U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 December 6, 2001 ------------------------------------------------ Date of Report (date of earliest event reported) Adpads Incorporated ---------------------------------------------------- Exact Name of Registrant as Specified in its Charter Colorado 0-28373 84-1306598 --------------------------- --------------- ---------------------- State or Other Jurisdiction Commission File IRS Employer Identifi- of Incorporation Number cation Number 108 Fortunato Place, Neptune, New Jersey 07753 ---------------------------------------------------------- Address of Principal Executive Officer, Including Zip Code (732) 918-8004 -------------------------------------------------- Registrant's Telephone Number, Including Area Code 1000 Highway 34, Matawan, New Jersey 07747 ----------------------------------------------------------- Former Name or Former Address, if Changed Since Last Report ITEM 1. CHANGES IN CONTROL OF REGISTRANT. On December 6, 2001, Adpads Incorporated (the "Company") completed the acquisition of 100% of the outstanding common stock of Blue Flying Fish, Inc., a Delaware corporation ("BFFI"), in exchange for shares of the Company's Common Stock and Series A Convertible Preferred Stock. The Company issued a total of 18,800,000 shares of Common Stock and 4,783,333 shares of its Series A Convertible Preferred Stock to the shareholders of BFFI at the closing. The stock issuances were made pursuant to a Share Exchange Agreement ("Agreement") between the Company and BFFI. The terms of the Agreement were the result of negotiations between the managements of the Company and BFFI. However, the Board of Directors did not obtain any independent "fairness" opinion or other evaluation regarding the terms of the Agreement, due to the cost of obtaining such opinion or evaluation. The Agreement also provides for the issuance of a finder's fee in the amount of 10,000 shares of the Series A Convertible Preferred Stock. The foregoing summary of the Agreement is qualified by reference to the complete text of the Agreement, together with the exhibits thereto, which is filed as Exhibit 10 hereto, and is incorporated herein by this reference. The Series A Convertible Preferred Stock (the "Preferred Stock") is convertible into shares of the Company's Common Stock at the rate of one share of Preferred Stock for 120 shares of Common Stock. The Company has less than 700,000 shares of authorized and unissued Common Stock, and therefore, the Preferred Stock cannot be converted unless and until the number of authorized shares of Common Stock is increased significantly or unless there is a significant reverse split, both of which actions require shareholder approval. The Company intends to seek shareholder approval of a one for 40 reverse stock split as soon as the Company can prepare proxy materials and have them reviewed by the Securities and Exchange Commission. The Company estimates that the shareholder meeting will be held in January 2002. If and when the shareholders approve the one for forty reverse stock split, the holders of the Preferred Stock will be able to convert their shares of Preferred Stock into Common Stock on a three shares of Common Stock for every one share of Preferred Stock basis. In compliance with the conditions to closing the transaction with BFFI, the Company converted $220,000 of its outstanding debt into 4,400,000 restricted shares of the Company's Common Stock at a price of $0.05 per share. In compliance with the conditions to closing the transaction with BFFI, David Brownstein delivered at closing an irrevocable proxy to William Callari for 6,300,000 shares of the Company's Common Stock. As a result of the transaction with BFFI, the issuance of the 18,800,000 shares of common stock and 4,783,333 shares of Series A Convertible Preferred Stock to the BFFI shareholders, following are those persons known by the Company to own 5% or more of the Company's Common Stock: 2 Percent of Outstanding Shares of Name and Address Number of Votes Common Stock ---------------- --------------- ------------ Mark Spargo 122,648,255 (1) 73.0% 22 Parkside Way Millstone Twp., NJ 08691 William Callari 138,146,979 (2) 78.1% 108 Fortunato Place Neptune, NJ 07753 David Brownstein 14,142,000 28.7% 1000 Highway 34 Matawan, NJ 07747 Erica Ventley 40,882,871 (3) 46.0% 410 Park Avenue, 17th Floor New York, NY 10022 Gerald Goodman 3,066,161 (4) 5.9% Two Industrial Way West Eatontown, NJ 07724 _____________________ (1) Includes 3,889,655 shares of Common Stock and 118,758,600 shares of Common Stock underlying 989,655 shares of Series A Convertible Preferred Stock. (2) Includes 3,760,000 shares of Common Stock held directly by Mr. Callari; 421,379 shares of Common Stock held by North Star Resources, Inc., which is controlled by Mr. Callari; 114,800,040 shares of Common Stock underlying 956,667 shares of Series A Convertible Preferred Stock held by Mr. Callari; 12,865,560 shares of Common Stock underlying 107,213 shares of Series A Convertible Preferred Stock held by North Star Resources, Inc.; and 6,300,000 votes held under an irrevocable proxy from David Brownstein. (3) Includes 1,037,241 shares of Common Stock held directly by Ms. Ventley; 259,310 shares of Common Stock held by her two children; 31,668,960 shares of Common Stock underlying 263,908 shares of Series A Convertible Preferred Stock held by Ms. Ventley; and 7,917,360 shares of Common Stock underlying 65,978 shares of Series A Convertible Preferred Stock held by her two children. (4) Includes 97,241 shares of Common Stock and 2,968,920 shares of Common Stock underlying 24,741 shares of Series A Convertible Preferred Stock. 3 Effective on the closing of the acquisition, the Company's Officers and Directors were as follows: Mark E. Spargo - Chairman of the Board and CEO William Callari - Vice Chairman and COO Erica Ventley - CFO and Director Gerald Goodman - Director and Chairman of the Audit Committee ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. As described in Item 1 of this Report, on December 6, 2001, the Company acquired all of the outstanding Common Stock of BFFI in exchange for 18,800,000 shares of the Company's Common Stock and 4,783,333 shares of the Company's Series A Convertible Preferred Stock. Blue Flying Fish, Inc. ("BFFI" or the "Company"), a Delaware corporation, is a diversified holding company currently comprised of three operating divisions: Buhl Industries ("Buhl"); First American Mortgage Group ("FAMG"); and BFFI Services ("BFFI Services"). With the exception of the recently formed BFFI Services, the subsidiaries are existing businesses, acquired by the management for their turnaround and/or growth potential. BFFI management focuses on key areas to implement change: sales and marketing, cash flow management, strategic planning/M&A, and the use of shared internet-based technology services to reduce costs, grow distribution and implement high quality Customer Relationship Management systems. Currently, the Company's biggest subsidiary is Buhl. Established in 1953, Buhl is a manufacturer of projection and lighting technology and electrical sockets. For year end May 2001, it had a net loss before taxes of $736,910 on $4,861,558 in revenues. The Company's second largest division is FAMG, which was started in June of 2001. It is primarily a sub-prime mortgage broker with offices in five states. BFFI's other division is BFFI Services. Launched in September of 2001, it is a professional services consulting firm focusing upon outsourced management, technology strategy, system design, development, deployment and aggregation of best-of-breed Managed Service Producer relationships for clients and subsidiaries. ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS. The Company intends to hold a special shareholders meeting in January 2001, at which time shareholders will be asked to approve a change of the Company's name to Blue Flying Fish, Inc.; a one-for-forty (1 for 40) reverse stock split; a change of domicile from Colorado to Delaware; a Stock Option Plan; and any other matters that come before the meeting. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The financial statements required by Rule 3-05(b) of Regulation S-X for BFFI are not yet available, and will be filed by amendment on or before February 19, 2002. 4 (b) PRO FORMA FINANCIAL INFORMATION. The pro forma financial information required by Article 11 of Regulation S-X is not yet available, and will be filed by amendment on or before February 19, 2002. (c) EXHIBITS. Exhibit 10 Share Exchange Agreement between Adpads Incorporated and Blue Flying Fish, Inc. (filed herewith electronically) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized. ADPADS INCORPORATED Dated: December 21, 2001 By:/s/ Mark Spargo Mark Spargo, CEO 5

