U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One)
X Annual report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended January 31,
1997
or
____ Transition report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to _________
Commission File Number: 0-28514
TREASURY INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 98-0160284
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
7040 Tranmere Drive
Mississauga, Ontario, Canada L5S 1L9
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (905) 673-1700
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Name of Each Exchange
Title of Each Class: on which Registered:
Common Stock, par value None
$0.0001 per share
Check whether the registrant: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x No __
Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B 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[ ].
As of January 31, 1997, 14,942,566 shares of the registrant's common
stock were outstanding.
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of July 29, 1997 was $1,423,080.
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PART I
The information set forth in this Report on Form 10-KSB including,
without limitation, that contained in Item 6, Management's Discussion and
Analysis and Plan of Operation, contains "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Actual results may materially differ from those
projected in the forward-looking statements as a result of certain risks and
uncertainties set forth in this report. Although management believes that the
assumptions made and expectations reflected in the forward-looking statements
are reasonable, there is no assurance that the underlying assumptions will, in
fact, prove to be correct or that actual future results will not be different
from the expectations expressed in this report.
Item 1. Description of Business
Overview
Treasury International, Inc. ("Treasury" or the "Company") engages in
the international manufacturing, sourcing and distribution of quality consumer
and industrial products. The Company's plan is to become an international
manufacturing, distribution and marketing conglomerate. To expand its business,
the Company seeks to make acquisitions in niche industries of companies having
strong brand recognition and/or significant market share and/or marketing
capabilities, with the intent of growing these businesses into leaders in their
respective markets.
As of January 31, 1997, the Company markets and distributes
non-pharmaceutical branded products and manufactures and markets customized
plastic containers through its indirect wholly-owned subsidiary, Mega Blow
Moulding Limited ("Mega Blow"). On February 25, 1997, the Company acquired
Silver 925, Inc. ("Silver"), which designs, manufactures, and distributes gold
and silver plated jewelry. As used in this report, unless otherwise indicated,
references to the Company shall include Silver, Mega Blow and Megatran
Investments Ltd., a wholly-owned subsidiary of the Company ("Megatran"), which
holds all of the capital stock of Mega Blow. Through these subsidiaries, the
Company manufactures, distributes and exports a combined total of more than
3,000 products. The Company has the capacity to provide private labeling
services for unique product specifications; tailored packaging services for all
product lines; complete warehousing facilities; marketing services via a network
of marketing and sales representatives; and specialized multi-lingual sales
associates. By utilizing its customized computer information and production
systems, the Company strives at all times to ensure access to the broadest range
of quality products.
History
The Company was incorporated in the State of Delaware on August 18,
1995. Following its formation, the Company acquired all of the issued and
outstanding shares of J.J.A.M.P. Treasury International Corp. ("JJAMP"), a
Canadian corporation based in metropolitan Toronto, Ontario, Canada. JJAMP was
organized on September 29, 1993 and until August 17, 1995, conducted its
business under the name "Treasury International." The acquisition of JJAMP was
accomplished through the issuance of 8,023,812 shares of the Company's Common
Stock to JJAMP's stockholders.
On October 30, 1996, the Company acquired all of the issued and
outstanding common shares of Megatran, a Canadian company based in metropolitan
Toronto, Ontario, Canada. The purchase price for the Megatran shares was
$2,863,182, of which $2,111,302 was paid in cash and the balance was paid by
delivery of debentures in the original principal amount of $751,880, which
debentures are convertible into shares of the Company's Common Stock.
Just subsequent to the fiscal year end, on February 25, 1997 the Company
acquired all of the outstanding capital stock of Silver, a Florida corporation
based in Miami, Florida. The purchase price for the Silver shares was
$2,000,000, which amount is payable in five annual installments of $400,000, of
which 90% of each annual installment is to be paid in shares of the Company's
Common Stock and 10% of each annual installment is to be paid in cash.
The Company's principal executive offices are located at 7040 Tranmere
Drive, Mississauga, Ontario, Canada L5S 1L9, and its telephone number is (905)
673-1700.
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Corporate Summary and Growth Strategies
The Company is aggressively pursuing potential acquisitions and
strategic alliances which management believes would significantly increase
revenues, profits and value for its stockholders in accordance with its business
objectives. The Company's "Leveraged Build-Out" strategy consists of growth
through internal expansion of sales and profits in existing operations through
an aggressive acquisitions program. Businesses targeted for acquisition must
meet or exceed management's stringent revenue and profit objectives. Management
must also believe that the targeted corporations have outstanding North American
and International prospects for rapid growth in both top line revenues and
bottom line profits. Management is committed to expanding its global presence by
entering the emerging markets within Latin America, Eastern Europe and Africa.
In furtherance of this plan, the Company anticipates utilizing existing
marketing channels of the acquired companies. Management's objective is to
obtain additional distribution capacity, gain market share for its existing
product lines and diversify the products and services the Company can offer to
its expanding client base.
In addition to internal growth and acquisitions, the Company is also
active in the business of creating and maintaining international strategic
trading links. The purpose of this plan is to obtain alternate production
sources and new channels of marketing and distribution for both consumer and
industrial products in North America and, in particular, the United States. The
Company is also continually attempting to develop and implement systems to
popularize its products through the promotion of high quality private label
branded products at competitive prices.
The Company's Markets in General
The Company believes it can achieve widespread acceptance for its
products in developing countries where mass consumption of goods is in its
infancy. Management believes the Company can take advantage of a very
competitive global situation by delivering highly knowledgeable and experienced
cultural liaisons that stand behind internationally recognized products. The
Company should then be able to maintain an upward momentum in world markets
including the aggressive penetration of important emerging markets on a global
scale.
These international businesses involve complex and dynamic processes of
political and economic issues in addition to traditional issues of market and
firm related concerns. For these reasons, Treasury has pursued strategies that
include complementary networks of culturally experienced individuals with the
principal objectives of growth and development through leveraged acquisitions.
As a conglomerate, the Company does not face direct competition, however
the Company's subsidiaries directly compete in their respective industries; see
"Industry Segments" below. The Company's success, as measured against other
conglomerates, depends upon its ability to locate and acquire subsidiaries which
will complement its existing lines of business.
