
believes, although it cannot be assured, that it has made significant inroads in
stabilizing its operating and overhead costs and should be able to move forward
with its business plan as discussed herein.
<PAGE>

Consultants & Advisors

            The Company has in the past, and will in the future, retain
consultants with significant experience in areas such as marketing, advertising
and financing.

            In April 1996, the Company engaged L. Eric Whetstone to provide
business consulting services. As compensation for these services, Mr. Whetstone
received a one-time grant of 250,000 shares of restricted stock and an annual
grant of 37,500 shares of restricted stock for the five-year period of the
consulting agreement. In January 1998, the Company accelerated the payment of
the annual compensation to Mr. Whetstone called for over the term of the
five-year contract and issued him 175,000 shares of restricted stock. Also in
January 1998, Mr. Whetstone was issued a warrant to purchase 1,000,000 shares of
common stock. The warrants have an exercise price of $1.90 and an expiration
date of January 5, 2001. The warrants were issued as part of the termination of
the stock purchase agreement from April 1996. SEE "SUBSEQUENT EVENTS."

ITEM 7. FINANCIAL STATEMENTS.

            Audited, consolidated balance sheets as of January 31, 2000, 1999
and 1998, and related statements of operations, stockholders' equity
(deficiency) and cash flows for the years then ended and for the period from
October 18, 1985 (inception) to January 31, 1999 are included after Item 12
herein.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

            Management is not aware, and has not been advised by any former
accountants, of any disagreement on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.
Management has not consulted the accountants regarding either the application of
accounting principles to any specified transaction or any disagreement with any
former accountants.

PART III.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

(A)              IDENTIFICATION OF DIRECTORS & EXECUTIVE OFFICERS

            The current directors of the Company will serve until the next
annual (or special in lieu of annual) meeting of shareholders at which directors
are elected and qualified. Names, age, period served and positions held with the
Company are as follows:
<PAGE>

<TABLE>
<CAPTION>
Name                       Age           Positions with Company
<S>                        <C>           <C>
Edward C. Kelly            63            President, Chief Executive Officer,
                                         Treasurer and Chairman of the Board*

Leonard J. Klarich         65            Vice President, Secretary and Director*

Jurgen A. Wolf             65            Director*

Ian D. Lambert             54            Director

Kurt R. Ziemer             44            Director
</TABLE>

*Member of the Executive Committee of the Board of Directors.  Mr. Klarich
was also appointed Secretary by the Board of Directors on June 3, 1996.

            EDWARD C. KELLY - Mr. Kelly has been President of the Company since
June 10, 1994, and a director since April 1994. He was appointed a member of the
Executive Committee on September 18, 1995, and Chairman of the Board of
Directors after the removal of Mr. Arzt (by a 2/3 majority vote of shareholders)
in June 1996. From January 1994 until June 10, 1994 he was Executive Vice
President of the Company. Mr. Kelly has been involved in the engineering and
design of the machine since 1993 and was awarded a U.S. patent in July 1996. Mr.
Kelly owned and operated Mega Products Corporation, a subcontract manufacturing
company, from 1970 through 1994. Mega serviced companies including IBM, GE,
Dupont, Gulf & Western and Kulick & Soffa.

            LEONARD J. KLARICH - Since September 1995, Mr. Klarich has been a
director of the Company and also was a consultant to management from March
through May 1996. Mr. Klarich was retained as Executive Vice President of the
Company in June 1996 to assist in the day-to-day operations of the Company, with
specific emphasis on distribution networks, distributors and marketing. In June
1997, his title was changed to Vice President. He was also appointed Secretary
in June 1996. Mr. Klarich was Chairman of the Board of K&D, a high-tech graphic
design company located in Woodland Hills, California until early 1996. From 1976
to 1989 he owned and operated Avecor, Inc., a plastics manufacturing company
with revenue in excess of $40 million upon his sale of the company. Prior
thereto, he spent a number of years as a chief operating officer of companies in
need of turnaround due to financial concerns.

