UNITED STATES
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, 1999
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 --------------------------------
Incorporation or Organization) (IRS Employer Identification No.)
1081 King St., E 2nd Floor N2G 2N1
Kitchener, Ontario ---------
------------------------------- (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (519) 579-3424
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: None
Title of Each Class: Name of Each Exchange on which Registered:
------------------- -----------------------------------------
Common Stock, par value $0.0001 None
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 __ No |X|
<PAGE>
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, 1999, 88,320,677 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 20, 1999 was $6,528,009.
<PAGE>
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.'s focus is the development and acquisition of
proprietary assets in vertical markets that offer significant growth potential.
Treasury's mandate is to enhance shareholder value through an asset management
and acquisition strategy that targets companies where Treasury's management,
shareholders and corporate structure can be leveraged to improve strategic
market position, asset productivity and growth potential.
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. JJAMP was dissolved on August 26, 1997 as part of the
Company's efforts to simplify its corporate structure. The operations of JJAMP
are now conducted through the Company.
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 that owns all of the issued and outstanding common stock of
Mega Blow Moulding Limited ("Mega Blow"). 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. On
December 1, 1998, the Company sold all of its indirect equity interest in Mega
<PAGE>
Blow for $5,100,000, of which $250,000 was paid in cash, $850,000 is held as a
note receivable to be paid directly to Mega Blow's bank to repay its line of
credit and the remaining $4,000,000 is evidenced by a promissory note.
On February 25, 1997 the Company acquired all of the outstanding capital
stock of Silver 925, Inc. ("Silver"), a Florida corporation based in Miami, at
an aggregate purchase price of $2,000,000, of which $200,000 was due as a cash
payment over a five-year period and $1,800,000 was to be paid in shares of
Treasury's common stock. On September 19, 1997, the Company entered into an
Agreement with James Hal, Silver and each of Moche Bendayan, Salomon Bendayan
and Edward Kozial (collectively, the "Purchasers"), pursuant to which the
Company resold to the Purchasers all of the outstanding shares of Silver's
common stock (the "Silver Shares"). In consideration for the repurchase of the
Silver Shares and in settlement of all obligations of the Company and James Hal
under the terms of that certain Agreement dated as of June 18, 1996, as amended
as of February 25, 1997, the Company issued to the Purchasers an aggregate of
752,500 shares of the Company's common stock.
The Company's principal executive offices are located at 1081 King Street,
E 2nd Floor, Kitchener, Ontario, Canada N2G 2N1, and its telephone number is
(519) 579-3424.
Recent Development
On May 7, 1999, Treasury completed the purchase of Pioneer Media Group
("Pioneer"), a company that provides technology based marketing solutions (print
and Internet catalogs and end to end e-commerce enterprise solutions), digital
asset management and creative design for business to business communication.
Pioneer is also involved in the development of Internet based enterprise
commerce solutions that allow companies to link their customers and vendors as
well as integrate internal applications on a variety of networks and platforms.
Pioneer has built a proprietary database of product information regarding
over 300 of the leading manufactuers of industrial products. From this database,
Pioneer publishes print, CD-ROM and Internet based catalog solutions for its
industrial customers located across Canada. Pioneer receives and reproduces
information for the database, using the latest technology tools, in the format
required for the target publishing media. Pioneer is responsible for the
maintenance of the electronic information and the output applications. All
printing and CD replication is outsourced through 3rd party sources with Pioneer
providing all pre-press and authoring services.
Pioneer also builds dynamic web sites which enable Internet users to
access the information available from a company's print catalog. Efficiencies
are built into the publishing process using a single database to serve
information to each publishing media. The strength of Pioneer is its ability to
provide customers with a complete end-to-end print, CD-ROM and Internet
publishing solution. Pioneer's current target markets include distributors and
manufacturers of industrial, maintenance repair and operation, fastener, fluid
power, power transmission, electrical, plumbing, occupational health and safety
products.