Management believes that one of Treasury's major long term opportunities
is in Latin America. Latin America has a population of over 450 million and many
of its countries have populations well in excess of those in Canada and Europe,
and has countries with large urban populations and developing economies. With
the recent widespread move towards democratization of the region and development
of market oriented economies, experts predict positive future prospects in the
region. In fact, the value of contemporary foreign direct investment (debt and
equity investment) in some Latin American countries is almost twelve times the
size of levels before the South American debt crisis in the 1980's. The debt
crisis created a situation where consumers had little access to imported
products or services and little ability to purchase even if such products had
been available. With the easing of this crisis, these markets are in need of
goods and services. Similar situations are developing in Eastern Europe and
Africa which also present potential opportunities for the Company. It is one of
Treasury's major objectives to expand its global presence by meeting the needs
in these "emerging markets" whose rapid growth is fueling demand for industrial
and consumer products.
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Industry Segments
The following is a summary of the Company's operations by industry
segment:
o Customized Commercial Plastic Containers (Mega Blow Moulding Limited)
Overview. Since its formation in 1984, Mega Blow has operated as a
specialized custom molder of plastic bottles and containers for use in the
pharmaceutical, health and beauty, household cleaner and food product
industries. During fiscal 1996, Mega Blow's revenues were approximately $7
million. Approximately one-half of Mega Blow's revenues are generated in the
United States. Mega Blow also has a strong market presence in the Province of
Ontario, Canada, which is the main manufacturing center in Canada. Plastic is a
disposable material which is in high demand in today's environmentally friendly
and industrializing world. Management believes that demand will continue to grow
significantly well into the next century. With an estimated market in North
America of over $15 billion for plastic products, management believes that Mega
Blow is well positioned for growth.
Customers. Mega Blow concentrates on manufacturing products for
customers who are the end user or manufacturer agents. Mega Blow has fostered
relationships with many major North American corporations, including Johnson &
Johnson, G.K. Packaging, Fenton Webber, Novo Pharm, Jones Packaging and the
Canadian shampoo division of L'Oreal. Management believes that Mega Blow has an
excellent reputation for quality and customer service and prides itself on its
ability to consistently maintain a zero percent defect rate. This has resulted
in long-standing customer relationships, many in excess of 10 years.
Facilities/Equipment. Mega Blow operates from a leased, 46,000 square
foot manufacturing facility in metropolitan Toronto, Canada. Mega Blow operates
nine Bekum blowing machines. The Bekum machine is considered by industry experts
to be the best currently available and gives Mega Blow a state-of-the-art
manufacturing capacity. The Bekum machine can be operated almost indefinitely
when properly maintained and updated. All machines are computerized and
controlled by special tracking devices which monitor all aspects of machine
productivity. Further, Mega Blow's computerized systems give the manufacturing
process numerous diagnostic features which maximize productivity and quality
control. All manufacturing machines are constantly serviced and maintained to
the highest degree possible by a specially trained maintenance staff as well as
by 24 hour on-call maintenance professionals. Mega Blow seeks to maximize
productivity and utilization of fixed overhead costs by operating the plant 24
hours a day with four shifts.
Personnel. Mega Blow employs more than one hundred non-unionized regular
employees including production, management, foremen and office staff. Mega
Blow's management is experienced in every facet of operations including machine
operation, machine repairs and maintenance, completing setups, mold maintenance,
purchasing, distribution and marketing. A majority of Mega Blow's staff has been
with the Company since its inception and has grown and been promoted over time.
Materials. Mega Blow's major raw material usage consists of the
following resins: Pet G, H.D.P.E. (High Density Polyethylene) and L.D.P.E. (Low
Density Polyethylene). Management is not aware of any environmental concerns in
respect of Mega Blow, its manufacturing facilities or its products. Mega Blow
presently uses six major suppliers of the above resins. Mega Blow has been
dealing with each of its major suppliers for over ten years. In the event that
its existing sources of supply are insufficient to meet its existing needs,
management believes that alternative supplies would be available at competitive
prices from one of its other major suppliers or from outside alternative
suppliers not currently engaged by Mega Blow.
Growth Strategy. Treasury intends to increase Mega Blow's sales,
market share and profitability by employing three strategic initiatives:
o A strategic acquisition program in this very fragmented market
o Streamlining existing manufacturing operations
o Making high return capital expenditures to increase Mega Blow's
production output and efficiency
o Gold and Silver Jewelry (Silver 925 Inc.)
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General. Silver, formed in 1986, designs, manufactures, markets, and
distributes gold and silver plated jewelry. Silver's 1996 revenues were
approximately $9.1 million. Management believes that Silver has an established
international reputation for high quality and innovatively designed jewelry with
high level after-sales customer services. Silver's products are advertised,
reviewed and profiled on national television, and in magazines and consumer
trade catalogues. Within the $13 billion jewelry industry, the gold and silver
plated sector has enjoyed unprecedented growth due to large demand for jewelry
with high perceived value.
Silver specializes in the silver/gold plated "bridge" jewelry segment of
the industry. This segment has undergone and continues to show tremendous growth
due to increasing consumer demand for high perceived value, low cost
merchandise. The Company believes that Silver's closest competitor has a limited
sales and marketing force and no in-house production or design capabilities.
Management believes that Silver has a unique competitive advantage as it has
differentiated itself from its competitors by its unique designs, quality
fabrication, ability to cater to specific customer requirements through its own
in-house design staff, after-sale customer service and its unconditional
lifetime warranties on products for key customers.
The Company believes that Silver offers quality, service and styling to
a wide range of customers. The emphasis is on product development and
flexibility in product design for major retailers who are new product driven,
while at the same time having the ability to quickly bring products to market.
To complete the Company's exclusive customer services, it offers unconditional
lifetime warranties on specific products.
Silver also builds product recognition, image and excitement through the
promotion and customer support of its products in regional and national markets.
Silver's "celebrity" marketing division is responsible for creating and
marketing products for such famous personalities as Suzanne Somers (Home
Shopping Network) and Elizabeth Taylor (Avon). Silver intends to expand in this
area as celebrity marketing has proven to be an extremely effective and popular
vehicle for the sale of bridge jewelry.