            JURGEN A. WOLF  -  Mr. Wolf has been a director of the Company
and a member of the Executive Committee of the Board of Directors since
September 18, 1995.  Since 1983, he has been President of J.A. Wolf
Projects, Ltd., a private Vancouver company engaged in commercial and
industrial contracting.  From August 1992 to March 1993, Mr. Wolf was a
director of Yukon Spirit Mines Ltd. (currently known as Gainey Resources
Ltd.).  Mr. Wolf is also a director of four Canadian public companies, which
include: Consolidated Gulfside Industries, Ltd., Shoreham Resources, Ltd.,
U.S. Oil Inc. and Key Capital Group, Inc.
<PAGE>

            IAN D. LAMBERT - Mr. Lambert was appointed as a director of the
Company in July 1995 and was re-elected to the Board in September 1995. He is
the President of International Tasty Fries, Inc., a stockholder in the Company
and, until November 1996, was President of Yukon Spirit Mines Ltd. (now doing
business as Gainey Resources Ltd.). International Tasty Fries and Yukon are
affiliated entities. International Tasty Fries has a distributorship agreement
with the Company for a number of European countries; Yukon's distribution
agreement was reacquired by the Company in April 1998. Mr. Lambert has been
involved with the financing and management of numerous resource and industrial
based public companies, both in Canada and the U.S., since the early 1980's, and
currently is a director of five publicly traded companies of which only the
Company is a reporting company. Prior to that time, he was an Information
Systems executive with MacMillan Bloedel Ltd. and also the Manager, Systems
Consulting for the Vancouver office of Deloitte Haskins & Sells. SEE "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS" AND "SUBSEQUENT EVENTS."

            KURT R. ZIEMER  -  Mr. Ziemer was appointed to the Board of
Directors on October 4, 1996 as the board designee of Whetstone Ventures
Corporation, Inc. pursuant to the April 30, 1996 Stock Purchase Agreement
with the Company.  Since 1989 he has owned and operated Ziemer
Buick-Pontiac-GMC Truck, Inc. located in New Holland, Pennsylvania.  From
1977 until 1989, he served in several capacities for the auto dealership.

(B)      DIRECTORSHIPS.

            The current directors hold no other directorships in any Company
with a class of securities registered pursuant to Section 12 of the Exchange Act
or subject to the requirements of Section 15(d) of such Act or any Company
registered as an investment Company under the Investment Company Act of 1940,
except as disclosed herein.

(C)      IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES.

            None.

(D)      FAMILY RELATIONSHIPS.

            None.

ITEM 10. EXECUTIVE COMPENSATION

(A)      GENERAL

(B)      SUMMARY COMPENSATION TABLE

                             ANNUAL COMPENSATON (1)

                                   Fiscal Year

<TABLE>
<CAPTION>
            Nane &                    Ended           Restricted  Bonus
            Principal Position        January 31,     Salary      Stock (2)
<S>                                   <C>             <C>         <C>
            Edward C. Kelly           2000            $240,000
            President, CEO            1999            $267,000    $1,031,250 (4)
            & Chairman (3)            1998            $289,000        $0

            Christopher A.            1998            $ 93,750        $0
            Plunkett, EVP (5)

            Leonard J. Klarich        1999            $ 12,400        $0
            Secretary, Director       1998            $ 60,000        $0
            & Vice President (6)      1997            $ 40,000        $0
</TABLE>
<PAGE>

(1) There were no long-term incentive payments made in the year-ended January
31, 2000.

(2) Value of restricted stock grants are determined by using the closing bid
price of the Company's common stock on the date of issuance.

(3) Mr. Kelly has served as President and Treasurer of the Company since June
10, 1994, a director since April 1994, Chairman of the Board since June 3, 1996,
and was Executive Vice President from January 1994 to June 10, 1994. This table
does not include: (i) accrued director compensation of approximately $833 per
month since September 1995; (ii) a restricted stock award of 9,206 post-split
shares granted to Mr. Kelly as a component of his compensation for the fiscal
year ended January 31, 1996; (iii) options granted to each of board member on
October 1, 1996 by the Board of Directors for 50,000 post-split shares of
restricted common stock exercisable for three years at $4.00 per share and an
option granted for 1,000,000 post-split shares of common stock exercisable for
two years at .50 per share.

(4) Represents the value assigned to a restricted stock grant of 1,500,000
post-split shares made to Mr. Kelly on September 11, 1997, pursuant to the terms
of the Stock Purchase Agreement from April 1996.

(5) Mr. Plunkett served as Executive Vice President of the Company from June
1997 through June of 1998.