ADPADS, L.L.C. (A LIMITED LIABILITY COMPANY IN THE DEVELOPMENT STAGE) BALANCE SHEETS December 31, ------------ ASSETS 1999 1998 ----- ---- CURRENT ASSETS: Cash $ -- $ 211 Accounts receivable, less allowance for doubtful accounts of $1,000 in 1999 48,768 3,593 Inventories 8,367 360 Prepaid expenses and other current assets 3,056 -- --------- --------- Total Current Assets 60,191 4,164 PROPERTY AND EQUIPMENT 83,732 2,660 --------- --------- $ 143,923 $ 6,824 ========= ========= LIABILITIES AND MEMBERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Cash overdraft $ 3,436 $ -- Current maturities of long-term debt 8,227 -- Accounts payable 17,331 3,456 Accrued expenses 6,118 962 Deferred revenue 51,643 8,500 Billings in excess of costs on uncompleted contracts 11,700 -- Due to member 31,500 -- --------- --------- Total Current Liabilities 129,955 12,918 --------- --------- LONG-TERM DEBT, LESS CURRENT MATURITIES 36,036 -- --------- --------- COMMITMENT MEMBERS' EQUITY (DEFICIENCY) ACCUMULATED DURING THE DEVELOPMENT STAGE (22,068) (6,094) --------- --------- $ 143,923 $ 6,824 ========= =========