For the fiscal year ended July 31, 1996, Silver had approximately $9.1
million in annual sales. Silver's annual sales over the past five years have
increased by approximately 82%. The current market breakdown of sales for the
1996 fiscal year by geographic region is as follows:
o United States 78%
o Canada 10%
o Europe 10%
o Latin America 2%
Customers. Silver markets its products throughout the United States and
internationally to some of the best known major retail chains, mass
merchandisers, catalogue outlets and independent jewelry stores. Silver has a
customer base of over 500 major and independent active accounts purchasing over
2,500 products, and sells to well known clients, including Bloomingdales, J.C.
Penney, Macy's, Q.V.C. Network, Service Merchandise Catalogues, the Home
Shopping Network, American Airlines, Avon Products, Seta and T.J. Maxx. Sales to
major retailers account for 80% of Silver's total revenues.
Manufacturing. Silver operates out of a leased 6,800 square foot
facility in Miami, Florida. This facility serves as head office, manufactur-
ing and distribution center and warehouse.
Personnel. Silver employs more than 40 people in its non-unionized Miami
location and utilizes more than 600 contract workers for most facets of its
production, which is done primarily in Bangkok, Thailand. The Thai jewelry
production industry is, at present time, not significantly impacted by either
governmental or industry regulations and management does not anticipate any
future changes in this environment.
Materials. Management believes that there is sufficient availability of
the necessary raw materials to produce Silver's jewelry products by accessing
the world markets for gold, silver and gem stones. Silver has been able to
secure all its necessary material inputs at competitive prices. Management
believes that should severe price shocks affect any of Silver's raw material
sources, it will be able to adjust its finished product pricing structure
accordingly by maintaining accurate and timely inventory levels using its
computerized inventory control systems.
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Growth Strategy. Treasury's management considers the existing fragmented
industry structure ideal for its Leveraged Build-Out strategy and plans to
increase market share employing the following key strategies:
o Using its Leveraged Build-Out strategy to make aggressive key acquisitions
o Establish Silver as an aggressive marketer of high quality silver/gold
plated jewelry in the United States and abroad
o Improve the in-house marketing team and outside company sales force
o Maintain optimal inventory levels to ensure timely response and adequacy
of supply
o Improve and diversify Silver's marketing and distribution strategies
Additionally, based on extensive market research, Silver's southern
Florida base of operations and Silver management's multi-lingual abilities, the
Company believes that potential sales to Latin America, Africa and Europe offer
excellent growth opportunities. Further, the Company intends to improve Silver's
profitability with an aggressive program of streamlining and reengineering
operations to reduce production and overhead costs and increase productivity and
sales response time.
Government Approvals and Licenses
The Company has sought legal and technical expertise to ensure that it
and its suppliers, distributors and independent associates have all the
necessary government approvals, licenses, permits and certificates.
Currency, Foreign Exchange and Banking
As most of the Company's operations have been based primarily in North
America, the Company believes that the current exchange rate environment has
been favorable to it and as such has not undertaken active foreign exchange
hedging activities. Management monitors world exchange conditions on a regular
basis and should the current favorable environment change, management will
implement a more active foreign currency hedging policy.
Research and Development Costs
During its last two fiscal years, the Company has incurred no material
expenditures on account of research and development as management believes that
the success of the Company and its business operations did not require
significant research and development efforts.
Employees
As of July 17, 1997, the Company has five full time officers and,
including its subsidiaries, 141 employees. Many of these employees are able to
communicate fluently in one or more of the following languages: English,
Spanish, Portuguese, French, Italian, Arabic and Hebrew. This multilingual
capacity will significantly assist the Company in penetrating the world's
emerging foreign markets. None of the Company's employees are represented by a
labor union or is subject to a collective bargaining agreement. The Company
considers its relations with its employees to be good.
Investment Policies
The Company has no limitations on the amounts which it may invest in any
one investment or type of investment. The Company has no holdings in real
estate, real estate mortgages and similar securities or publicly traded
securities. As well, the Company does not have any investment in persons or
companies primarily devoted to such investments and it is not the policy of the
Company to make investments for the purpose of capital gain or passive income.
Presently, all available monies are being used for day-to-day operations.
Patents and Trademarks
Due to the nature of Treasury's operations, it does not currently hold
any existing or pending patents or trademarks outside of the Company's and its
subsidiaries' names.
International Operations
Foreign business is conducted through subsidiaries, representatives and
distributors, and, to a lesser extent, by direct sales. International revenues
accounted for approximately 52% of consolidated total revenues in fiscal 1997,
and 90% of consolidated total revenues in fiscal 1996. The majority of
Treasury's international revenues are derived from Canada and Latin America. See
note 13 to the January 31, 1997 year end financial statements (the "Financial
Statements"). In view of the location and diversity of its international
activities, the Company does not believe that there are any special risks beyond
normal risks of uncertainty attendant to doing business abroad.
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Item 2. Properties
The Company leases 46,000 square feet of space in Mississauga, Ontario,
Canada as administrative offices and manufacturing facilities at a rental rate
of Can$4.75 per square foot per year. The current lease period expires on
December 31, 1998, with an option to renew until December 31, 2003. In addition,
Silver leases a 6,800 square foot manufacturing and admnistrative facility in
Miami Florida at a base rate of $5,000 per month plus certain pass through
expenses, which lease expires in October 2001.
Item 3. Legal Proceedings
The Company is not currently engaged in any legal proceedings and is not
aware of any pending or threatened litigation that could have a material adverse
effect on the Company's business, financial condition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market For Common Equity and Related Stockholder Matters
In December 1995, the Company's Common Stock commenced trading on the
NASDAQ "pink sheets" under the symbol "TREY." On April 12, 1996, the Common
Stock of the Company was approved for trading on the NASDAQ-OTC Electronic
Bulletin Board. The following table sets forth the range of high and low closing
representative bid prices for the Company's Common Stock from April, 30, 1996
through January 31, 1997 (as reported by NASDAQ), which represent inter-dealer
prices, without retail mark-up, mark-down or commission and may not reflect
actual transactions:
Quarter Ended High Bid Low Bid
- ------------- -------- -------
January 31, 1996 $1.13 $0.30
April 30, 1996 0.50 0.25
July 31, 1996 1.31 0.50
October 31, 1996 1.07 0.19
January 31, 1997 0.44 0.16
As of July 17, 1997, there were 104 holders of record of the Company's
Common Stock. The Company has not declared or paid any cash dividends on its
Common Stock since its inception, and its Board of Directors currently intends
to retain all earnings for use in the business for the foreseeable future. Any
future payment of dividends will depend upon the Company's results of
operations, financial condition, cash requirements and other factors deemed
relevant by the Company's Board of Directors.
