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, 2003

          [ ] 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 January
2003: Not Determinable.

Shares  outstanding  of the  registrant's  common  stock as of January 31, 2003:
80,460,991 shares.


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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.

(B) BUSINESS OF THE COMPANY

      GENERAL

      The Company  has  developed a patented  French fry  vending  machine  (the
"Machine").  The Company  intends to manufacture  and market the machine in both
domestic and  international  markets  through  traditional  sales to established
vending  companies.  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


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<PAGE>

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,  cooking oil, serving cups
and condiments. 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 HISTORY

      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.

      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 the Company,  believed  they had  developed a viable  production
model French fry vending  machine.  They decided to abandon the original device.
The Company 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


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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 parties 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.  The Company  agreed to pay $50,000 in interest  raising the total
debt to $700,000. The Company has paid $450,000 to Premier towards its 50% share
of  the  development   costs.   Premier  will  also  receive  $250  per  machine
manufactured by the third party.

      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.  Subsequently  the  contract was
cancelled.  In  January  2000,  the  Company  opened  an  assembly  facility  in
Portsmouth,  New  Hampshire  and  hired  sub-contractors  to  produce  the first
twenty-five  units.  However,  in November 2001 the Company  ceased all business
dealings in New  Hampshire,  pulled its machines from the field and  transported
them along with the  Company's  manufacturing  equipment to ACE Metal  Products,
Inc. in Turlock, California for the first run production.

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.  The Tasty Fries
device is  comprised  of many  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 the overall business
plan,  the tooling  process  itself has


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been delayed due to the lack of capital available,  however,  the pre-production
tooling stage is now complete.

      The Company will also produce a tabletop model of the machine.  Customized
parts will be marketed to operators  of the machine,  be they owners or lessees.
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.

      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.

      The Machine  requires a 110-volt  connection  and is equipped  with modern
computer  technology using  microprocessors and sensors. If the machine operator
desires, the Machine can communicate with a central database, 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 Machine has 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,  additional  cups and condiments 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.


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<PAGE>

      The Machine has received Underwriter's  Laboratory ("UL") approval for the
United States and Canada.  The Company is committed to placing in the market,  a
reliable vending machine which will dispense our French fry product. We plan for
improvements to the machine at costs which are not material.  These improvements
to the machine  will  require  re-certification  by UL, which may cause delay in
installation of the improved  machine.  The machine also received  certification
from the  National  Automatic  Merchandising  Association  ("NAMA") and from the
Federal Communications Commission ("FCC").

THE POTATO PRODUCT

      The  Company's  proprietary  Potato  Product  for use in the  Machine  was
developed  jointly by Tasty Fries,  Inc. and Nestle  Netherlands BV.  Management
estimates that the cost to establish its own  manufacturing  line to produce the
Potato Product is significant.  Due to the  considerable  costs involved and the
current  availability of another potato product,  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
traditional sales to established companies in the vending industry.  The Company
may also own and operate machines itself.

      The existing  distributorship  agreements  essentially require an up-front
payment and  minimum  annual  payments  usually  over the life of the  contract.
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.

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 or by the distributor themselves. There is currently 1
distributorship,  which has not been terminated or reacquired. The distributor's
obligation  to make  further  payments,  after  tendering  the  initial  deposit
required upon execution of the distributorship  agreement, is conditioned on the
Company's ability to ship its Machines and related products. Management believes
that once commercial  production of Machines is commenced and the distributor is
notified and required to place orders for Machines, it may be financially unable
to do so or may  simply  elect  not to  purchase  Machines  and  effectuate  its
respective  agreement.   The  Company  appointed  Ahmad  Zohbi,  as  a  Regional
Representative  for Tasty Fries,  Inc. for the Middle East and Northern  Africa,
excluding Israel, Moracco and Turkey.

In  February,  2002 the  Company  entered  into a  Master  Sales  and  Marketing
Agreement with SilverLeaf,  LLC. The Agreement granted  SilverLeaf the exclusive
distribution  rights  for the sale and  marketing  of the  Tasty  Fries  vending
machine excluding certain existing  territories.  The Agreement was subsequently
cancelled by the Company. See LEGAL PROCEDINGS.


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      The Company  hired IC Ads,  Inc. to develop and maintain the Company's web
site (www.tastyfries.com).

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  distinguishes it from the competition.
Most  attempts  use  either a frozen  or  pre-cooked  potato  and are  heated by
microwave  or  convection  oven.  Tasty  Fries'  patented  process is unique and
management  believes  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.

      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,  serving cups and
condiments.  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.  The  Company
presently  purchases  potato product from Nestle  Netherlands BV and has entered
into a contract  with them for the purchase of the product.  At such time in the
future as may be warranted by the success of the business, the Company may elect
to  enter  into  the  production  of its own  proprietary  potato.  SEE  "POTATO
PRODUCT."

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,  and the European Patent office
(which currently represents 17 European countries).  The Company has applied and
has received  patent  protection  in Canada,  Israel and Brazil;  the Company is
awaiting examinations of the European and Japanese applications.

      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


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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 has received
UL  (Underwriter's   Laboratory),   NAMA  (  National  Automated   Merchandising
Association)   approval  and  will  receive  NSF  approval  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.  Management  believes,
although  no  assurance  is given,  that the  required  approvals  from  various
regulatory  agencies are obtainable and are not currently aware of anything that
will delay the  necessary  approvals.  The machine has also  received  F.C.C.  (
Federal Communications Certification) approval.

      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, 2003 and 2002, the Company incurred
$586,611 and  $1,759,899,  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.  Projected  costs to design and develop this model should not exceed
$300,000 as much of the technology can be transferred  from the standard vending
machine.

PERSONNEL

      As of  January  31,  2003,  the  Company  had a total  of  four  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 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.


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<PAGE>

ITEM 2. PROPERTIES.

      The Company  owns no  properties.  In December  2002,  the Company  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  $5,582.92 per month until  December 1 2003. In November 2002, the
Company leased 1,000 square feet of warehouse space located at Ambler Warehouse,
North Maple Street,  Ambler,  PA. The current lease  commitment on the warehouse
space is $450 per month until November 30, 2003.

ITEM 3.  LEGAL PROCEEDINGS.

SilverLeaf,  LLC v. Tasty Fries,  Inc.:  United  States  District  Court for the
District of New Jersey

On February 1, 2002 the  Company  entered  into an  exclusive  Master  Sales and
Marketing  Agreement with SilverLeaf LLC. The Agreement  granted  SilverLeaf the
exclusive  distribution  rights for the sale and  marketing  of the Tasty  Fries
vending  machine  excluding  certain  existing  territories.  The  Agreement was
subsequently   cancelled  by  the   Company.   In  May  2002,   SilverLeaf   LLC
("SilverLeaf")  sued  the  Company  in New  Jersey  State  Court  requesting  an
injunction  preventing the  termination of the February 1, 2002 Master Sales and
Marketing Agreement (" Agreement").  Without the Company's knowledge,  the State
Court  Judge  entered an "Order to Show Cause With  Temporary  Restraints"  (the
"OSC"),  which  purported to prevent the Company from  terminating the Agreement
until a hearing on SilverLeaf's motion for Preliminary Injunction.

The  Company  removed  the case to the  United  States  District  Court  for the
District  of New  Jersey,  and the case was  assigned  to the Chief  Judge,  the
Honorable  John W.  Bissell.  Judge  Bissell  denied  SilverLeaf's  Motion for a
Preliminary   Injunction  and  dissolved  the  OSC.  Judge  Bissell  found  that
SilverLeaf  would not be  irreparably  injured  if the  Company  terminated  the
Agreement.  Judge  Bissell's  ruling  allowed the Company's  termination  of the
Agreement to stand.

SilverLeaf  thereafter  filed an  emergency  appeal to the United  States  Third
Circuit District Court of Appeal (the "Third Circuit"). On October 20, 2002, the
Third Circuit  unanimously  affirmed Judge Bissell's Order denying  SilverLeaf's
application  for a  preliminary  injunction,  finding no abuse of  discretion in
Judge Bissell's  conclusion that "SilverLeaf  failed to demonstrate a reasonable
probability  of success on the merits." The case was remanded to Judge  Bissell.
SilverLeaf  amended  its  complaint  to allege  causes of action  for  breach of
contract,  infringement of exclusive license,  fraud, tortious interference with
prospective  business advantage and breach of implied covenant of good faith and
fair dealing.  The Company moved to dismiss the Complaint.  On December 5, 2002,
Judge Bissell dismissed all claims against the Company,  except for SilverLeaf's
claims  for  breach of  contract  and  tortious  interference  with  prospective
business advantage.  The Company has initiated a Motion for Summary Judgement as
to these two remaining claims, which the Company expects to be heard in the next
sixty to ninety days. If successful,  the granting of the Summary Judgement will
completely dispose of the SilverLeaf


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litigation.  The Company  believes that the SilverLeaf  action has no merits and
will continue to vigorously defend the case.