ADPADS, L.L.C. (A LIMITED LIABILITY COMPANY IN THE DEVELOPMENT STAGE) STATEMENTS OF OPERATIONS AND MEMBERS' EQUITY (DEFICIENCY) August 12, 1998, August 12, 1998, Date of Year Ended Date of Inception, Inception, to December 31, to December 31, December 31, 1999 1998 1999 ---- ---- ---- REVENUES: Web design $ 33,681 $ -- $ 33,681 Marketing services 97,333 9,788 107,121 --------- --------- --------- 131,014 9,788 140,802 --------- --------- --------- COSTS AND EXPENSES: Cost of revenues 31,902 10,427 42,329 Selling, general and administrative 169,362 25,454 194,816 --------- --------- --------- 201,264 35,881 237,145 --------- --------- --------- LOSS FROM OPERATIONS (70,250) (26,093) (96,343) INTEREST EXPENSE 1,229 -- 1,229 --------- --------- --------- NET LOSS (71,479) (26,093) (97,572) MEMBERS' EQUITY (DEFICIENCY), BEGINNING OF PERIOD (6,094) -- -- MEMBERS' CAPITAL CONTRIBUTIONS 71,195 22,279 93,474 MEMBERS' CAPITAL DISTRIBUTIONS (15,690) (2,280) (17,970) --------- --------- --------- MEMBERS' EQUITY (DEFICIENCY), END OF PERIOD $ (22,068) $ (6,094) $ (22,068) ========= ========= =========

ADPADS, L.L.C. (A LIMITED LIABILITY COMPANY) IN THE DEVELOPMENT STAGE) STATEMENTS OF CASH FLOWS August 12, 1998, August 12, 1998, Date of Year Ended Date of Inception, Inception, to December 31, to December 31, December 31, 1999 1998 1999 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (71,479) $ (26,093) $ (97,572) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization 21,598 665 22,263 Provision for losses on accounts receivable 1,000 -- 1,000 Changes in operating assets and liabilities: Accounts receivable (46,176) (3,593) (49,769) Inventories (8,007) (360) (8,367) Prepaid expenses and other current assets (3,055) -- (3,055) Accounts payable 13,875 3,456 17,331 Accrued expenses 5,156 962 6,118 Deferred revenue 43,143 8,500 51,643 Billings in excess of costs on uncompleted contracts 11,700 -- 11,700 --------- --------- --------- Net cash flows from operating activities (32,245) (16,463) (48,708) --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES - Purchase of property and equipment (74,541) (3,325) (77,866) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from cash overdraft 3,436 -- 3,436 Contributions from members 71,195 22,279 93,474 Distributions to members (15,690) (2,280) (17,970) Due to member 31,500 -- 31,500 Payments on long-term debt (1,774) -- (1,774) Proceeds from long-term debt 17,908 -- 17,908 --------- --------- --------- Net cash flows from financing activities 106,575 19,999 126,574 --------- --------- --------- NET CHANGE IN CASH (211) 211 -- CASH, BEGINNING OF PERIOD 211 -- -- --------- --------- --------- CASH, END OF PERIOD $ -- $ 211 $ -- ========= ========= ========= SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 1,229 $ -- $ 1,229 ========= ========= ========= Noncash financing and investing activities - Equipment additions by capital leases $ 28,129 $ -- $ 28,129 ========= ========= =========