The Company has undertaken the following unregistered sales of its Common
Stock. All of the following sales were exempt from registration pursuant to
Sections 3(b) and 4(2) of the Securities Act and Regulation D or Regulation S
promulgated by the Securities Exchange Commission (the "SEC") thereunder. None
of the following unregistered sales involved underwriters, and there were no
underwriting discounts or commissions.
<TABLE>
<S> <C> <C> <C>
Person or Class of
Persons Number of Total Cash Price or
Date, Title of Securities Sold to Whom Sold Shares Consideration
July 19, 1996, Common Stock George B. Sukornyk 500,000 $99,000
July 19, 1996, Common Stock Yaachov Azagury 500,000 $99,000
</TABLE>
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Item 6. Management's Discussion and Analysis or Plan of Operation
Overview
Treasury is an international manufacturing, distribution and marketing
company with subsidiaries producing over 3,000 consumer and industrial products
primarily for North American markets. Once solely an international distributor
of 225 consumer products, Treasury's acquisition of Mega Blow more than doubled
annual sales to over $2 million for the fiscal year ended January 31, 1997. With
the acquisition of Silver, on a pro forma basis, the Company projects
significantly higher revenues for the fiscal year ending January 31, 1998. The
comparison set forth below does not give effect to the acquisition of Silver in
February, 1997.
Total assets increased 548% to almost $4 million from the 1996 fiscal
year to fiscal 1997 with the October 1996 acquisition of Mega Blow. The
Company's total assets increased to an estimated $6 million after the
consummation of the Silver acquisition in February, 1997.
During the next 24 to 36 months, Treasury will continue to pursue its
expansion goals via its Leveraged Build-Out strategy. To increase its current
subsidiaries' market share, the Company plans to acquire key competitors or
companies having important synergy's with existing company operations. Current
operations are also planned to be streamlined in order to reduce costs and
improve quality and productivity. Furthermore, Treasury intends to expand its
global presence by entering the rapidly industrializing and emerging markets,
including the key economies in Latin America, Eastern Europe and Africa.
The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company included with this annual
report.
Fiscal 1997 Compared to Fiscal 1996
Net sales increased during fiscal year 1997 to approximately $2.12
million, up approximately 91% from $1.1 million in fiscal year 1996. The
increase in net sales also reflects the inclusion of Mega Blow for the three
months ended January 31, 1997 (67%). The Company experienced a net loss of
$1,032,084 for its fiscal year ended January 31, 1997, an increase of
approximately 99.8% when compared to the Company's net loss of $516,656 in the
fiscal year ended January 31, 1996. Among the significant items impacting the
1997 results were increased expenses resulting from the Mega Blow and Silver
acquisitions as well as extensive marketing and consulting arrangements
undertaken by the Company.
The cost of sales for fiscal 1997 represented 82% of net sales, or
$1,743,380, a 161% increase compared to 60% of net sales, or $667,083, in fiscal
1996. The increase is attributable to the write-down of obsolete and slow-moving
inventories, higher prices of raw materials, increased sales of lower margin
products and, to a lesser extent, pricing incentives to major customers.
Operating, general and administrative expenses increased in fiscal 1997
to $1,151,128, or approximately 54% of sales, compared to $957,607, or
approximately 86% of sales, in fiscal 1996. The increase is attributable to the
write-off of uncollectible accounts receivable, expenses related to the October
30, 1996 acquisition of Mega Blow, expenses related to the acquisition of Silver
which was consummated subsequent to year end, consulting services rendered (see
note 15 of the Financial Statements) and marketing and promotion activities.
Liquidity and Capital Resources
The primary sources of liquidity for the Company are funds generated by
operations and borrowings under the Company's loan agreement. Additional
information on the loan agreement is described in notes 6 and 7 to the Company's
Financial Statements.
In August 1995, the Company issued 2,750,000 shares of Common Stock to
five private investors for an aggregate cash price of $275,000 pursuant to a
private placement offering. From August through November 1995, the Company
issued 1,449,878 shares of Common Stock for an aggregate price of $724,794
pursuant to a private placement offering. Each of the private placement
offerings was made pursuant to an exemption from registration provided by Rule
504 of Regulation D promulgated under the Securities Act of 1933, as amended.
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In July, 1996, the Company issued 1,000,000 shares of Common Stock to
two individuals for an aggregate cash price of $198,000. See Item 5 of this
report.
In October, 1996, the Company sold 0% Convertible Debentures in the
aggregate principal amount of $1,000,000 due October 29, 1997 and October 30,
1999, respectively. In the same month, the Company also sold an 8% Senior
Subordinated Convertible Debenture in the principal amount of $500,000, due
October 29, 1997. As of July 16, 1997, the holder of the 8% Debenture elected to
convert the outstanding amount of such Debenture into shares of the Company's
Common Stock. The sales of the Debentures were made pursuant to an exemption
from registration provided by Regulation S promulgated under the Securities Act
of 1933.
As of January 31, 1997, current assets totaled $1,348,995 compared to
$592,605 at January 31, 1996. The increase was attributable to the inclusion of
Mega Blow's current assets of $1,258,662 at January 31, 1997. At fiscal year end
1997, the Company had no cash and short-term deposits compared to fiscal 1996
cash and short-term deposits of $292,611. The cash and short-term deposits were
used for expenses related to the acquisitions undertaken by the Company.
As of January 31, 1997, current liabilities totaled $2,561,147 compared
to $49,317 as of January 31, 1996. The increase was attributable to the
inclusion of Mega Blow's current liabilities of $1,405,067 at January 31, 1997,
higher levels of trade payables reflecting business growth, a current portion of
long-term debt of $1,147,812 and current bank indebtedness of $394,407 incurred
to finance both the Company's acquisition of Mega Blow and accounts receivable,
as discussed in note 6 to the Company's Financial Statements. Accounts
receivable totaled $812,357 at fiscal year end 1997 compared to $180,304 in
fiscal year 1996, an increase principally attributable to the Mega Blow
acquisition.