Tasty Fries, Inc. v. Syndi Romanoff, SilverLeaf, LLC, Silver-Shadow Enterprises,
LLC and Leon Pirak : United States District Court for the District of New Jersey

On October  18,  2002,  the  Company  filed a lawsuit  against  Syndi  Romanoff,
SilverLeaf, LLC, Silver-Shadow Enterprises, LLC ("Silver Shadow") and Leon Pirak
("Pirak")  for  declaratory  relief on whether the  Company can legally  issue a
restricted  stock  certificate for 3,000,000  shares of the Company's stock (the
"Restricted  Stock") and a Warrant for 2,225,000  shares of the Company's  stock
exercisable  at  $1.00/share  (the  "Warrant")  in the name of Silver  Shadow or
Pirak.  Pirak filed a Motion for Summary  Judgement,  which is  scheduled  to be
heard on May 15, 2003,  requesting  the Court to enter an order  compelling  the
Company to issue the  Restricted  Stock and Warrant in his name and awarding him
attorneys'  fees.  The Company  has  opposed the Motion on the grounds  that the
Company does not believe Pirak has demonstrated  that he is entitled,  under the
securities  laws, to the  ownership of the  Restricted  Stock and Warrants.  The
Company  intends to proceed  with the case  until it can  determine  if Pirak is
legally entitled to the Restricted Stock and Warrants.

California  Food and Vending,  Inc. v. Tasty Fries,  Inc. et al.:  United States
District Court for the Central District of California

As of January 21,  2002,  the  Company and  California  Food and  Vending,  Inc.
("CFV") entered into an Agreement to Settle  Liability Under Modified  Judgement
("Agreement")  under which CFV sold to Tasty Fries for One Million  Five Hundred
Thousand  Dollars  ($1,500,000),  payable on an  installment  basis,  all of the
Machine and Potato  Royalty  Rights  awarded to it under the Modified  Judgement
Pursuant to Stipulation For Entry Of Modified Judgement ("Modified Judgement"*).
The  $1,500,000  with interest at Eight  Percent (8%) per annum,  was payable in
eight installments over a twenty four (24) month period. The Company timely made
the  first  five  principal  payments,  for a total of Seven  Hundred  and Fifty
Thousand Dollars ($750,000), plus accrued interest. The payment of the principal
amount of $750,000,  plus accrued interest resulted in the extinguishment of all
of CFV's Machine  Royalty  Rights,  and on February 13, 2003, CFV filed with the
federal court a partial satisfaction of judgement.  The remaining $750,000,  was
due in three  equal  installments  of Two  Hundred  and Fifty  Thousand  Dollars
($250,000),  plus accrued interest,  from April 21, 2003 to January 21, 2004. On
April 24,  2003,  the  Company  and CFV entered  into a letter  agreement  which
modified the  Agreement and reduced the remaining  $750,000  owed,  plus accrued
interest of $16,  602.38,  for a one time  discounted  payment of $696,602.38 on
April 28, 2003. The Company made the payment,  and all of CFV's remaining rights
under the Modified  Judgement and Agreement were  extinguished  and satisfied in
full. On May 2, 2003 CFV filed with the federal court an Acknowledgement of Full
Satisfaction of Judgement.

*The Modified  Judgement  provided,  interalia,  (1) that the Company pay to CFV
royalties on the  manufacture,  sale, use and distribution of french fry vending
machines (the "Machine Royalty  Rights"),  and (2) the Company pay to CFV a flat
Twenty Five Cents ($0.25) per pound of potato product,  sold,  commercially used
or distributed,  in connection with Tasty Fries french fry vending machines,  in
perpetuity (the "Potato Product Royalty Rights").


                                       9
<PAGE>

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.

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

                                                  High Bid            Low Bid
                                                  --------            -------

                  FISCAL 2001
                  -----------
                  First Quarter                    $ .73               $ .38
                  Second Quarter `                   .54                 .35
                  Third Quarter                      .57                 .32
                  Fourth Quarter                     .44                 .20

                  FISCAL 2002
                  -----------
                  First Quarter                      .47                 .24
                  Second Quarter                     .37                 .14
                  Third Quarter                      .27                 .10
                  Fourth Quarter                     .58                 .09

                  FISCAL 2003
                  -----------
                  First Quarter                      .60                 .12
                  Second Quarter                     .39                 .10
                  Third Quarter                      .18                 .08
                  Fourth Quarter                     .38                 .09


                                       10
<PAGE>

(B) HOLDERS.

      The approximate  number of record holders of the Company's common stock as
of January 31, 2003 is 1,311.

(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,  cooking oil, serving cups
and condiments. The Company's long-term profitability and success will be driven
to 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 market its products in both domestic and  international  markets through a
combination  traditional  leases  and/or sales to  established  companies in the
vending industry and through Company owned machines.

      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, with
receipt of each order the  Company  will  require  an advance  payment  from its
customers for the machine itself and the ancillary products associated with each
vend.  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.

      In February,  2002 the Company  entered into a Master Sales and  Marketing
Agreement with SilverLeaf,  LLC. The Agreement granted  SilverLeaf the exclusive
distribution  rights  for the sale and  marketing  of the  Tasty  Fries  vending
machine excluding certain existing  territories.  The Agreement was subsequently
cancelled by the Company. See LEGAL PROCEDINGS.


                                       11
<PAGE>

Liquidity and Capital Resources

      At January 31, 2003, the Company had approximately $56,609 in cash.

      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.

      Subsequent to January 31, 2003, 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 Year Ended January 31, 2003 and 2002

      The company is still in the  development  stage and, as a result,  has not
realized any  revenues,  which would  include the fiscal years ended January 31,
2003 and 2002.

      As a result of the company's  financial  condition,  it frequently  issues
common  stock to acquire  various  services.  When the issue  price is below the
current market price,  the company incurs stock purchase  expense.  In the years
ended January 31, 2003 and 2002, stock purchase  discount expense was $1,446,302
and $503,500.

      The  company  maintains a staff of several  personnel.  Salary and related
payroll tax expense for the years ended January 31, 2003 and 2002 were $742,519,
$525,000, respectively.

      The company is dependent upon outside  consultants to provide research and
development,  financial,  and  marketing  expertise.  As a result,  expenses can
fluctuate from year to year. Consulting expenses for the years ended January 31,
2003 and 2002 were $586,611 and $1,760,000, respectively.

      The company incurs legal fees in connection with business negotiations and
contract preparation, as well as certain instances of litigation. Legal expenses
for the years  ended  January  31,  2003 and 2002 were  $289,604  and  $118,000,
respectively.

      The loss from operations for the years ended January 31, 2003 and 2002 was
($3,947,644) and ($3,833,000), respectively.


                                       12
<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.

      The  Company  has in the past and  continues  to engage  the  services  of
Lancaster Ventures Corporation to provide business consulting services.

      The Company has in the past and  continues  to engage the services of USIS
International  Capital  Corporation  ("USIS")  to  provide  business  consulting
services and to assist the Company with the  introduction  of its machine to the
marketplace.

      The Company  has in the past and  continues  to engage the  services of IC
Ads, Inc. to develop and maintain the Company's web site (www.tastyfries.com).

ITEM  7. FINANCIAL STATEMENTS.

      Audited  balance  sheets as of January 31, 2003 and 2002,  and the related
statements of operations,  of stockholders'  equity deficiency and of cash flows
for the years ended  January  31, 2003 and 2002 and for the period from  October
18, 1985 (inception) to January 31, 2003 are included after Item 12 herein.

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

      On June 20, 2002 , Goldenberg  Rosenthal,  LLP resigned as the independent
accountant of the Company. Goldenberg Rosenthal, LLP advised the Company that it
made a corporate  decision to discontinue  the practice of providing  accounting
and auditing services to publicly traded companies.

      On September 5, 2002 the Company engaged Baratz and Associates, PA, as its
new independent 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


                                       13
<PAGE>

The  current  directors  of the  Company  will serve  until the next  meeting of
shareholders  at which directors are elected and qualified.  Names,  age, period
served and positions held with the Company are as follows:

                                             Positions with
              Name                Age           Company
              ----                ---       --------------

          Edward C. Kelly          67       President, Chief Executive Officer,
                                            Treasurer and Chairman of the Board*

          Leonard J. Klarich       69       Secretary and Director*

          Jurgen A. Wolf           69       Director*

          Kurt R. Ziemer           48       Director

      *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.