(6) This table does not include: (i) accrued director compensation of
approximately $833 per month since September 1995; (ii) an option to purchase
1,042 post-split shares of common stock exercisable at $2.40 per share until
December 15, 2005, automatically granted to each non-employee director under the
1995 Stock Option Plan on December 15, 1995, (iii) an option to purchase 4,082
post-split shares of common stock exercisable at $2.45 per share until December
15, 2006, automatically granted to each non-employee director under the 1995
Stock Option Plan; and (iv) an option to purchase 50,000 post-split shares of
common stock granted by the Board of Directors on October 1, 1996 exercisable
for $4.00 per share until October 1, 1999.

(C)      OPTIONS/S.A.R. GRANTS TABLE

             OPTION GRANTS IN THE FISCAL YEAR ENDED JANUARY 31, 2000

none

(1) Mr. Kelly was issued, by the Board of Directors, a stock option to purchase
an aggregate of 1,000,000 shares of common stock. SEE "EXECUTIVE COMPENSATION
TABLE."
<PAGE>

(D)      AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUE
         TABLE.

            None.

(E)      LONG TERM INCENTIVE PLAN ('LTIP") AWARDS TABLE.

            None.

(F)      COMPENSATON OF DIRECTORS.

The Directors were not entitled to compensation prior to September 18, 1995. At
the Board of Directors meeting held on September 18, 1995, the Board voted to
approve payment of annual directors' fees of $10,000 per director plus
reasonable expenses commencing as of such date. Payments for the fiscal years
ending January 31, 2000, 1999, 1998, and 1997 have been accrued on a pro rata
basis each year and will be paid when the Company is financially able to do so.

(G)      EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN
         CONTROL ARRANGEMENTS

           On October 1, 1994, the Company entered into an employment agreement
with Edward C. Kelly, its then President and Treasurer. The employment agreement
was for a three-year term commencing retroactively to October 1, 1993 and was
automatically renewable for additional one-year terms after expiration on
September 30, 1996. The employment agreement was subsequently amended effective
May 1, 1995. SEE EXHIBIT 13.1

           On June 16, 1997, the Company executed an employment agreement with
Christopher Plunkett who joined the Company as Executive Vice President. On June
15, 1998 Mr. Plunkett's employment was terminated with the Company.

(H)      REPORT ON REPRICING OF OPTIONS/SARS

            None

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

(A)      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.

The following table sets forth, as of April 26, 2000, the ownership of common
stock by persons known to the Company who own beneficially more than 5% of the
outstanding shares of common stock:

<TABLE>
<CAPTION>
            Name & Address of            Amount & Nature or     Percent
            Beneficial Owner            Beneficial Ownership    of Class
<S>                                           <C>                  <C>
            Edward C. Kelly                   1,568,650            5%
            650 Sentry Parkway, Suite One
            Blue Bell, PA  19422  (1)

            Lancaster Investment Corporation  2,200,000            7%
            11 Waterfront Estates, Estates Drive
            Lancaster, PA  19601  (2,3)
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
            Name & Address of            Amount & Nature or      Percent
             Beneficial Owner          Beneficial Ownership      of Class
<S>                                          <C>                    <C>
            L. Eric Whetstone                539,000                1%
            11 Waterfront Estates, Estates Drive
            Lancaster, PA  19601  (3,4)

            Whetstone Ventures
            Corporation, Inc.                777,000                2%
            11 Waterfront Estates, Estates Drive
            Lancaster, PA  17602  (3)
</TABLE>

----------

(1) Does not include an option for 1,000,000 post-split shares of common stock
granted by the Board of Directors on July 1, 1998 exercisable until July 1, 2000
at .50 per share.

(2) Does not include 1,400,000 additional shares issued to Lancaster Investments
pursuant to the terms of the April 1998 financing. These additional shares are
being held in escrow pending the complete funding of the transaction and will be
released from escrow on a pro-rata basis as the financing is completed. As of
January 31, 1999, $800,000 of the total $1,500,000 financing has been received
and 1,600,000 of the total 3,000,000 shares have been released. SEE "LIQUIDITY
AND CAPITAL RESOURCES" AND "SUBSEQUENT EVENTS."