As of January 31, 1997, Mega Blow had outstanding $950,393 in term
loans, which loans are secured by a first priority lien on the assets of Mega
Blow and the personal guarantee of James Hal, the Company's president. The term
loans are due on October 30, 2003. The Company also has outstanding $1,501,880
principal amount of convertible debentures, due as follows: $1,000,627 in 1998;
$250,627 in 1999; and $250,626 in 2000. All the debentures are convertible into
shares of the Company's Common Stock at the option of the holder. In the event
the holders convert these debentures, the Company's obligation to repay the
$1,501,880 indebtedness would be eliminated.
The Company has a foreign exchange rate risk related to international
earnings and cash flows. Management anticipates that, in future, the Company may
enter into forward foreign exchange contracts and purchase currency options tied
to the economic value of receivables, payables and expected cash flows
denominated in non-local foreign currencies should the need arise.
The Company believes it will generate sufficient positive cash flow from
operations to meet its operating requirements for the next twelve months.
However, there can be no assurance that the Company will be able to repay the
debentures that mature in 1997 if they are not converted. If the funds available
under the Company's financing agreements, together with its current cash and
cash equivalents are not sufficient to meet the Company's cash needs, the
Company may, from time to time, seek to raise capital from additional sources,
including extension of its current lending facilities, project-specific
financings and additional public or private debt or equity financings.
Item 7. Financial Statements
The financial statements of the Company, including the notes thereto,
together with the report of Bromberg & Associate, independent certified public
accountants thereon, are presented beginning at page F1.
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
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PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The following table provides information concerning each executive
officer and director of the Company. All directors hold office until the next
annual meeting of Stockholders or until their successors have been elected and
qualified.
NAME AGE TITLE
Mr. James Hal
(a.k.a. James Halioua) 34 Chairman of the Board
Chief Executive Officer
President and Director
Mr. Howard Halpern 37 Chief Financial Officer
Executive Vice President
Mr. Mark Halioua 42 Director
Mr. Robert Abourmad 45 Director
Mr. Hal has been Chairman of the Board, Chief Executive Officer and a
Director of the Company since its inception in August 1995. Mr. Hal was the
President and Chief Financial Officer of JJAMP from its inception in September
1993 through acquisition by the Company in August 1995. From 1983 to 1993,
Mr. Hal was the President of Tropi-Golf Inc. of Concord, Canada. He was
previously a Director for Gaming Lottery Corp., a company trading both on
the NASDAQ and on the Toronto Stock Exchange, and Le Print Express, Inc.
which trades on the Canadian Dealer Network (CDN).
Mr. Halpern, a certified public accountant, has been Chief Financial
Officer and Executive Vice President of the Company since January 15, 1997. From
1989 until July 1992, he was the Controller of Merisel Canada, Inc., a computer
wholesaler with approximately $208,000,000 of annual sales and 70 employees.
Since July 1992 he has practiced as a sole proprietor Chartered Accountant in
Canada, providing tax, financial and management consulting services.
Mr. Abourmad has been a Director of the Company since August 18, 1995.
From 1995 to present he has been the President of Payless Locksmith, Inc. of
Toronto, Canada.
Mr. Mark Halioua has been a Director of the Company since August 18,
1995. Since August 1988, he has been the President of National Printing Group in
Markham, Canada, a printing company. He possesses no other directorships.
Mr. James Hal and Mr. Mark Halioua are brothers.
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) reports they file. Based solely on a review of the copies
of such reports furnished to the Company during or with respect to the fiscal
year ended January 31, 1997, or written representations that no Forms 5 were
required, the Company believes that during the fiscal year ended January 31,
1997, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with,
except that each of the officers and directors of the Company named above have
not filed initial statements of beneficial ownership and James Hal has not filed
two reports on Form 4 regarding grants of options and Howard Halpern has not
filed one report on Form 4 regarding grants of options.
Item 10. Executive Compensation
Summary Compensation Table
The following table sets forth the compensation for each of the Company's
fiscal years since inception for (i) the Company's Chief Executive officer
during the fiscal year ended January 31, 1997 and (ii) each other executive
officer of the Company whose compensation during the fiscal year ended January
31, 1997 exceeded $100,000.
Page 10
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL COMPENSATION LONG TERM COMPENSATION
Securities
Restricted underlying All Other
Fiscal Annual Annual Other Annual Stock options LTIP Compen-sation
Name Year Salary Bonus Compensation Awards and SARs payouts
James Hal 1997 $60,000 $49,000 NONE NONE 2,500,000 NONE NONE
James Hal 1996 $65,000 NONE NONE NONE NONE NONE NONE
H. Halpern 1997 - $49,000 NONE NONE 2,500,000 NONE NONE
</TABLE>
Stock Option Grants Table
The following table provides information with regard to stock options
granted to the persons named in the foregoing compensation table:
<TABLE>
<C> <C> <C> <C>
% Total
Number of Securities Options/SARs
Underlying Granted to
Name of Options/SARs Granted Employees in Exercise of
Grantee Fiscal Year Base Price Expiration Date
James Hal 2,500,000 50% $0.11 Jan. 31, 2008
Howard Halpern 2,500,000 50% $0.11 Jan. 31, 2008
</TABLE>
All of the options granted to Mr. Hal were granted independent of the
Company's stock option plan. The options were awarded in consideration of Mr.
Hal agreeing to personally guaranty a $750,000 debenture of the Company, and the
grant of such options was approved by the 2 disinterested directors on the Board
of Directors of the Company.