      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


                                       14
<PAGE>

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.

      Louis M. Kelly,  Esquire was hired by the company as  Operations  Manager.
      Mr.  Kelly has served as outside  counsel to the Company and has a working
      knowledge  of the  business.  Mr.  Kelly is the son of  Edward  C.  Kelly,
      President and CEO of the Company.

ITEM 10. EXECUTIVE COMPENSATION

(A)   GENERAL

(B)   SUMMARY COMPENSATION TABLE

                             ANNUAL COMPENSATON (1)
                             ----------------------

                         Fiscal Year
Name &                      Ended                                   Restricted
Principal Position        January 31,     Salary         Bonus      Stock
Edward C. Kelly              2003         $240,000        $0        $81,708 (3)
President, CEO               2002         $240,000        $0
& Chairman (2)               2001         $240,000        $0

      (1)   There were no long-term  incentive  payments made in the  year-ended
            January 31, 2003.


      (2)   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) an option
            granted for 1,000,000  post-split shares of common stock exercisable
            for two years at .50 per share (iv) options granted  pursuant to Mr.
            Kelly's  employment  contract  (vi)  option  granted  for  3,500,000
            post-split  shares of common stock exercisable at .50 per share.

      (3)   544,720  shares  of  restricted  stock @ .15 were  issued in lieu of
            salary   increase  for  the  proceeding   three  years  pursuant  to
            Employment Contract.

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

OPTION GRANTS IN THE FISCAL YEAR ENDED JANUARY 31, 2003


                                       15
<PAGE>

      Each  Director  of the  Company  received a seven year  option to purchase
      50,000 shares of our common stock at an exercise price of $.45.

      Each  Director  of the  Company  received  a two year  option to  purchase
      200,000 shares of our common stock at an exercise price of $.45.

      Edward C. Kelly received a seven year option to purchase  1,000,000 shares
      of our common  stock at an exercise  price of $ .17 per share  pursuant to
      employment contract.

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

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

      None.

(F)   COMPENSATON OF DIRECTORS.

      Directors are  compensated  by payment of an annual fee and grant of stock
      options.  Each director  receives an annual fee of $10,000.  Each director
      also  receives an option  exercisable  for seven  years to acquire  50,000
      shares of Tasty  Fries  common  stock for each year of service  commencing
      June 10, 1994. The exercise price is equal to the closing bid price of our
      stock on June 9th proceeding  each year of service.  Exercise prices range
      from $.45 to $1.25 per share.  Each of our Director's  received a two year
      option to purchase 200,000 shares of our common stock at an exercise price
      of $.45.

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

      In July, 2001, the Board of Directors  approved the terms of an Employment
      Agreement  for the  Company's  Chief  Executive  Officer.  The  Employment
      Agreement  is for a period of ten years  from its date of  execution.  The
      Employment Agreement provides for an annual salary, to be increased by 10%
      each year. In addition,  the Chief Executive  Officer is granted the right
      to acquire up to 1,000,000 shares of the Company's restricted Common Stock
      for each full year of his employment with the Company, commencing with the
      year beginning June 10, 1994. The  acquisition  price for such stock shall
      be the closing  price of the stock on June 9 (or the closest  business day
      thereto) of each such full year.  He has the right to exercise this option
      at any time up to seven  years  from the date his right to  acquire  stock
      vests.  The agreement  also provides for  compensation  arrangement in the
      case of temporary disability, death and permanent disability.

(H)   REPORT ON REPRICING OF OPTIONS/SARS

      None


                                       16
<PAGE>

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

(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.

      The following  table sets forth,  as of January 31, 2003, the ownership of
      common  stock by persons  known to the Company who own  beneficially  more
      than 5% of the outstanding shares of common stock:

      Name & Address of                        Amount & Nature of       Percent
        Beneficial Owner                       Beneficial Ownership     of Class
        ----------------                       --------------------     --------

      Edward C. Kelly                               2,528,000             3%
      650 Sentry Parkway, Suite One
      Blue Bell, PA  19422  (1)

      L. Eric Whetstone                             3,535,357             4%
      11 Waterfront Estates, Estates Drive
      Lancaster, PA  19601


      L. Eric & Ilona Whetstone &
      Charles Whetstone Jt Ten                      2,500,000             3%
      11 Waterfront Estates, Estates Drive
      Lancaster, PA  19601

      L. Eric & Ilona Whetstone Ten Com             2,422,727             3%
      11 Waterfront Estates, Estates Drive
      Lancaster, PA  19601

      L. Eric & Ilona Whetstone Jt Ten                734,392             --
      11 Waterfront Estates, Estates Drive
      Lancaster, PA  19601


      David Rights
      1095 Rydal Road
      Rydal, PA 19046                               9,200,000            11%

      Ahmad Zhobi
      U.A.E.                                        4,300,000             5%

      Zekra Zhobi                                   2,680,000             3%

(1)   Does not include an option for 3,500,000 shares of common stock at .50 per
      share expiring 4/5/04; an option for 200,000 shares of common stock at .50
      per share expiring  11/1/04;  options for 400,000 shares expiring  ratably
      between  June 10, 2003 and June 10, 2009 at exercise  prices  ranging from
      $.12 to $1.25 per


                                       17
<PAGE>

      share. Options for 8,000,000 shares expiring ratably between June 10, 2003
      and June 10, 2009 at exercise  prices ranging from $.12 per share to $1.25
      per share pursuant to Employment Contract.  SEE "EMPLOYMENT  CONTRACTS AND
      TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

(B)   SECURITY OWNERSHIP OF MANAGEMENT

      The  following  table sets forth,  as of April 30,  2003,  the  beneficial
      common stock ownership of all directors,  executive  officers,  and of all
      directors and officers as group:

        Name & Address of                   Amount & Nature of         Percent
        Beneficial Owner                    Beneficial Ownership       of Class
        ----------------                    --------------------       --------

      Edward C. Kelly                            2,528,000                3%
      650 Sentry Parkway, Suite One
      Blue Bell, PA  19422  (1)

      Leonard J. Klarich                           180,000                0
      839 Claybrook Court
      Knoxville, TN  37923  (2)

      Jurgen A. Wolf                                50,000                0
      #103 15325 17 Ave
      Surrey, B.C.
      Canada V4A1T8  (3)



      Kurt R. Ziemer                               850,000                1%
      599 Valley View Drive
      New Holland, PA  17557  (4)

      All Officers and Directors                 3,608,000                5%
      as a group  (4 persons)

      * less than 1%

(1)   Does not include an option for 3,500,000 shares of common stock at .50 per
      share expiring 4/5/04; an option for 200,000 shares of common stock at .50
      per share expiring  11/1/04;  options for 400,000 shares expiring  ratably
      between  June 10, 2003 and June 10, 2009 at exercise  prices  ranging from
      $.12 to $1.25 per share.  Options for 8,000,000  shares  expiring  ratably
      between  June 10, 2003 and June 10, 2009 at exercise  prices  ranging from
      $.12 per share to $1.25 per share  pursuant to  Employment  Contract.  SEE
      "EMPLOYMENT  CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
      ARRANGEMENTS

      (2) Does not  include:  (i) options for 350,000  shares  expiring  ratably
      between  June 10, 2003 and June 10, 2009 at exercise  prices  ranging from
      $.12 to $1.25 per share (ii) option for 200,000  shares of common stock at
      .50 per share expiring 11/1/04.


                                       18
<PAGE>

(3)   Does not include: (i) options for 350,000 shares expiring ratably between
      June 10, 2003 and June 10, 2009 at exercise prices ranging from $.12 to
      $1.25 per share (ii) option for 200,000 shares of common stock at .50 per
      share expiring 11/1/04.

(4)   Does not include: (i) options for 300,000 shares expiring ratably between
      June 10, 2003 and June 10, 2009 at exercise prices ranging from $.12 to
      $1.25 per share (ii) option for 200,000 shares of common stock at .50 per
      share expiring 11/1/04. Mr. Ziemer's option has been prorated to reflect
      the date he was appointed to the Board of Directors on October 4, 1996.

(C)   CHANGES IN CONTROL.

      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.