ADPADS, L.L.C. (A LIMITED LIABILITY COMPANY IN THE DEVELOPMENT STAGE) NOTES TO FINANCIAL STATEMENTS The following is a schedule of future minimum rental payments required for the capital equipment leases that have initial or remaining lease terms in excess of one year at December 31, 1999: Year Ending December 31, ------------------------ 2000 $ 7,846 2001 7,679 2002 5,856 2003 5,856 2004 5,856 2005 752 --------- Total future minimum lease payments 33,845 Less: Amount representing interest 7,028 --------- Present value of minimum lease payments (Note 5) 26,817 Less: Current maturities 5,695 --------- Non-current $ 21,122 ========= Rent expense, for operating leases in 1999 and 1998 was $18,000 and $10,500, respectively. NOTE 5 - LONG-TERM DEBT: A summary of long-term debt at December 31, 1999 follows: Interest Description Rate ----------- -------- Note payable, collateralized by equipment, due in monthly installments through October, 2004 10% $ 17,446 Capital leases (Note 4) 26,817 --------- 44,263 Less: Current maturities 8,227 --------- $ 36,036 ========= Long-term debt at December 31, 1999, matures as follows: Year Ending December 31, ------------------------ 2000 $ 8,227 2001 8,956 2002 8,211 2003 9,030 2004 9,167 2005 672 --------- $ 44,263 =========

ADPADS, INC. (A Development Stage Company) PRO FORMA CONSOLIDATED BALANCE SHEET DECEMBER 31, 1999 (Unaudited) ASSETS Historical RRL Adjustments Consolidated ---------- --- ----------- ------------ CURRENT ASSETS: Cash $ -- $ 22 $ 214,978 a,b,c $ 215,000 Accounts receivable, net 48,768 -- -- 48,768 Inventories 8,367 -- -- 8,367 Other current assets 3,056 -- -- 3,056 --------- --------- --------- --------- Total Current Assets 60,191 22 214,978 275,191 PROPERTY AND EQUIPMENT 83,732 -- -- 83,732 --------- --------- --------- --------- $ 143,923 $ 22 $ 214,978 $ 358,923 ========= ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Cash overdraft $ 3,436 $ -- $ -- $ 3,436 Accounts payable and accrued expenses 23,449 26,376 (26,376) a 23,449 Current maturities of long-term debt 8,227 -- -- 8,227 Deferred revenue 51,643 -- -- 51,643 Billings in excess of costs on 11,700 -- -- 11,700 uncompleted contracts Due to stockholder 31,500 -- -- 31,500 --------- --------- --------- --------- Total Current Liabilities 129,955 26,376 (26,376) 129,955 --------- --------- --------- --------- LONG-TERM DEBT 36,036 -- -- 36,036 --------- --------- --------- --------- STOCKHOLDERS' EQUITY: Preferred stock, common stock and 75,504 3,950 211,050 a,b,c 290,504 paid-in capital Retained earnings (deficit) (97,572) (30,304) 30,304 a (97,572) --------- --------- --------- --------- Total Stockholders' Equity (Deficiency) (22,068) (26,354) 241,354 192,932 --------- --------- --------- --------- $ 143,923 $ 22 $ 214,978 $ 358,923 ========= ========= ========= =========