<PAGE>
Corporate Summary and Growth Strategies
With the change of management and redefinition of the Company's business,
Treasury will now pursue the following objectives defined by our mandate:
1. Strategic Market Position. Pioneer Media Group,
through initiatives such as database catalog publishing
and dynamic web site development, offers Treasury an
early entry into the rapidly developing Internet and
information asset management arena. Our competitive
advantages include our ability to adapt to the changing
technological environment and the implementation of
business solutions that leverage Pioneer's proprietary
information database. Treasury is also seeking an
alliance with a transaction-based software solutions
provider.
2. Asset Productivity. The consolidation of corporate
activities allows us to focus our energy and resources
on emerging opportunities, accountable and
complimentary to Treasury. The resulting synergies
from consolidation and the organization's efficient
business process yields higher velocity of
transactions, shorter time in getting products to
market and better return for each asset dollar
investment.
3. Growth Potential. The Internet and other emerging
technologies have and will continue to have a
tremendous impact on today's businesses. In
particular, the rate at which information is exchanged
will affect a company's productivity, profitability and
survival. We believe that Treasury is well positioned
to provide beneficial technology-based business
solutions that focus on awareness (products and
capabilities), preference (name and brand recognition)
and market share.
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.
Research and Development Costs
During its last three 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 June 30, 1999, the Company had 2 full time officers, 3 sales and
marketing representatives, 1 administrator and 5 production personnel. None of
the Company's employees are represented by a labor union or are subject to a
collective bargaining agreement. The Company considers its relations with its
employees to be good.
<PAGE>
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.
ITEM 2. Properties
The Company leases 2,200 square feet of space in Kitchener, Ontario,
Canada as administrative offices and production facilities at a rental rate of
$1300 (Canadian Dollars) per month. The current lease period expires on August
31, 2001, with an option to renew until August 31, 2003.
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.
On June 8, 1998, an amendment to the Certificate of Incorporation
increasing the authorized shares of common stock from 50,000,000 to 100,000,000.
On November 30, 1998, the sale of 100% of the stock of the Company's
indirect subsidiary Mega Blow Moulding Limited, a company engaged in the
manufacture and marketing of custom plastic containers, to 1299004 Ontario
Corporation, an Ontario corporation (the "Sale") on the terms contained in that
certain Stock Purchase Agreement dated August 11, 1998 and amendment thereto
dated as of September 30, 1998.
<PAGE>
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 December, 1997
through January 31, 1999 (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
------------- -------- -------
April 30, 1997 $0.31 $0.19
July 31, 1997 $0.20 $0.20
October 31, 1997 $0.06 $0.06
January 31, 1998 $0.15 $0.142
April 30, 1998 $0.046 $0.039
July 31, 1998 $0.13 $0.125
October 31, 1998 $0.09 $0.085
January 31, 1999 $0.08 $0.08
As of June 30, 1999, there were 140 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. None of the following unregistered sales involved underwriters, and there
were no underwriting discounts or commissions.
Exemption
Title of Amount of Price or under
Date Securities Transaction Type Securities Consideration Securities
Sold Sold Act
- ---------------------------------------------------------------------------
Feb. 23, Common For Services 1,400,000 $190 sec. 4 (2)
1998 Stock Rendered
May 5, 1998 Common Debt Conversion 1,000,000 $27,000 sec. 4 (2)
Stock (729759 Alberta
Limited)
May 5, 1998 Common Debt Conversion 1,000,000 $27,000 sec. 4 (2)
Stock (GHQ Limited)
Aug. 10, Common Cancellation of 8,000,000 To cancel Regulation S
1998 Stock Options to James 11,500,000
Hal options
Aug. 10, Common Cancellation of 4,000,000 To cancel Regulation S
1998 Stock Options to 7,500,000
Howard Halpern options
<PAGE>
Exemption
Title of Amount of Price or under
Date Securities Transaction Type Securities Consideration Securities
Sold Sold Act
- ---------------------------------------------------------------------------
Oct. 30, Common Debt Conversion 33,670,000 $1,000,000 Regulation S
1998 Stock
Nov. 30, Common Sale of Silver 113,750 N/A Regulation S
1998 Stock 925
Jan. 28, Common For Services 2,000,000 $60,000 Regulation S
1999 Stock Rendered
ITEM 6. Management's Discussion and Analysis or Plan of Operation
Overview
Treasury is an asset management company in the business of acquiring other
organizations and creating resultant synergies primarily in North America.