SUBSEQUENT EVENTS

      At April 28, 2003 the Company  settled  the  $750,000  balance of the note
      payable to California  Food and Vending,  Inc.  ("CFV") and acquired clear
      title  to the  royalty  rights  that had  been  previously  held by CFV as
      discussed in Note 8. CFV accepted a discounted  amount of $696,602 as full
      payment of the $750,000 principal balance and accrued interest of $16,602.
      The note was due in installments through January 2004.

      The  Company  acquired  the  funds  to  finance  this  settlement  from  a
      stockholder.  The terms of this  funding  include  future  payments to the
      stockholder of $0.20 per pound of potato product sold by the Company for a
      term consisting of the greater of 10 years, commencing when 250 french fry
      vending machines are placed into commercial use; or payment in full of the
      $696,602  amount   financed  plus  accrued   interest  at  9%  per  annum,
      compounded.


REPORTS ON FORM 8-K.

      Forms 8-K dated May 19,  1999,  June 17, 1999,  July 20, 1999,  August 11,
1999,  October 14, 1999  November  20, 1999,  March 20, 2001,  July 11, 2002 and
September 9, 2002 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.


                                       19
<PAGE>

TASTY FRIES, INC.

Date as of filing                              By: /s/ Edward C. Kelly
                                                   -----------------------------
                                                   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.

/s/ Edward C. Kelly                                               April 30, 2002
------------------------------------
Edward C. Kelly, Chairman, CEO
President, Treasurer & Director

/s/ Leonard J. Klarich                                            April 30, 2002
------------------------------------
Leonard J. Klarich, Vice President,
Secretary & Director

/s/ Jurgen A. Wolf                                                April 30, 2002
------------------------------------
Jurgen A. Wolf, Director

/s/ Kurt N. Ziemer                                                April 30, 2002
------------------------------------
Kurt N. Ziemer, Director


                                       20
<PAGE>


                                  CERTIFICATION
                                  -------------

I, Edward C. Kelly, certify that:

1. I have reviewed this annual report on Form 10-KSB of Tasty Fries, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. I am responsible for  establishing  and maintaining  disclosure  controls and
procedures  (as  defined  in  Exchange  Act Rules  13a-14  and  15d-14)  for the
registrant and have:

      a)  designed  such  disclosure  controls  and  procedures  to ensure  that
      material   information   relating  to  the   registrant,   including   its
      consolidated  subsidiaries,  is made  known to us by others  within  those
      entities,  particularly  during the period in which this annual  report is
      being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      annual report (the "Evaluation Date"); and

      c) presented in this annual report our conclusions about the effectiveness
      of the disclosure  controls and  procedures  based on our evaluation as of
      the Evaluation Date;

5. I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):

      a) all  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

      b) any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and

6. I have indicated in this annual report whether there were significant changes
in  internal  controls  or in other  factors  that  could  significantly  affect
internal  controls  subsequent  to the  date  of  our  most  recent  evaluation,
including any  corrective  actions with regard to significant  deficiencies  and
material weaknesses.

May 16, 2003

Edward C. Kelly
CEO/CFO

<PAGE>



To the Board of Directors and Stockholders
Tasty Fries, Inc.
Blue Bell, Pennsylvania

We have audited the accompanying balance sheet of Tasty Fries, Inc. (A
Development Stage Company) as of January 31, 2003, and the related statements of
operations, changes in stockholders' deficiency, and cash flows for the year
then ended and for the period October 18, 1985 (inception) to January 31, 2003.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit. The financial statements for Tasty Fries, Inc. as of January 31,
2002, were audited by other auditors whose report dated April 12, 2002,
expressed an unqualified opinion on those financial statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the balance sheet as of January 31, 2003 and the related
statements of operations, changes in stockholders' deficiency, and cash flows
for the year then ended and, based on our audit and the reports of other
auditors, the statements of operations, changes in stockholders' deficiency, and
cash flows for the period from October 18, 1985 (inception) to January 31, 2003,
present fairly, in all material respects, the financial position of Tasty Fries,
Inc. (A Development Stage Company) as of January 31, 2003, and the results of
its operations and its cash flows for the periods then ended, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has not generated any revenues, has incurred
net losses since its inception, and has a working capital and stockholders'
deficiency as of January 31, 2003. These factors raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

                                                     Baratz & Associates, P.A.
Marlton, New Jersey
April 28, 2003


<PAGE>

                                TASTY FRIES, INC.
                          (A Development Stage Company)
                                 BALANCE SHEETS

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

                                                    January 31      January 31,
        ASSETS                                         2003            2002
                                                   ------------    ------------
Current assets
  Cash                                             $     56,609    $    120,566
  Prepaid expenses                                        9,682          24,598
                                                   ------------    ------------

    Total current assets                                 66,291         145,164

Furniture and office equipment, net
  of accumulated depreciation of
  $77,539, January 31, 2003
  and $74,062, January 31, 2002                           2,585           3,633

Other assets
  Royalty rights                                      1,500,000       1,500,000
                                                   ------------    ------------

Total Assets                                       $  1,568,876    $  1,648,797
                                                   ============    ============

        LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities
  Accounts payable and accrued expenses            $    953,480    $    739,783
  Current maturities of long-term debt                  750,000         600,000
  Stockholder loans payable                              60,349         312,566
                                                   ------------    ------------

  Total current liabilities                           1,763,829       1,652,349
                                                   ------------    ------------
Long term liabilities
  Long-term debt, net of current maturities                  --         750,000
  Unearned revenue                                      320,000         320,000
                                                   ------------    ------------

  Total long term liabilities                           320,000       1,070,000
                                                   ------------    ------------

Total Liabilities                                     2,083,829       2,722,349
                                                   ------------    ------------

Commitments and contingencies

Stockholders' deficiency
  Common stock, $.001 par value
    Authorized 100,000,000 shares;
    issued and outstanding 80,460,991
    shares, January 31, 2003; issued
    and outstanding 59,171,758 shares,
    January 31, 2002                                     80,461          59,171
  Additional paid-in capital                         32,784,028      28,261,075
  Deficit accumulated in the
    development stage                               (33,279,442)    (29,331,798)
                                                   ------------    ------------
                                                       (414,953)     (1,011,552)
  Less: Subscription receivable                        (100,000)        (62,000)
                                                   ------------    ------------

  Total stockholders' deficiency                       (514,953)     (1,073,552)
                                                   ------------    ------------

Total Liabilities and
  Stockholders' Deficiency                         $  1,568,876    $  1,648,797
                                                   ============    ============

                        See notes to financial statements


                                       3
<PAGE>

                                TASTY FRIES, INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
                  FOR THE YEARS ENDED JANUARY 31, 2003 AND 2002
              AND OCTOBER 18, 1985 (INCEPTION) TO JANUARY 31, 2003

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

<TABLE>
<CAPTION>
                                                     Cumulative        Years Ended January 31,
                                                       Since        ----------------------------
                                                     Inception          2003            2002
                                                    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>
Revenues                                            $         --    $         --    $         --
                                                    ------------    ------------    ------------

Costs and expenses
        Research, machine and product development      6,114,912         586,611       1,759,899
        Selling, general and administrative           21,330,893       1,758,742       1,529,532
                                                    ------------    ------------    ------------

        Total costs and expenses                      27,445,805       2,345,353       3,289,431
                                                    ------------    ------------    ------------

Loss before other income (expense)                   (27,445,805)     (2,345,353)     (3,289,431)
                                                    ------------    ------------    ------------

Other income (expense)
        Interest income                                   21,274              --              --
        Forfeited distributor deposits                    15,000              --              --
        Stock purchase discount                       (3,723,854)     (1,446,302)       (503,500)
        Interest expense                              (2,146,057)       (155,989)        (40,017)
                                                    ------------    ------------    ------------

        Total other income (expense)                  (5,833,637)     (1,602,291)       (543,517)
                                                    ------------    ------------    ------------

Net loss                                            $(33,279,442)   $ (3,947,644)   $ (3,832,948)
                                                    ============    ============    ============

Net loss per share of common stock                                        ($0.06)         ($0.08)
                                                                    ============    ============

Weighted average shares outstanding                                   68,533,451      46,957,387
                                                                    ============    ============
</TABLE>

                       See notes to financial statements

                                        4
<PAGE>

                                TASTY FRIES, INC.
                          (A Development Stage Company)
                STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                OCTOBER 18, 1985 (INCEPTION) TO JANUARY 31, 2003

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

<TABLE>
<CAPTION>
                                                                        Deficit
                                                                       Accumulated
                                                        Additional        in the          Total
                                            Common        Paid-in      Development    Stockholders'
                                            Stock         Capital         Stage       (Deficiency)
                                         -----------    -----------    -----------   --------------
<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)