Directors' Compensation
The Company's policy is not to pay compensation to directors who are also
employees of the Company for their service as directors. Additionally,
non-employee directors do not presently receive compensation for their service
as directors. The Company will, however, reimburse directors a fixed amount for
out-of-pocket expenses incurred for attendance at meetings.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information with respect to the beneficial
ownership of the outstanding Common Stock of the Company as of July 22, 1997 by
(i) each director of the Company, (ii) each executive officer of the Company and
each executive officer of the Company named in the Summary Compensation Table
above, (iii) each person known by the Company to own more than 5% of the
Company's Common Stock and (iv) all directors and officers as a group:
Page 11
<PAGE>
Beneficial
Ownership
of Common Stock Current Percent
Name and Address of Class
(1)
11,500,006 51.2%
James Hal (2)
7040 Tranmere Drive
Mississauga, Ontario
Canada L5S 1L9
Howard Halpern (2) 7,500,000 33.4%
160 Theodore Place
Thornhill, Ontario
Canada L4J 8E3
Halpern Family Trust 4,000,006 26.8%
650 Briar Hill Ave.
Suite 301
Toronto, Ontario
Canada M5N 1N3
Mark Halioua (3) 20,700 *
147 Beverly Glen Blvd.
Thornhill, Ontario
Canada L4J 4Y2
Robert Abourmad (4) 20,300 *
87 Bayhampton Crescent -------------
Thornhill, Ontario
Canada L4J 4Y2
All directors, executive 23,041,012 76.8%
officers and 5% owners, as a
group:
-------------
* Less than one percent.
- -------------------------------
(1) Computed on the basis of 14,942,566 shares of Common Stock and, with
respect to those persons holding options to purchase Common Stock
exerciseable within 60 days, the number of shares of Common Stock that
are issuable upon the exercise thereof.
(2) Includes options to purchase 7,500,000 shares of Common Stock
exerciseable within 60 days.
(3) Includes options to purchase 20,000 shares of Common Stock
exerciseable within 60 days and 300 shares of Common Stock owned by his
wife.
(4) Includes options to purchase 20,000 shares of Common Stock exerciseable
within 60 days.
Page 12
<PAGE>
Item 12. Certain Relationships and Related Transactions
In August 1995, James Hal, the President and principal stockholder of
the Company converted an aggregate of $71,267 in advances to the Company into
7,221,430 shares of the Company's Common Stock.
Item 13. Exhibits, List and Reports on Form 8-K
(a) Index to Financial Statements
Report of Independent Auditors
Financial Statements
Financial Data Schedule (filed electronically herewith)
Exhibits
3.1 Certificate of Incorporation of the Company, as amended*
3.2 By-Laws of the Company.*
4.1 Form of Junior 0% Convertible Subordinated Debenture due
October 30, 1999.**
4.2 Form of Series A Senior Convertible Subordinated Debenture due
October 29, 1997.**
4.3 Form of Series A Senior Convertible Subordinated Debenture due
October 29, 1997.**
10.1 Treasury International, Inc. 1995 Stock Option Plan.*
10.2 Share Purchase and Exchange Agreement dated August 18, 1995 between the
shareholders of J.J.A.M.P. Treasury International Corp., J.J.A.M.P
Treasury International Corp., and Treasury International, Inc.*
10.3 Agreement dated October 30, 1996 by and among Treasury International,
Inc., William Sarantos, Toula Sarantos, Martin Maxwell, Louis Chelin,
Verne Chelin, David Bereskin, In Trust, Joseph Myers, Eleanor Maxwell,
Berta Lenenfeld, Douglas Ferguson and Megatran Investments Ltd.***
10.4 Agreement dated as of June 18, 1996, as amended, by and among Treasury
International, Inc., Silver 925, Inc., Moche Bendayan, Solomon Bendayan
and Edward Kozial.****
21.1 Subsidiaries of the Company.
23.1 Consent of Bromberg & Associate.
Page 13
<PAGE>
27.1 Financial Data Schedule.
- ---------------
* Incorporated by reference from, the Company's Registration Statement on
Form 10-SB, as amended, originally filed with the SEC on October 21,
1996.
** Incorporated by reference from, the Company's Quarterly Report on Form
10-QSB, as filed with the SEC on December 20, 1996.
*** Incorporated herein by reference from, the Company's Current Report on
Form 8-K, as filed with the SEC on November 21, 1996.
**** Incorporated herein by reference from, the Company's Current Report
on Form 8-K, as filed with the SEC on March 17, 1997.
(b) During the three month period ended January 31, 1997, the Company
filed the following reports on Form 8-K:
On November 21, 1996, the Company filed a report on Form 8-K
reporting on Item 2 that it had acquired all of the outstanding
stock of Megatran Investments, Ltd.
On January 13, 1997 the Company filed an amendment to its report
on Form 8-K reporting on Item 7 the audited financial statements
of Megatran Investments, Ltd.
Page 14
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TREASURY INTERNATIONAL, INC.
By: /s/ James Hal
President and Chief
Executive Officer
By: /s/ Howard Halpern
Chief Financial Officer
Pursuant to the requirements of the Exchange Act, this Report has been
signed below by the following persons on behalf of the Company in the capacities
and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ James Hal President and Chief Executive July 28, 1997
Officer and Director
/s/ Howard Halpern Chief Financial Officer July 28, 1997
/s/ Mark Halioua Director July 28, 1997
/s/ Robert Abourmad Director July 28, 1997
Page 15
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1997
CONTENTS
AUDITORS' REPORT............................................... F1
CONSOLIDATED BALANCE SHEET..................................... F2
CONSOLIDATED STATEMENT OF DEFICIT.............................. F3
CONSOLIDATED STATEMENT OF OPERATIONS........................... F4
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' DEFICIENCY....................................... F5
CONSOLIDATED STATEMENT OF CASH FLOWS........................... F6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................... F7
Page 16
<PAGE>
AUDITORS' REPORT
Board of Directors and Shareholders
Treasury International, Inc.