(3) Lancaster Investment Corporation and Whetstone Ventures Corp. are both
affiliates of L. Eric Whetstone. In aggregate, the 3,516,000 shares currently
owned by these three parties represent 11% of the outstanding shares of the
Company. Upon completion of the April 1998 financing, these three parties will
own 4,416,000 total shares, representing 14% of the then-outstanding shares. SEE
"CHANGES IN CONTROL" AND "SUBSEQUENT EVENTS."

(4) Includes 150,000 post-split shares of common stock issued to L. Eric
Whetstone in connection with the April 1998 financing from Lancaster Investment
Corp.

(B)      SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth, as of April 26, 2000, the beneficial common
stock ownership of all directors, executive officers, and of all directors and
officers as group:

<TABLE>
<CAPTION>
            Name & Address of            Amount & Nature or     Percent
            Beneficial Owner            Beneficial Ownership    of Class
<S>                                           <C>                  <C>
            Edward C. Kelly                   1,568,650            5%
            650 Sentry Parkway, Suite One
            Blue Bell, PA  19422  (1)

            Leonard J. Klarich                        0            0
            839 Claybrook Court
            Knoxville, TN  37923  (2)
</TABLE>

<TABLE>
<CAPTION>
            Name & Address of            Amount & Nature or     Percent
            Beneficial Owner            Beneficial Ownership    of Class
<S>                                           <C>                  <C>
            Jurgen A. Wolf                          0               0
            1285 West Pender Street
            Vancouver, B.C. Canada (3)

            Ian D. Lambert                    230,000               1%
            c/o International Tasty Fries, Inc.
            595 Howe Street, Suite 602
            Vancouver, B.C.  V6C 2T5  (4)

            Kurt R. Ziemer                    640,000               2%
            599 Valley View Drive
            New Holland, PA 17557 (5)

            All Officers and Directors      2,438,650               7%
            as a group (5 persons)
</TABLE>

* less than 1%
<PAGE>

(1) Does not include an option for 1,000,000 post-split shares of common stock
granted by the Board of Directors on July 1, 1998 exercisable until July 1, 2000
at .50 per share.

(2) Does not include: (i) an option to purchase 1,042 post-split shares of
common stock exercisable at $2.40 per share until December 15, 2005,
automatically granted to each non-employee director under the 1995 Stock Option
Plan on December 15, 1995; (ii) an option to purchase 4,082 post-split shares of
common stock exercisable at $2.45 per share until December 15, 2006,
automatically granted to each non-employee director under the 1995 Stock Option
Plan; and (iii) an option for 50,000 post-split shares of common stock granted
by the Board of Directors on October 1, 1996 exercisable for $4.00 per share
until October 1, 1999.

(3) Does not include: (i) an option to purchase 1,042 post-split shares of
common stock exercisable at $2.40 per share until December 15, 2005,
automatically granted to each non-employee director under the 1995 Stock Option
Plan on December 15, 1995, (ii) an option to purchase 4,082 post-split shares of
common stock exercisable at $2.45 per share until December 15, 2006,
automatically granted to each non-employee director under the 1995 Stock Option
Plan.

(4) 436,952 post-split shares were issued to International Tasty Fries, Inc. in
1995 as consideration for a financing. Mr. Lambert is the President of
International Tasty Fries and is a shareholder of that company. Does not
include: (i) an option to purchase 1,042 post-split shares of common stock
exercisable at $2.40 per share until December 15, 2005, automatically granted to
each non-employee director under the 1995 Stock Option Plan on December 15,
1995, (ii) an option to purchase 4,082 post-split shares of common stock
exercisable at $2.45 per share until December 15, 2006, automatically granted to
each non-employee director under the 1995 Stock Option Plan. SEE "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."

(5) Does not include 680 post-split shares underlying an option exercisable at
$2.45 per share until December 15, 2006, automatically granted to each
non-employee director under the 1995 Stock Option Plan. Mr. Ziemer's option has
been prorated to reflect the date he was appointed to the Board of Directors on
October 4, 1996.
<PAGE>

(C)      CHANGES IN CONTROL.

In connection with the Subscription Agreement dated April 13, 1998 between the
Company and Lancaster Investment Corp., the Company granted Whetstone Ventures,
Inc. the right to name one of the five directors to the Board of Directors of
Tasty Fries, Inc. Together with a previous right of appointment (from the April
1996 stock purchase agreement), Whetstone Ventures, Inc. may appoint two members
to the Board of Directors of Tasty Fries, Inc.