Issued 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
      (carried forward)                      322,270      2,075,490     (3,779,482)    (1,381,722)

(continued)
</TABLE>

                        See notes to financial statements


                                        5
<PAGE>

                                TASTY FRIES, INC.
                          (A Development Stage Company)
                STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                OCTOBER 18, 1985 (INCEPTION) TO JANUARY 31, 2003

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

(continued)

<TABLE>
<CAPTION>
                                                                        Deficit
                                                                       Accumulated
                                                        Additional        in the          Total
                                            Common        Paid-in      Development    Stockholders'
                                            Stock         Capital         Stage       (Deficiency)
                                         -----------    -----------    -----------   --------------
<S>                                      <C>            <C>            <C>            <C>
Balance, January 31, 1995
      (brought forward)                      322,270      2,075,490     (3,779,482)    (1,381,722)

Issued 21,815,000 shares                     218,150      1,054,350             --      1,272,500

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                         (620,885)       620,885             --             --

Net loss for the year ended
      January 31, 1996                            --             --     (1,384,488)    (1,384,488)
                                         -----------    -----------    -----------    -----------

Balance, January 31, 1996                      3,120      4,266,355     (5,163,970)      (894,495)

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
      (carried forward)                        4,700      6,097,275     (7,336,230)    (1,234,255)

(continued)
</TABLE>

                        See notes to financial statements


                                        6
<PAGE>

                                TASTY FRIES, INC.
                          (A Development Stage Company)
                STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                OCTOBER 18, 1985 (INCEPTION) TO JANUARY 31, 2003

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

(continued)

<TABLE>
<CAPTION>
                                                                        Deficit
                                                                       Accumulated
                                                        Additional        in the          Total
                                            Common        Paid-in      Development    Stockholders'
                                            Stock         Capital         Stage       (Deficiency)
                                         -----------    -----------    -----------   --------------
<S>                                      <C>            <C>            <C>            <C>
Balance, January 31, 1997
      (brought forward)                        4,700      6,097,275     (7,336,230)    (1,234,255)

Issued 1,500,000 shares for
      non-recurring compensation               1,500      1,029,750             --      1,031,250

Issued 167,083 shares                            167         80,650             --         80,817

Issued 955,000 shares for services               955      1,317,545             --      1,318,500

Issued 43,750 shares for
      litigation settlement                       44         54,644             --         54,688

Issued 700,000 shares for
      convertible notes                          700        566,979             --        567,679

Issued 452,772 shares for
      repayment of notes payable                 452        523,587             --        524,039

Issued 120,000 shares for
      repayment of notes payable,
      officer/director                           120        175,830             --        175,950

Net loss for the year ended
      January 31, 1998                            --             --     (5,074,155)    (5,074,155)
                                         -----------    -----------    -----------    -----------

Balance, January 31, 1998                      8,638      9,846,260    (12,410,385)    (2,555,487)

Issued 2,251,307 shares                        2,252      1,299,526             --      1,301,778

Issued 5,586,150 shares for
      convertible notes                        5,586      3,129,504             --      3,135,090

Issued 42,704 shares for
      interest on convertible notes               43         26,385             --         26,428

Issued 1,226,815 shares for services           1,227        490,652             --        491,879

Issued 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
      (carried forward)                       17,996     14,917,077    (15,922,509)      (987,436)

(continued)
</TABLE>

                        See notes to financial statements


                                        7
<PAGE>

                                TASTY FRIES, INC.
                          (A Development Stage Company)
                STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                OCTOBER 18, 1985 (INCEPTION) TO JANUARY 31, 2003

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

(continued)
<TABLE>
<CAPTION>
                                                                        Deficit
                                                                       Accumulated
                                                        Additional        in the          Total
                                            Common        Paid-in      Development    Stockholders'
                                            Stock         Capital         Stage       (Deficiency)
                                         -----------    -----------    -----------   --------------
<S>                                      <C>            <C>            <C>            <C>
Balance, January 31, 1999
      (as restated) (brought forward)         17,996     14,917,077    (15,922,509)      (987,436)

Issued 3,789,000 shares                        3,789      1,624,291             --      1,628,080

Issued 250,000 shares for
      litigation settlement                      250        124,750             --        125,000

Issued 6,184,405 shares for services           6,184      2,799,214             --      2,805,398

Issued 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     19,714,832    (21,706,166)    (1,962,615)

Issued 3,660,000 shares                        3,660      1,228,140             --      1,231,800

Issued 3,155,000 shares for services           3,155      1,312,312             --      1,315,467

Issued 4,000,000 shares for
      repayment of note payable                4,000      1,596,000             --      1,600,000

Issued 1,200,000 shares for
      payment of accrued expenses              1,200        548,800             --        550,000

Net loss for the year ended
      January 31, 2001                            --             --     (3,792,684)    (3,792,684)
                                         -----------    -----------    -----------    -----------

Balance, January 31, 2001                     40,734     24,400,084    (25,498,850)    (1,058,032)

Issued 6,200,000 shares                        6,200        835,800             --        842,000

Issued 747,500 shares for litigation
      settlement                                 747        113,928             --        114,675

Issued 10,010,247 shares for services         10,010      2,542,743             --      2,552,753

Issued 1,480,000 shares for
      repayment of note payable                1,480        368,520             --        370,000

Net loss for the year ended
      January 31, 2002                            --             --     (3,832,948)    (3,832,948)
                                         -----------    -----------    -----------    -----------

Balance, January 31, 2002
      (carried forward)                       59,171     28,261,075    (29,331,798)    (1,011,552)

(continued)
</TABLE>

                        See notes to financial statements


                                        8
<PAGE>

                                TASTY FRIES, INC.
                          (A Development Stage Company)
                STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                OCTOBER 18, 1985 (INCEPTION) TO JANUARY 31, 2003

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

(continued)
<TABLE>
<CAPTION>
                                                                        Deficit
                                                                       Accumulated
                                                        Additional        in the          Total
                                            Common        Paid-in      Development    Stockholders'
                                            Stock         Capital         Stage       (Deficiency)
                                         -----------    -----------    -----------   --------------
<S>                                      <C>            <C>            <C>            <C>
Balance, January 31, 2002
      (brought forward)                       59,171     28,261,075    (29,331,798)    (1,011,552)

Issued 14,650,003 shares
      in private placements                   14,650      3,032,035             --      3,046,685

Issued 3,694,516 shares for
      services                                 3,695        820,339             --        824,034

Issued 1,750,000 shares for
      repayment of notes payable               1,750        244,066             --        245,816

Issued 1,194,720 shares for
      compensation                             1,195        216,513             --        217,708

Proceeds from issuance of
      stock warrants                              --        210,000             --        210,000

Net loss for the year ended
      January 31, 2003                            --             --     (3,947,644)    (3,947,644)
                                         -----------    -----------    -----------    -----------

Balance, January 31, 2003                $    80,461    $32,784,028    $(33,279,442)  $  (414,953)
                                         ===========    ===========    ===========    ===========
</TABLE>

                        See notes to financial statements


                                        9

<PAGE>

                                TASTY FRIES, INC.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
              FOR THE TWELVE MONTHS ENDED JANUARY 31, 2003 AND 2002
              AND OCTOBER 18, 1985 (INCEPTION) TO JANUARY 31, 2002

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

<TABLE>
<CAPTION>
                                                                       Cumulative     Twelve Months Ended January 31
                                                                         Since        ------------------------------
                                                                       Inception          2003             2002
                                                                      ------------    ------------    --------------
<S>                                                                   <C>             <C>             <C>
Cash flows from operating activities                                  $(33,279,442)   $ (3,947,644)   $ (3,832,948)
  Net loss
  Adjustments to reconcile net loss to net cash used in operating
       activities
            Depreciation and amortization                                  314,395           3,477           6,421
            Common stock issued for services                            10,945,208         741,373       2,049,254
            Common stock issued for litigation settlement                  764,364              --         114,675
            Stock purchase discount                                      3,723,854       1,446,302         503,500
            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        438,594              --          40,017
            (Increase) decrease in assets
                 Prepaid expenses                                           (9,682)         14,916         (24,598)
                 Other assets                                                   --              --              --
            Increase (decrease) in liabilities
                 Accounts payable and accrued expenses                   1,463,463         213,697         134,702
                 Unearned revenue                                          320,000              --              --
                                                                      ------------    ------------    ------------

  Net cash used in operating activities                                (13,940,050)     (1,527,879)     (1,008,977)
                                                                      ------------    ------------    ------------