ADPADS, INC. (A Development Stage Company) PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1999 (Unaudited) Pro Forma Historical RRL Adjustments Consolidated ------------ ------------ ------------ ------------ REVENUES $ 131,014 $ -- $ 131,014 ------------ ------------ ------------ COSTS AND EXPENSES: Cost of revenues 31,902 -- 31,902 Selling, general and administrative 169,362 13,443 $ (26,354)a 156,451 ------------ ------------ ------------ ------------ 201,264 13,443 (26,354) 188,353 ------------ ------------ ------------ ------------ LOSS FROM OPERATIONS (70,250) (13,443) 26,354 (57,339) INTEREST EXPENSE 1,229 -- -- 1,229 ------------ ------------ ------------ ------------ LOSS BEFORE INCOME TAXES (CREDITS) (71,479) (13,443) 26,354 (58,568) INCOME TAXES (CREDITS) -- -- -- -- ------------ ------------ ------------ ------------ NET LOSS $ (71,479) $ (13,443) $ 26,354 $ (58,568) ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 15,542,000 1,500,015 4,883,000 21,925,015 ============ ============ ============ ============ NET LOSS PER SHARE OF COMMON STOCK $ -- $ -- $ -- $ -- ============ ============ ============ ============

ADPADS, INC. (A Development Stage Company) PRO FORMA CONSOLIDATED BALANCE SHEET DECEMBER 31, 1999 (Unaudited) Pro Forma --------- AdPads, Inc. and ASSETS RRL Visual Adjustments Consolidated ---------- ---------- ----------- ------------ CURRENT ASSETS: Cash $ 215,000 $ 165 $ (165)a,b,d $ 215,000 Accounts receivable, net 48,768 - - 48,768 Inventories 8,367 - - 8,367 Other current assets 3,056 1,155 (1,115)a 3,056 ---------- ---------- ---------- ---------- Total Current Assets 275,191 1,320 (1,320) 275,191 PROPERTY AND EQUIPMENT 83,732 - - 83,732 GOODWILL - - 175,000 b,c 175,000 ---------- ---------- ---------- ---------- $ 358,923 $ 1,320 $ 173,680 $ 533,923 ========== ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Cash overdraft $ 3,436 $ - $ - $ 3,436 Accounts payable and accrued expenses 23,449 - - 23,449 Current maturities of long-term debt 8,227 - - 8,227 Deferred revenue 51,643 - - 51,643 Billings in excess of costs on uncompleted contracts 11,700 - - 11,700 Due to stockholder 31,500 - - 31,500 ---------- ---------- ---------- ---------- Total Current Liabilities 129,955 - - 129,955 ---------- ---------- ---------- ---------- LONG-TERM DEBT 36,036 - - 36,036 ---------- ---------- ---------- ---------- STOCKHOLDERS' EQUITY: Preferred stock, common stock and paid-in capital 290,504 1,000 174,000 a,b,c,d 465,504 Retained earnings (deficit) (97,572) 320 (320)a (97,572) ---------- ---------- ---------- ---------- Total Stockholders' Equity (Deficiency) 192,923 1,320 173,680 367,932 ---------- ---------- ---------- ---------- $ 358,923 $ 1,320 $ 173,680 $ 533,923 ========== ========== ========== ==========

ADPADS, INC. (A Development Stage Company) PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1999 (Unaudited) Pro Forma --------- AdPads, Inc. and Pro Forma RRL Visual Adjustments Consolidated ---------- ---------- ----------- ------------ REVENUES $ 131,014 $ - $ 131,014 ---------- ---------- ------------ COSTS AND EXPENSES: Cost of revenues 31,902 - 31,902 Selling, general and administrative 156,451 245 $ 35,000 c 191,696 ---------- ---------- ----------- ------------ 188,353 245 35,000 223,598 ========== ========== =========== ============ LOSS FROM OPERATIONS (57,339) (245) (35,000) (92,584) INTEREST EXPENSE 1,229 - - 1,229 ---------- ---------- ----------- ------------ LOSS BEFORE INCOME TAXES (CREDITS) (58,568) (245) (35,000) (93,813) INCOME TAXES (CREDITS) - - - - ---------- ---------- ----------- ------------ NET LOSS $ (58,568) $ (245) $ (35,000) $ (93,813) ========== ========== =========== ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 21,925,015 - 2,250,000 b,d 24,175,015 ========== ========== =========== ============ NET LOSS PER SHARE OF COMMON STOCK $ - $ - $ - $ - ========== ========== =========== ============

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