We have audited the consolidated balance sheets of Treasury International,
Inc. as at January 31, 1997 and 1996, and the consolidated statements of
operations, deficit, shareholders' deficiency and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the corporation as at January
31, 1997 and 1996 and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
CHARTERED ACCOUNTANTS
Page F1
<PAGE>
TORONTO, CANADA
June 16, 1997
TREASURY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
AS AT JANUARY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS
1997 1996
CURRENT
Cash and short-term deposits $ --- $ 292,611
Accounts receivable 812,357 180,304
Inventories (Notes 2 and 4) 385,915 117,838
Sundry assets 144,541 1,852
Income taxes receivable 6,182 ---
_________ __________
1,348,995 592,605
GOODWILL 1,835,918 ---
CAPITAL ASSETS (Notes 2 and 5) 723,299 10,972
_________ __________
$3,908,212 $ 603,577
LIABILITIES
CURRENT
Bank indebtedness (Note 6) $ 394,407 $ ---
Accounts payable and accrued liabilities 1,018,928 49,317
Current portion of long-term debt 1,147,812 ---
__________ _________
2,561,147 49,317
DEFERRED INCOME TAXES 54,161 ---
LONG-TERM DEBT (Note 7) 1,304,461 ---
_________ _________
3,919,769 49,317
</TABLE>
SHAREHOLDERS' DEFICIENCY
<TABLE>
<S> <C> <C>
SHARE CAPITAL
Authorized
30,000,000 common shares at $.0001
Issued
14,942,566 common shares 1,494 1,222
Contributed surplus (Note 9) 1,543,861 1,077,866
DEFICIT (1,556,912) (524,828)
_________ _________
(11,557) 554,260
_________ _________
$3,908,212 $ 603,577
</TABLE>
APPROVED ON BEHALF OF THE BOARD
/s/ James Hal, Director /s/ Robert Abourmad, Director
Page F2
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF DEFICIT
YEAR ENDED JANUARY 31, 1997
1997 1996
Balance, beginning of year $ (524,828) $ (8,172)
Net loss for the year (1,032,084) (516,656)
Balance, end of year $(1,556,912) $ (524,828)
Page F3
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1997
<TABLE>
<S> <C> <C>
1997 1996
REVENUE...................................................................................... $2,123,631 $1,110,736
COST OF GOODS SOLD .......................................................................... 1,743,380 667,083
GROSS PROFIT ................................................................................ 380,251 443,653
EXPENSES
Warehouse and factory 139,660 --
General and administrative 956,086 957,607
Selling and delivery 55,382 --
1,151,128 957,607
LOSS FROM OPERATIONS before undernoted items ............................................... (770,877) (513,954)
Management fees 193,316 --
Financial 31,390 --
Amortization ............................................ 39,941 2,702
264,647 2,702
LOSS before income taxes ................................................................... (1,035,524) (516,656)
Provision for income taxes (recovery) ....................................................... (1,542) --
Deferred income taxes (recovery) ............................................................ (1,898) --
(3,440) --
NET LOSS..................................................................................... $ (1,032,084) $ (516,656)
Loss per common share ....................................................................... $ (0.08) $ (0.04)
Weighted average number of
common shares outstanding ........................................................... 13,221,096 12,223,690
</TABLE>
Page F4
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIENCY
YEAR ENDED JANUARY 31, 1997
ISSUED SHARE CONTRIBUTED
CAPITAL SURPLUS
____________ ___________
Issued 8,023,812 shares of common
stock in exchange for the assets
and liabilities of J.J.A.M.P
Treasury International Corp.
in August 1995 $ 802 $ 78,347
Issued 4,199,878 shares of common
stock in connection with a
private placement offering 420 999,519
________ _________
Balance - January 31,1996
1,222 1,077,866
Issued 1,000,000 shares of
common stock with a private
placement offering 100 197,900
Issued 800,000 shares of
common stock as per stock option
plan (Note 14) 80 39,920
Issued 635,000 shares of
common stock for consulting
services (Note 15) 64 131,686
Issued 283,876 shares of
common stock to former shareholders
of Mega Blow Moulding Limited (Note 16) 28 96,489
________ __________
Balance - January 31, 1997 $ 1,494 $1,543,861
======== ==========
Page F5
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED JANUARY 31, 1997
<TABLE>
<S> <C> <C>
1997 1996
Cash flows from operating activities
Net loss $(1,032,084) $ (516,656)
Adjustments to reconcile net
loss to net cash used in
operating activities
Increase in deferred income taxes 54,161 ---
Amortization 39,941 2,702
Increase in accounts receivable (632,053) (111,955)
Increase in income taxes receivable (6,182) ---
Increase in inventories (268,077) (38,342)
Decrease (increase) in sundry assets (142,689) 627
Increase (decrease) in accounts payable 969,611 (52,248)
________ ________
Net cash used in operating activities (1,017,372) (715,872)
Cash flows from financing activities
Long-term debt 2,452,273 ---
Advances by shareholders --- (71,267)
Proceeds on issue of common shares 466,267 1,079,044
_________ _________
Cash provided by financing activities 2,918,540 1,007,777
Cash flows from investing activities
Goodwill (1,835,918) ---
Purchase of capital assets (752,268) (2,695)
___________ __________
Cash used for investing activities (2,588,186) (2,695)
___________ __________
Decrease (increase) in cash and
short-term deposits (687,018) 289,210
Cash and short-term deposits,
beginning of year 292,611 3,401
___________ __________
Cash and short-term deposits
(bank indebtedness)
end of year $ (394,407) $ 292,611
============ ===========
</TABLE>
Page F6
<PAGE>
TREASURY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS AT JANUARY 31, 1997
1. Nature of business
Treasury International, Inc. is a holding company which through its
wholly-owned subsidiaries, J.J.A.M.P Treasury International Corp.,
Megatran Investments Ltd. and Mega Blow Moulding Limited, manufactures
and distributes a variety of consumer and industrial products. The
company was incorporated on August 18, 1995 in the state of Delaware.
2. Summary of significant accounting policies
(a) Basis of consolidation
These consolidated financial statements include the accounts
of the company and its wholly-owned subsidiaries,
J.J.A.M.P. Treasury International Corp., Megatran Investments
Ltd.and Mega Blow Moulding Limited.
(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
amortization.
Amortization is provided as follows:
Leasehold improvements - straight line over term of lease
Machinery and equipment - 20% diminishing balance
Office equipment - 20% diminishing balance
(d) Revenue recognition
Revenue is generally recognized as customers are invoiced for
products shipped by the company.
(e) Loss per share
Loss per share is calculated based on the weighted average
number of shares outstanding during the year of 13,221,096.
(f) Foreign currency translation
Substantially all assets and liabilities of the company's foreign
subsidiaries are translated at year-end exchange rates, while
revenue and expenses are translated at exchange rates prevail-
ing during the year. Adjustments for foreign currency trans-
lation fluctuations are included in net income.