Cash flows from investing activities
  Purchase of furniture and office equipment                               (80,124)         (2,429)             --
  Loan costs                                                              (236,856)             --              --
                                                                      ------------    ------------    ------------

  Net cash used in investing activities                                   (316,980)         (2,429)             --
                                                                      ------------    ------------    ------------

Cash flows from financing activities
  Proceeds from convertible notes payable                                2,600,000              --              --
  Issuance of common stock                                              10,867,174       1,907,001         780,000
  Issuance of stock warrants                                               210,000         210,000
  Costs of raising capital                                                (318,700)             --              --
  Note payable, net                                                        875,165        (650,651)        262,566
  Officer/director note                                                     80,000                              --
                                                                      ------------    ------------    ------------

  Net cash provided by financing activities                             14,313,639       1,466,350       1,042,566
                                                                      ------------    ------------    ------------

(Decrease) increase in cash (carried forward)                               56,609         (63,958)         33,589

(continued)
</TABLE>

                        See notes to financial statements


                                       10
<PAGE>

                                TASTY FRIES, INC.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
              FOR THE TWELVE MONTHS ENDED JANUARY 31, 2003 AND 2002
              AND OCTOBER 18, 1985 (INCEPTION) TO JANUARY 31, 2002

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

(continued)

<TABLE>
<CAPTION>
                                                                       Cumulative     Twelve Months Ended January 31
                                                                         Since        ------------------------------
                                                                       Inception          2003             2002
                                                                      ------------    ------------    --------------
<S>                                                                   <C>             <C>             <C>
(Decrease) increase in cash (brought forward)                               56,608         (63,958)         33,589

Cash, beginning of period                                                       --         120,567          86,978
                                                                      ------------    ------------    ------------

Cash, end of period                                                   $     56,608    $     56,609    $    120,567
                                                                      ============    ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION

       Cash paid during the period for interest                       $    143,120    $     88,317    $         --
                                                                      ============    ============    ============

SUPPLEMENTAL DISCLOSURE OF NONCASH
   FINANCING ACTIVITIES

   Issuance of common stock for services                              $ 10,945,208    $    741,373    $  2,049,254
   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                      764,364              --         114,675
   Accrued interest on notes payable                                       438,594              --          40,017
   Issuance of common stock to pay accrued expenses                        550,000              --              --
   Issuance of common stock to pay note payable                          1,471,566         201,566         370,000
   Acquisition of royalty rights                                        (1,500,000)             --      (1,500,000)
   Note payable, royalty rights                                          1,500,000              --       1,500,000
   Issuance of common stock for subscription receivable                    162,000         100,000          62,000
</TABLE>

                        See notes to financial statements


                                       11


<PAGE>


                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

NOTE 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Nature of operations

            The  Company  is a  development  stage  company  since  it  has  not
            completed designing,  testing, and manufacturing its sole product, a
            vending machine that will cook and dispense  french fries.  Over the
            past  several  years the  Company  has field  tested the machine and
            upgraded certain  features to enhance its  performance.  The overall
            time  frame  to bring  the  product  to the  market  place  has been
            extended due to a lack of working capital. The costs associated with
            the production of the machines has been charged to research, machine
            and  product  development  costs.  From  the  corporation's  date of
            inception,  October  18,  1985,  to date it has  engaged  in various
            business  activities  that were  unprofitable.  The  Company  had no
            revenues  from the  sale of its  french  fry  vending  machine.  The
            ability  to  continue  as  a  going  concern  is  dependent  on  the
            continuation   of  financing  to  fund  the  expenses   relating  to
            successfully   manufacturing  and  marketing  the  vending  machine.
            Management is currently in negotiations with several funding sources
            to provide the working  capital  necessary to: (i) begin  commercial
            production of the machines,  and (ii) bring them to market, at which
            time the Company  believes that sufficient cash will be generated to
            support  its  operations.  Management  cannot  assure  the  ultimate
            success of the above plan.

            Use of estimates

            The  preparation  of financial  statements in  conformity  with U.S.
            generally accepted accounting principles requires management to make
            estimates and assumptions that affect the reported amounts of assets
            and liabilities and disclosure of contingent  assets and liabilities
            at the date of the financial statements, and the reported amounts of
            revenues and expenses  during the reporting  period.  Actual results
            could differ from those estimates.

            Stock Issuances

            Stock  issuances  are accounted for as increases to common stock and
            additional  paid-in  capital based upon the quoted  trading price of
            our  stock on the date of  issuance.  In  instances  where  stock is
            issued for either  cash or  services  at a price per share less than
            the quoted  trading  price on the date of issuance,  stock  purchase
            discount  expense is charged for the  difference  between the quoted
            trading price and the issuance  price.  Commissions  paid to brokers
            who assist in private placements are expensed as incurred.

            Research, machine and product development

            Research and development  costs consist of expenditures  incurred by
            the Company  during the course of planned  search and  investigation
            aimed  at the  discovery  of new  knowledge,  which  will be used to
            develop  and test a  vending  machine  and  potato  product  for the
            formation  of french  fries.  Research  and  development  costs also
            include costs for  significant  enhancements  or improvements to the
            machine  and/or  potato  product.  The  Company  expenses  all  such
            research and development costs as they are incurred.


                                      (1)
<PAGE>

                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

            Unearned revenue

            Unearned revenue represents amounts received for distribution rights
            of the vending  machines,  which the Company is still in the process
            of  developing  and testing.  The Company  records  these amounts as
            unearned revenue upon receipt. These deferrals will be recognized as
            income over the life of the machine upon  commercial  production  of
            machines or upon forfeiture by distributors as a result of breach of
            contract.  Since  commercial  production  of  the  machine  has  not
            commenced,  the  unearned  revenue is  classified  as a  non-current
            liability.

            Impairment of intangible assets

            In  accordance  with  Statement  of Financial  Accounting  Standards
            ("SFAS")  No.  142,  "Goodwill  and  Other  Intangible  Assets",  an
            intangible  asset,   such  as  acquired  royalty  rights,   with  an
            indefinite  useful life is not amortized.  Instead,  this intangible
            asset is tested  for  impairment  annually,  or more  frequently  if
            events of changes in circumstances  indicate that the asset might be
            impaired.  The  impairment  test  consists  of a  comparison  of the
            estimated  fair  vale of the  intangible  asset  with  its  carrying
            amount.  If the carrying  amount of an intangible  asset exceeds its
            fair value,  an  impairment  loss shall be  recognized  in an amount
            equal to the excess.

            Furniture and office equipment and depreciation

            Furniture and office  equipment are stated at cost.  Depreciation is
            determined using the straight-line  method over the estimated useful
            lives of the  equipment,  ranging  from 3 to 7  years.  Depreciation
            expense  for the years ended  January 31, 2003 and 2002  amounted to
            $3,477, $6,421, respectively.

            Income taxes

            Income  taxes  are  provided  for the tax  effects  of  transactions
            reported in the financial statements and consists of taxes currently
            due plus deferred taxes related primarily to differences between the
            bases of balance sheet items for financial and income tax reporting.
            The Company  determines  the  deferred  tax asset  generated  by net
            operating loss carryforwards.  All deferred tax assets are evaluated
            and a valuation allowance, if necessary, is established.

            Concentration of credit risk

            The Company  occasionally  maintains  deposits in banks in excess of
            federally  insured  limits.  The risk is managed by maintaining  all
            deposits in high quality financial institutions.


                                      (2)
<PAGE>

                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

            Loss per share

            In March, 1997, the Financial Accounting Standards Board issued SFAS
            No. 128, "Earnings Per Share". The statement requires the Company to
            disclose  both basic  earnings  per share and diluted  earnings  per
            share for annual and interim periods ending after December 15, 1997.
            Basic earnings per share is based on the weighted  average number of
            common shares outstanding, while diluted earnings per share is based
            on the  weighted  average  number of common  shares and common share
            equivalents  that would  arise  from the  exercise  of  options  and
            warrants  or  conversion  of  convertible  securities.  The  Company
            incurred losses from operations in 2003 and 2002;  therefore,  basic
            and diluted earnings per share have been computed in the same manner
            since the exercise of warrants and the conversion of the convertible
            notes payable would be antidilutive.

            Recent accounting pronouncements

            There are no  recently  issued  accounting  pronouncements  that are
            expected to have a  significant  impact on the  Company's  financial
            statements.

NOTE 2      VENDING MACHINES

            Vending  machines  are  carried  at  the  lower  of  market  or  net
            realizable  value.  Net  realizable  value is defined  as  estimated
            selling price of the machines less  predictable  costs of completion
            and disposal.  Since the predictable cost of completion  exceeds the
            estimated selling price the vending machines are stated at zero.