            Except as described in this Report, there are no arrangements, known
to the Company, including any pledge by any person of securities of the Company
or of any of its parents, the operation of which may at a subsequent date result
in a change in control of the Company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

            Mr. Ian Lambert, a director of the Company since July 1995, is the
President and a shareholder of International Tasty Fries, Inc., a stockholder in
the Company and, until November 1996, was President of Yukon Spirit Mines Ltd.
(now doing business as Gainey Resources Ltd.). International Tasty Fries and
Yukon are affiliated entities. International Tasty Fries has a distributorship
agreement with the Company for a number of European countries; Yukon's
distribution agreement was reacquired by the Company in April 1998. Because of
the potentially conflicting interests that Mr. Lambert may face, given his role
as President of one of the Company's distributors and a director of the Company,
Mr. Lambert may find it necessary to recuse himself from certain strategic
discussions in the normal course of business.

            In May of 1995, the Company loaned an officer/director $50,000 at
10% interest per annum. The loan was repaid in accordance with a payment plan
over past fiscal years. The balance due the Company at January 31, 2000 and 1999
was $0.

            In August of 1996, the Company loaned a different officer/director
$50,000 at 10% interest per annum. The loan was repaid in accordance with a
payment plan over past fiscal years. The balance due the Company at January 31,
2000 and 1999 was $0.

            In the normal course of its business, the Company occasionally has
legal services performed by one of Mr. Kelly's sons. The Company believes that
the compensation paid for the services received in connection with such services
are comparable to those it could expect to receive from other attorneys.

SUBSEQUENT EVENTS

            In January 1998, during the normal course of business, the Company
reached an agreement to re-acquire one of its territorial distributorships from
Yukon Spirits Mines, Ltd. (now doing business as Gainey Resources, Ltd.). The
agreement was subject to approval by Yukon's shareholders and the Vancouver
Stock Exchange. Yukon's distribution agreement included 23 U.S. states and seven
European countries. As consideration, the Company issued 250,000 post-split
shares of restricted stock and 100,000 warrants to purchase common stock. The
warrants have an exercise price of $.66 per share and expire on December 30,
2000. The transaction closed in April 1998.
<PAGE>

            In April 1998, the Company entered into an agreement to receive
$1,500,000 in proceeds from the sale of restricted stock to Lancaster Investment
Corporation. The Company issued 3,000,000 post-split shares of common stock as
consideration. The Company also issued warrants to purchase 1,500,000 shares of
common stock at an exercise price of $1.90; the warrants expire April 12, 2001.
In connection with the transaction, the Company also issued 150,000 post-split
shares of restricted stock to L. Eric Whetstone as a commission on the
transaction. The Company and the investor have entered into an escrow agreement
for this transaction. As of January 31, 2000, $800,000 has been received by the
Company and 1,600,000 shares have been released to the investor. The terms of
this financing call for the Company to file a registration statement with the
Securities and Exchange Commission within 30 days of signing, which was April
13, 1998. The Company intends to register all of the restricted common shares
and warrant shares issued and/or granted under this transaction in a
registration statement as soon as is practicable. SEE "CHANGES IN CONTROL."

                              REPORTS ON FORM 8-K.

            Forms 8-K dated May 19, 1999, June 17, 1999, July 20, 1999, August
11, 1999, October 14, 1999 and November 20, 1999 are hereby incorporated by
reference.

                                   SIGNATURES

            In accordance with Section 13 or 15(d) of the Exchange Act, the
Company caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                             TASTY FRIES, INC.

Date: April 29, 2000                         By:
                                                --------------------------------
                                                Edward C. Kelly
                                                President and Principal
                                                Financial Officer

            In accordance with the Exchange Act, this report has been signed by
the following persons on behalf of the Company and in the capacities and on the
dates indicated.

                                                      April 29, 2000
               -----------------------------------
               Edward C. Kelly, Chairman, CEO
               President, Treasurer & Director


                                                      April 29, 2000
               -----------------------------------
               Leonard J. Klarich, Vice President,
               Secretary & Director


                                                      April 29, 2000
               -----------------------------------
               Jurgen A. Wolf, Director


                                                      April 29, 2000
               -----------------------------------
               Ian D. Lambert, Director


                                                      April 29, 2000
               -----------------------------------
               Kurt N. Ziemer, Director