<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended July 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1939
For the transition period from __________________ To _________________
Commission File Number: 0-28514
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TREASURY INTERNATIONAL, INC.
- -------------------------------------------------------------------------------
(exact name of small business issuer as specified in its charter)
DELAWARE 98-0160284
- -------------------------------- ---------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization identification number)
1181 Finch Ave. West, Unit 21, North York, Ontario M3J 2V8
- -----------------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number, including area code: 416-663-4194 Check whether
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the issuer (1) filed all reports required to be filed by section 13 or 15 (d)
of the exchange act during the past 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes No X
------ ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, par value
$.0001 per share 13,973,690
- ----------------------- --------------------
Class
<PAGE>
PART 1. Financial Information
ITEM 1. Financial Statements
TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED BALANCE SHEET
(U.S. DOLLARS)
<TABLE>
<CAPTION>
ASSETS
July 31 January 31
1996 1996
(Unaudited)
<S> <C> <C>
Current
Cash and short-term deposits $ 191,639 $ 292,611
Accounts receivable 353,115 80,304
Inventories (Note 1b) 224,605 117,838
Prepaid expenses 2,134 1,852
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771,493 592,605
Non-current
Capital (Note 1c & 4) 9,875 10,972
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$ 781,368 $ 603,577
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LIABILITIES
Current
Accounts payable $ 37,040 $ 49,317
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SHAREHOLDERS' EQUITY
Share capital
Authorized
20,000,000 Common shares at $.0001
Issued
13,973,690 Common shares (Note 5) 1,397 1,222
Contributed surplus 1,313,191 1,077,866
Deficit
(570,260) (524,828)
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744,328 554,260
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$ 781,368 $ 603,577
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</TABLE>
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TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JULY 31, 1996
(U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
July 31 July 31
1996 1995
<S> <C> <C>
Sales $ 277,735 $ 297,780
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Cost of sales 161,297 177,932
Operating, general
and administrative expenses 168,584 35,492
Depreciation expense 549 782
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330,430 214,206
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Income (loss) before income taxes ( 52,695) 83,574
Income taxes -- 19,530
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Income (loss) before undernoted item ( 52,695) 64,044
Income tax reduction arising
from loss carryforward -- 940
--------- ---------
Net income (loss) $( 52,695) $ 64,984
--------- ---------
--------- ---------
Loss per common share $( 0.004)
---------
---------
Weighted average number of
common shares outstanding 13,973,690
----------
----------
</TABLE>
3
<PAGE>
TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JULY 31,1996
(U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
JULY 31 JULY 31
1996 1995
<S> <C> <C>
Sales $ 561,326 $ 549,142
--------- ---------
Cost of sales 325,496 323,722
Operating, general
and administrative expenses 280,165 135,479
Depreciation expense 1,097 1,331
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606,758 460,532
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Income (loss) before income taxes ( 45,432) 88,610
Income taxes -- 20,487
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Income (loss) before undernoted item ( 45,432) 68,123
Income tax reduction arising
from loss carryforward -- 940
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Net income (loss) $( 45,432) $ 69,063
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Loss per common share $( 0.003)
---------
---------
Weighted average number of
common shares outstanding 13,973,690
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----------
</TABLE>
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TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JULY 31, 1996
(U.S. DOLLARS)
<TABLE>
<CAPTION>
Common Paid-in Contributed
Shares Capital Surplus
<S> <C> <C> <C>
Common stock issued
in exchange for the assets
and liabilities of J.J.A.M.P.
Treasury International Corp.
in August 1995 8,023,812 $ 802 $ 78,347
Issuance of stock in
August 1995 in connection
with a private placement
Offering 2,750,000 275 274,725
Issuance of stock in
August, September and
October 1995 with a
Private placement offering 985,578 99 492,690
Issuance of stock in
November 1995 with a
private placement offering 464,300 46 232,104
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Balance -- January 31, 1996 12,223,690 1,222 1,077,866
Issuance of stock in
July 1996 with a private
Placement offering 1,000,000 100 197,900
Issued stock in
July 1996 as per stock
option plan 750,000 75 37,425
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Balance -- July 31, 1996
(Unaudited) 13,973,690 $ 1,397 $1,313,191
---------- ------- ----------
---------- ------- ----------
</TABLE>
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<PAGE>
TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JULY 31, 1996
(U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
July 31 July 31
1996 1995
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $( 45,432) $ 69,063
Adjustments to reconcile net
income to net cash used in
operating activities
Depreciation 1,097 1,331
Increase in accounts receivable (172,811) ( 75,361)
Decrease (increase) in inventories (106,767) 49,049
Decrease (increase) in prepaid
expenses ( 282) 591
Decrease in accounts payable ( 12,277) ( 49,285)
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Net cash used in operating activities (336,472) ( 4,612)
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Cash flows from financing activities
Advances by shareholders -- ( 71,267)
Issue of common shares 175 77,998
Contributed surplus 235,325 -
-------- ---------
Cash flows from investing activities 235,500 6,731
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Cash flows from investing activities
Purchase of capital assets -- ( 2,494)
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Cash used for investing activities -- ( 2,494)
--------- ---------
Decrease in cash and
short-term deposits (100,972) ( 375)
Cash and short-term deposits,
beginning of period 292,611 3,401
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Cash and short-term deposits,
end of period $ 191,639 $ 3,026
--------- ---------
--------- ---------
</TABLE>
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TREASURY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS AT JULY 31, 1996
(UNAUDITED)
1. Summary of significant accounting policies
(A) Basis of consolidation:
These consolidated financial statements include the accounts of the
corporation and its wholly-owned subsidiary, J.J.A.M.P. Treasury
International Corp.