NOTE 3      SUBSCRIPTIONS RECEIVABLE

            As of January  31,  2003 and 2002,  the  Company  had  demand  notes
            receivable  resulting  from the sale of common  stock.  These  notes
            total  $100,000  and  $62,000,  respectively  and  are  non-interest
            bearing.  The notes have been presented in the accompanying  balance
            sheet as subscriptions receivable reducing stockholders' equity.



NOTE 4      UNEARNED REVENUE

            During the year ended January 31, 2000,  the Company  issued 500,000
            shares of common  stock to  reacquire  an  existing  distributorship
            valued at $41,000.  The Company also received  $100,000 as a deposit
            on the  machines  in  production.  As of January  31, 2003 and 2002,
            unearned  amounts related to  distribution  rights were $210,000 and
            deposits on machines totaled $110,000.

NOTE 5      ROYALTY RIGHTS

            At January 31,  2002,  the  Company  acquired  for $1.5  million the
            perpetual royalty rights to the french fry vending machine ($450 per
            machine) and potato product ($0.25 per pound) from California Food &
            Vending,  Inc. as  discussed in Note 8. These rights were subject to
            the repayment of the $1.5 million note issued in connection with the
            transaction (see note 6).


                                      (3)
<PAGE>

                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

            The Company  entered  into an  Agreement  with David J.  Rights,  in
            consideration  for him  paying  off  the  balance  of the  Company's
            obligation  to California  Food and Vending,  Inc.  regarding  their
            Potato  Royalty  Right,  wherein the Company  will pay Mr.  Rights a
            royalty of Twenty Cents ($0.20) per pound of potato product sold for
            a term consisting of the greater of:

            1.    ten years, commencing when two hundred fifty (250) Tasty Fries
                  vending machines are placed into commercial use; or

            2.    payment in full of the  $696,602.38  plus accrued  interest on
                  the unpaid balance, calculated at nine (9%) percent per annum,
                  compounded,  commencing April 24, 2003. (see Note 8 Litigation
                  and Note17 Subsequent Events).

NOTE 6      NOTES PAYABLE

            On April 24, 2003, the Company and California  Food & Vending,  Inc.
            ("CFV") entered into a letter agreement which modified the Agreement
            and reduced the remaining  $750,000 owed,  plus accrued  interest of
            $16,  602.38,  for a one time  discounted  payment of $696,602.38 on
            April 28,  2003.  The  Company  made the  payment,  and all of CFV's
            remaining  rights under the Modified  Judgement and  Agreement  were
            extinguished  and  satisfied  in full.  (see Note 8  Litigation  and
            Note17 Subsequent Events).

            As of January 31, 2003, the following loan was outstanding:

                  Officer, interest at 7.5%, without
                     established repayment terms                      $60,349
                                                                      =======

NOTE 7      COMMITMENTS

            During  the years  ended  January  31,  2003 and 2002,  the  Company
            incurred  $51,745 and $29,096,  respectively,  in rent expense.  The
            Company's  current  lease  commitment  for rental of office space is
            $5,582.92  per month until October 31, 2003.  The Company's  current
            lease  commitment  for  warehouse  space  is $450  per  month  until
            November 23, 2003.

            The Company has  committed  to engage a  consultant  through May 31,
            2006 at a $10,000  monthly fee payable in either cash or Tasty Fries
            stock along with additional equity compensation of 350,000 shares of
            stock over the term of the agreement.

            The Company has committed to pay Premier Design, Ltd. A $250 royalty
            per  french  fry  vending  machine   manufactured  and  placed  into
            commercial use.


                                      (4)
<PAGE>

                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

NOTE 8      LITIGATION

SilverLeaf, LLC v. Tasty Fries, Inc.: United States District Court for the
District of New Jersey

On February 1, 2002 the  Company  entered  into an  exclusive  Master  Sales and
Marketing  Agreement with SilverLeaf LLC. The Agreement  granted  SilverLeaf the
exclusive  distribution  rights for the sale and  marketing  of the Tasty  Fries
vending  machine  excluding  certain  existing  territories.  The  Agreement was
subsequently   cancelled  by  the   Company.   In  May  2002,   SilverLeaf   LLC
("SilverLeaf")  sued  the  Company  in New  Jersey  State  Court  requesting  an
injunction  preventing the  termination of the February 1, 2002 Master Sales and
Marketing Agreement (" Agreement").  Without the Company's knowledge,  the State
Court  Judge  entered an "Order to Show Cause With  Temporary  Restraints"  (the
"OSC"),  which  purported to prevent the Company from  terminating the Agreement
until a hearing on SilverLeaf's motion for Preliminary  Injunction.  The Company
removed the case to the United  States  District  Court for the  District of New
Jersey,  and the case was assigned to the Chief  Judge,  the  Honorable  John W.
Bissell.  Judge Bissell denied SilverLeaf's" Motion for a Preliminary Injunction
and  dissolved  the OSC.  Judge  Bissell  found  that  SilverLeaf  would  not be
irreparably  injured if the Company  terminated the Agreement.  Judge  Bissell's
ruling allowed the Company's  termination of the Agreement to stand.  SilverLeaf
thereafter filed an emergency appeal to the United States Third Circuit District
Court of Appeal (the "Third  Circuit").  On October 20, 2002,  the Third Circuit
unanimously affirmed Judge Bissell's Order denying SilverLeaf's  application for
a preliminary  injunction,  finding no abuse of  discretion  in Judge  Bissell's
conclusion that  "SilverLeaf  failed to demonstrate a reasonable  probability of
success on the  merits."  The case was  remanded  to Judge  Bissell.  SilverLeaf
amended  its  complaint  to  allege  causes of action  for  breach of  contract,
infringement of exclusive license, fraud, tortious interference with prospective
business  advantage  and  breach  of  implied  covenant  of good  faith and fair
dealing. The Company moved to dismiss the Complaint.  On December 5, 2002, Judge
Bissell dismissed all claims against the Company, except for SilverLeaf's claims
for breach of contract  and  tortious  interference  with  prospective  business
advantage.  The Company has initiated a Motion for Summary Judgement as to these
two remaining claims, which the Company expects to be heard in the next sixty to
ninety  days.  If  successful,  the  granting  of  the  Summary  Judgement  will
completely dispose of the SilverLeaf  litigation.  The Company believes that the
SilverLeaf action has no merits and will continue to vigorously defend the case.

Tasty Fries, Inc. v. Syndi Romanoff, SilverLeaf, LLC, Silver-Shadow Enterprises,
LLC and Leon Pirak : United States District Court for the District of New Jersey

On October  18,  2002,  the  Company  filed a lawsuit  against  Syndi  Romanoff,
SilverLeaf, LLC, Silver-Shadow Enterprises, LLC ("Silver Shadow") and Leon Pirak
("Pirak")  for  declaratory  relief on whether the  Company can legally  issue a
restricted  stock  certificate for 3,000,000  shares of the Company's stock (the
"Restricted  Stock") and a Warrant for 2,225,000  shares of the Company's  stock
exercisable  at  $1.00/share  (the  "Warrant")  in the name of Silver  Shadow or
Pirak.  Pirak filed a Motion for Summary  Judgement,  which is  scheduled  to be
heard on May 15, 2003,  requesting  the Court to enter an order  compelling  the
Company to issue the  Restricted  Stock and Warrant in his name and awarding him
attorneys'  fees.  The Company  has  opposed the Motion on the grounds  that the
Company does not believe Pirak has demonstrated  that he is entitled,  under the
securities  laws, to the  ownership of the  Restricted  Stock and Warrants.  The
Company  intends to proceed  with the case  until it can  determine  if Pirak is
legally entitled to the Restricted Stock and Warrants.