Page F7
<PAGE>
TREASURY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS AT JANUARY 31, 1997
(g) General
These financial statements have been prepared in accordance with
U.S. generally accepted accounting principles (GAAP), as they
relate to these financial statements.
3. Business combination
On October 30, 1996, the company acquired 100% of the issued and
outstanding common shares of Megatran Investments Ltd., parent company of Mega
Blow Moulding Limited. The purchase price of $2,863,182 consisted of $1,361,302
cash and debentures of $1,501,880.
4. Inventories
Inventories consist of: 1997 1996
Raw materials $ 151,241 $ ---
Packaging 24,345 ---
Finished goods 210,329 117,838
_________ _________
$ 385,915 $ 117,838
========= =========
5. Capital assets
January 31 January 31
1997 1996
__________________________________________
Accumulated Net Net
Cost Amortization book value book value
_____ ____________ __________ __________
Leasehold improvements ....... $ 4,221 1,328 $ 2,893 $ ---
Machinery and equipment ...... 2,438,759 1,770,174 668,585 ---
Office equipment 103,074 51,253 51,821 10,972
$2,546,054 1,822,755 $ 723,299 $ 10,972
6. Bank indebtedness
The bank indebtedness includes an operating loan due on demand of
$218,978 and is secured by a registered general assignment of book
debts and a general security agreement of Mega Blow Moulding Limited.
Page F8
<PAGE>
TREASURY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS AT JANUARY 31, 1997
7. Long term debt
The long-term debt consists of term loans and three debentures payable.
The term loans are secured by a registered general security agreement
having a first charge over all assets other than real property of Mega
Blow Moulding Limited. The term loans bear interest at rates varying
from 6.47% to bank prime plus 1.75%. One of the three debentures which
is in the amount of $500,000 is subject to 8% interest. The remaining
two are interest-free debentures.
The term loans and debentures are payable as follows:
Term loans Debentures Total
1998 $ 147,185 $1,000,627 $1,147,812
1999 154,158 250,627 404,785
2000 161,594 250,626 412,220
2001 169,527 --- 169,527
2002 177,989 --- 177,989
2003 and following 139,940 --- 139,940
__________ ___________ __________
950,393 1,501,880 2,452,273
Less current portion 147,185 1,000,627 1,147,812
__________ ___________ __________
$ 803,208 $ 501,253 $1,304,461
8. Lease commitments
The minimum rentals payable by Mega Blow Moulding Limited under long-
term operating leases, exclusive of certain operating costs for which the
company is responsible, are approximately as follows:
1997 $158,217
1998 158,217
1999 158,217
2000 158,217
2001 and subsequent until expiry 158,217
________
$791,085
========
9. Contributed surplus
Contributed surplus represents the premium paid on the issuance of common
shares.
Page F9
<PAGE>
TREASURY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS AT JANUARY 31, 1997
10. Income taxes
The company has non-capital losses carry-forward for income tax
purposes amounting to approximately $1,340,00 expiring in various years
through 2012. The potential benefits of these tax losses have not been
recorded in these financial statements.
11. Significant business relationship
The company made sales of $1,253,219 representing approximately 59%
of total sales to two customers.
12. Claims and lawsuits
The company has no claims or lawsuits filed or pending against it.
13. Segmented revenue information
The company, through its subsidiaries, manufactures and distributes
consumer and industrial products to Canada, South America and other
foreign jurisdictions.
Geographic segments ............. 1997 1996
Revenues:
United States-Domestic .............. $1,026,848 $ 115,150
Export sales:
Canada .............................. 544,683 215,365
Other foreign jurisdictions ......... 552,100 780,221
_________ __________
$2,123,631 $1,110,736
========== ==========
14. Stock options
The company adopted a stock option plan as at August 18, 1995 for which
it has received 10,000,000 shares of common stock. Each stock option may be
exercised in whole or in part at any time within ten years of the option
grant date at an exercise price equal to the per share fair market value of
the company's common stock as at the time of the grant of the option.
Page F10
<PAGE>
TREASURY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS AT JANUARY 31, 1997
15. Consulting services
The company has signed consulting agreements with various consulting
and public relations firms. Out of a total 1,435,000 common shares
granted, 635,000 common shares were issued to the recipients.
16. Mega Blow Moulding Limited
The company issued 283,786 common shares to the former shareholders of
Mega Blow Moulding Limited, in lieu of management fees owed by Mega Blow
Moulding Limited.
17. Subsequent event
Subsequent to the year end, the company acquired all of the issued
and outstanding capital stock of Silver 925, Inc., a company which
manufactures and distributes jewellery products. Silver 925, Inc. is
located in the state of Florida.
The purchase price of $2,000,000, is payable in five annual instalments
of $400,000, with each instalment payable 90% in common shares and 10%
in cash.
Page F11
<PAGE>
Page 17
<PAGE>
Exhibit 21.1
J.J.A.M.P. Treasury International Corp.
Megatran Investments Ltd.
Mega Blow Moulding Limited
Silver 925, Inc.
Exhibit 23.1
Consent of Independent Accountants
The Board of Directors
Treasury International, Inc.:
We consent to the use of our report included herein and to the reference
to our firm in the 10-KSB.
Bromberg & Associate
Page 18
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from the 10KSB and is
qualified in its entirety by reference to such
financial statements.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 812,317
<ALLOWANCES> 0
<INVENTORY> 385,915
<CURRENT-ASSETS> 1,348,995
<PP&E> 2,559,217
<DEPRECIATION> 1,822,755
<TOTAL-ASSETS> 3,908,212
<CURRENT-LIABILITIES> 2,561,147
<BONDS> 1,501,880
0
0
<COMMON> 1,494,000
<OTHER-SE> 1,543,861
<TOTAL-LIABILITY-AND-EQUITY> 3,908,212
<SALES> 2,123,631
<TOTAL-REVENUES> 2,123,631
<CGS> 1,743,380
<TOTAL-COSTS> 1,384,385
<OTHER-EXPENSES> (0)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,390
<INCOME-PRETAX> (1,035,524)
<INCOME-TAX> (3,440)
<INCOME-CONTINUING> 770,877
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,032,084)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.02)
</TABLE>