(B) Inventories:
Inventories are valued at the lower of cost (first-in, first-out
method) and net realizable value.
(C) Capital assets:
Capital assets are recorded at cost less accumulated depreciation.
Depreciation is provided using the declining balance basis at the
following annual rate:
Office furniture and equipment -- 20%
(D) Revenue recognition:
Revenue is generally recognized when customers are invoiced for the
products shipped by the corporation.
(E) Loss per share
Loss per share is calculated based on the weighted average number of
shares outstanding during the year of 13,973,690.
(F) General
The financial data for the six and three months ended July 31, 1996
and 1995 is unaudited, but includes all adjustments (consisting only
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results of
operations for such periods.
2. Incorporation:
The corporation was incorporated on August 18, 1995 in the state of
Delaware.
3. Business combination:
On August 18, 1995, by a reverse acquisition, the corporation
acquired 100% of the issued and outstanding shares of J.J.A.M.P.
Treasury International Corp. In exchange for 8,023,812 common shares
of the corporation. The effective date of the transaction was
August 1, 1995. Prior to the acquisition, Treasury International,
Inc. Did not carry on any commercial activities.
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<PAGE>
TREASURY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS AT JULY 31, 1996
(UNAUDITED)
4. Capital assets:
<TABLE>
<CAPTION>
July 31 January 31
1996 1996
Accumulated Net Net
Cost depreciation book value book value
------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Office furniture
and equipment $16,822 $6,947 $9,875 $10,972
</TABLE>
5. Contributed Surplus
Contributed surplus represents the premium paid on the issuance of common
shares.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(1) INTERIM PERIODS:
----------------
Results of Operations
For the three months ended July 31, 1996.
During the three months ended July 31, 1996 the Company's sales decreased
by 7% to $277,735 from $297,780 in the three months ended July 31, 1995. The
Company experienced a net loss of $52,695 in the three months ended July 31,
1996 compared to a net income of $83,574 in the three months ended July 31,
1995. The cost of products sold by the Company was 58% of sales during the
three months ended July 31, 1996, down from 60% of sales in the three months
ended July 31, 1995. Operating, general and administrative expenses
increased in the three months ended July 31, 1996 to $168,584 or 61% of
sales, compared to $35,492, or 12% of sales, in the three months ended July
31, 1995. The increase is attributable to expenses related to potential
acquisitions, marketing and promotion.
Results of Operations
For the six months ended July 31, 1996.
During the six months ended July 31, 1996 the Company's sales increased
by 2% to $ 561,326 from $ 549,142 in the six months ended July 31, 1995. The
Company experienced a net loss of $ 45,432 in the six months ended July 31,
1996 compared to net income of $88,610 in the six months ended July 31,
1995. The cost of products sold by the Company was 58% of sales during the
six months ended July 31, 1996, down from 59% of sales in the six months
ended July 31, 1995. Operating general and administrative expenses increased
in the six months ended July 31, 1996 to $ 280,165, or 50% of sales,
compared to $ 135,479, or 25 % of sales, in the six months ended July 31,
1995. The increase is attributable to expenses related to potential
acquisitions, marketing and promotion.
LIQUIDITY AND CAPITAL RESOURCES:
--------------------------------
Current assets totalled $771,493 at July 31, 1996 compared to $592,605 at
January 31, 1996. At July 31, 1996, cash and short-term deposits were
$191,639 compared to $292,611 at January 31, 1996. This decrease in cash
resulted from the payment of substantial expenses related to marketing and
promotion, and the Company's proposed acquisitions and a higher number of
accounts receivable outstanding. Accounts receivable totalled $353,115 at
July 31, 1996 compared to $180,304 at January 31, 1996.
In July, 1996 the Company raised $200,000 from the sale of 1,000,000
shares of common stock at $.20 per share and $37,500 from the exercise of
750,000 options at $.05 per share.
The Company requires substantial additional funds to finance its proposed
expansion. The Company has not yet formulated its plan to obtain, and it has
received no commitment for, such additional financing. Any such additional
funding likely will result in a material and substantial dilution to the
Company's then existing shareholders. The Company may be required to obtain
funds by pledging or relinquishing material rights to its assets that it
otherwise would not give up. No assurance can be given that any necessary
additional financing can be obtained when needed on terms which are
affordable by the Company, if at all.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereinto
duly authorized.
Dated: October 18, 1996 TREASURY INTERNATIONAL, INC.
BY /s/ JAMES HAL
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James Hal, President
BY /s/ HOWARD HALPERN
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Howard Halpern, Principal
Financial Officer
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