                                      (5)
<PAGE>

                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

California  Food and Vending,  Inc. v. Tasty Fries,  Inc. et al.:  United States
District Court for the Central District of California

As of January 21,  2002,  the  Company and  California  Food and  Vending,  Inc.
("CFV") entered into an Agreement to Settle  Liability Under Modified  Judgement
("Agreement")  under which CFV sold to Tasty Fries for One Million  Five Hundred
Thousand  Dollars  ($1,500,000),  payable on an  installment  basis,  all of the
Machine and Potato  Royalty  Rights  awarded to it under the Modified  Judgement
Pursuant to Stipulation For Entry Of Modified Judgement ("Modified Judgement"*).
The  $1,500,000  with interest at Eight  Percent (8%) per annum,  was payable in
eight installments over a twenty four (24) month period. The Company timely made
the  first  five  principal  payments,  for a total of Seven  Hundred  and Fifty
Thousand Dollars ($750,000), plus accrued interest. The payment of the principal
amount of $750,000,  plus accrued interest resulted in the extinguishment of all
of CFV's Machine  Royalty  Rights,  and on February 13, 2003, CFV filed with the
federal court a partial satisfaction of judgement.  The remaining $750,000,  was
due in three  equal  installments  of Two  Hundred  and Fifty  Thousand  Dollars
($250,000),  plus accrued interest,  from April 21, 2003 to January 21, 2004. On
April 24,  2003,  the  Company  and CFV entered  into a letter  agreement  which
modified the  Agreement and reduced the remaining  $750,000  owed,  plus accrued
interest of $16,  602.38,  for a one time  discounted  payment of $696,602.38 on
April 28, 2003. The Company made the payment,  and all of CFV's remaining rights
under the Modified  Judgement and Agreement were  extinguished  and satisfied in
full. On May 2, 2003 CFV filed with the federal court an Acknowledgement of Full
Satisfaction of Judgement.

*The Modified  Judgement  provided,  interalia,  (1) that the Company pay to CFV
royalties on the  manufacture,  sale, use and distribution of french fry vending
machines (the "Machine Royalty  Rights"),  and (2) the Company pay to CFV a flat
Twenty Five Cents ($0.25) per pound of potato product,  sold,  commercially used
or distributed,  in connection with Tasty Fries french fry vending machines,  in
perpetuity (the "Potato Product Royalty Rights").  The settlement of the debt at
April 28, 2003 has fully  extinguished the royalty rights provided to CFV by the
Modified Judgement.

                                      (6)
<PAGE>
                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

NOTE 9      STOCK OPTION PLAN

            Transactions in the Plan are as follows:

                                             Shares                 Avg Exercise
                                            Granted       Exercise     Price
                                            & Vested        Range     per share

     Balance, January 31, 2002             13,030,000    $0.10-$1.25    $0.51

     Fiscal 2003 Activity:

     Options granted                        2,580,000    $0.17-$0.50    $0.32
     Options expired                       (1,200,000)       $0.12      $0.12
     Options exercised                          --
                                           ----------


     Balance, January 31, 2003             14,410,000    $0.10-$1.25    $0.51
                                           ==========



            Stock Options expire at various dates through June 2009.

            The Company accounts for stock-based compensation in accordance with
            Statement of Financial  Accounting Standards No. 123, Accounting for
            Stock-Based  Compensation,  which  permits the use of the  intrinsic
            value  method  described  in  Accounting  Principles  Board  ("APB")
            Opinion  No.  25,  Accounting  for Stock  Issued to  Employees,  and
            requires the Company to disclose the proforma  effects of accounting
            for  stock-based   compensation  using  the  fair  value  method  as
            described in the optional  accounting  requirements of SFAS No. 123.
            As permitted  by SFAS No. 123, the Company will  continue to account
            for the  stock-based  compensation  under APB Opinion No. 25,  under
            which the Company has recognized no compensation expense.


                                      (7)
<PAGE>

                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

NOTE 9      STOCK OPTION PLAN

            Had  compensation  cost for the  Company's  stock  option  plan been
            determined  based on the fair value of the Company's common stock at
            the dates of awards using the Black-Scholes value method of SFAS No.
            123, the Company's net loss and net loss per common share would have
            been adjusted to the pro forma amounts as follows:

                                                      Year Ending January 31,
                                                       2003             2002
            Net Loss:
            As reported                           $(3,947,644)      $(3,832,948)
            Proforma                              $(4,170,034)       (3,878,948)

            Net loss per common share:
            As reported                                 (0.06)            (0.08)
            Proforma                                    (0.06)            (0.08)

            Significant  assumptions  used to  calculate  the fair  value of the
            awards are as follows:

                                                     Year Ending January 31,
                                                        2003            2003
            Risk free interest rates of return          5.00%           5.00%
            Expected option life                     84 months        84 months
            Volatility                                   50%             50%
            Expected dividends                           --              --

NOTE 10     PREFERRED STOCK

            On July 29, 1991, the Board of Directors authorized 5,000,000 shares
            of preferred  stock at a par value of $.001 per share.  No shares of
            preferred stock have been issued.

NOTE 11     STOCK WARRANTS ISSUED AND OUTSTANDING

            As of January  31,  2003,  the Company  had  26,892,500  warrants to
            purchase common stock  outstanding.  The warrants are exercisable at
            share  prices  between  $.50 and $3.00 and expire at  various  dates
            through December, 2007.


                                      (8)
<PAGE>

                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

NOTE 12     INCOME TAXES

            The Company has  approximately  $20,270,000  in net  operating  loss
            carryforwards,  which can be used to offset future  taxable  income.
            The net operating loss carryforwards expire through 2022.

            The  components of the  Company's  deferred tax assets as of January
            31, 2002 and 2001 are as follows:

                                                        2003          2002
            Net operating loss carryforwards         $8,600,000    $7,400,000
            Valuation allowance                      (8,600,000)   (7,400,000)
            Deferred tax asset                               --            --
                                                     ----------    ----------

            The valuation  allowance increased by $1,200,000 and $600,000 in the
            years ended January 31, 2003 and 2002, respectively.

            There are no significant  differences  between taxes computed at the
            federal  statutory  rate and the  provision for income taxes for the
            years ended January 31, 2003 and 2002.

NOTE 13     DIRECTORS' FEES

            The Company  accrued  Board of  Directors'  fees for the years ended
            January 31, 1997 through January 31, 2003 in the amount of $350,000.
            Interest has not been accrued on the unpaid balance.

            The following shares of stock were issued to retire $350,000 of this
            liability:

            January 2001          500,000 shares at $ .40 each        $200,000
            November 2001         909,890 shares at $ .11 each         100,000
            November 2002         250,000 shares at $ .20 each          50,000
                                                                      --------

                                                                      $350,000
                                                                      ========


                                      (9)
<PAGE>

                                TASTY FRIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JANUARY 31, 2003 AND 2002

NOTE 14     EMPLOYMENT AGREEMENT

            In July,  2000,  the  Board of  Directors  approved  the terms of an
            Employment  Agreement for the Company's Chief Executive Officer. The
            Employment  Agreement  is for a period of ten years from its date of
            execution.  The Employment  Agreement provides for an annual salary,
            to be increased by 10% each year. In addition,  the Chief  Executive
            Officer is granted  the right to acquire up to  1,000,000  shares of
            the  Company's  restricted  Common  Stock  for each full year of his
            employment with the Company, commencing with the year beginning June
            10, 1994. The acquisition  price for such stock shall be the closing
            price of the stock on June 9 (or the closest  business  day thereto)
            of each such full year.  He has the right to exercise this option at
            any time up to seven years from the date his right to acquire  stock
            vests. The chief executive officer can earn additional  compensation
            in the form of  commissions at a rate of $250 per french fry vending
            machine  manufactured  and placed into commercial use. The agreement
            also provides for compensation  arrangement in the case of temporary
            disability, death and permanent disability.

NOTE 15     RELATED PARTY TRANSACTIONS

            At January 31, 2003, the Company holds a $60,349 demand note payable
            to the chief executive officer as discussed in Note 6.

            The company incurred  commission  expense to individuals  related to
            the chief executive  officer in the aggregate amount of $137,000 for
            the year ended January 31, 2003.

NOTE 16     ADVERTISING EXPENSE

            The Company conducts nondirect  response  advertising and utilizes a
            website to market its product. These costs are expensed as incurred.
            Advertising costs for the years ended January 31, 2003 and 2002 were
            $58,223 and $105,717, respectively.

NOTE 17     SUBSEQUENT EVENTS

            At April 28, 2003 the Company  settled the  $750,000  balance of the
            note  payable to  California  Food and  Vending,  Inc.  ("CFV")  and
            acquired the royalty rights that had been  previously held by CFV as
            discussed in Note 8. CFV accepted a discounted amount of $696,602 as
            full payment of the $750,000  principal balance and accrued interest
            of $16,602. The note was due in installments through January 2004.

            The Company  acquired  the funds to finance this  settlement  from a
            stockholder.  The terms of this funding  include future  payments to
            the  stockholder  of $0.20 per pound of potato  product  sold by the
            Company for a term consisting of the greater of 10 years, commencing
            when 250 french fry vending machines are placed into commercial use;
            or payment in full of the  $696,602  amount  financed  plus  accrued
            interest at 9% per annum, compounded.

                                      (10)