During the next 12 to 24 months, Treasury will continue its expansion
goals. The company's acquisition strategy achieves the following objectives: i)
gain strategic position for its subsidiaries, ii) improve asset productivity and
iii) improve growth potential in both emerging technologies and key targeted
vertical market sectors. To increase its future subsidiaries' market share, the
Company will seek to acquire key competitors or companies having important
products and synergies with existing company operations. Present operations are
also planned to be streamlined in order to reduce costs.
The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company included in this annual report.
Fiscal 1999 compared to Fiscal 1998
Net sales decreased during fiscal year 1999 to $3.6 million, down
approximately 42% from $6.1 million in fiscal year 1998. The decrease in net
sales reflects the inclusion of only nine months' of the results of operations
of Mega Blow, a former subsidiary, compared to twelve months in 1998. The
Company experienced a net income of $2,158,635 for its fiscal year ended January
31, 1999, an increase of approximately 241% when compared to the Company's net
loss of $1,529,782 in fiscal year ended January 31, 1998. Among the significant
items impacting the 1999 results were the net gain of $2,811,231 realized on the
sale of Mega Blow which occurred on November 30, 1998.
The cost of sales for fiscal 1999 represented 76% of net sales, or
$2,714,875, representing nil change compared to 76% of net sales, or $4,628,960,
in fiscal 1998.
<PAGE>
Operating, general and administrative expenses decreased in fiscal 1999 to
$1,446,337, or approximately 40% of sales, compared to $2,126,998, or
approximately 35% of sales, in fiscal 1998. The decrease is attributable to the
inclusion of only ten months' results of operations of Mega Blow in fiscal year
1999, compared to twelve months' results of operations in fiscal year 1998.
Fiscal 1998 Compared to Fiscal 1997
Net sales increased during the fiscal year ended January 31, 1998 to over
$6.1 million, up approximately 189% from $2.1 million in the fiscal year ended
January 31, 1997. The increase in net sales reflects the inclusion of Mega
Blow's results of operations from the twelve month period. The Company
experienced a net loss of $1,437,986 for its fiscal year ended January 31, 1998,
an increase of approximately 40% when compared to the Company's net loss of
$1,032,084 in the fiscal year ended January 31, 1997. Among the signficant items
impacting the 1998 results were increased expenses resulting from the
disposition of Silver as well as extensive marketing and consulting arrangements
undertaken by the company.
The cost of sales for fiscal 1998 represented 76% of net sales, or
$4,628,960, a 166% increase compared to 82% of net sales, or $1,743,380, in
fiscal 1997. The increase is attributable to significantly greater net sales
from Mega Blow's operations.
Operating, general and administrative expenses increased in fiscal 1998 to
$1,846,345, or approximately 30% of sales, compared to $1,151,128, or
approximately 54% of sales, in fiscal 1997. The increase is attributable to
significantly higher sales and expenses related to the disposition of Silver.
Liquidity and Capital Resources
The primary sources of liquidity for the Company were funds generated from
the sale of Mega Blow.
On October 30, 1996, the company acquired 100% of the issued and
outstanding common shares of Megatran Investments Ltd., parent company of Mega
Blow. The purchase price of $2,863,182 consisted of $1,361,302 cash and
debentures of $1,501,880. Subsequently, on November 30, 1998, the company sold
Mega Blow for $5,100,000, of which $250,000 was received as a deposit,
$4,000,000 and $850,000 were received as a promissory note and a note receivable
respectively.
As of January 31, 1999, current assets totalled $873,054 compared to
$1,026,462 at January 31, 1998. The decrease is attributable to the Company's
sale of Mega Blow and the resultant elimination of physical inventories. As of
January 31, 1999, accounts receivables totalled $850,000 compared to $608,659 as
of January 31, 1998, representing an increase of 40%, due to the offsetting
effects of the elimination of customer trade receivables of Mega Blow and the
<PAGE>
recognition of the note receivable for $850,000 on the sale of Mega Blow. This
note was due on May 31, 1999 but company management agreed to extend the due
date of the note to July 22, 1999. At fiscal year end 1999, the Company had cash
on hand of $19,956. The cash balance was utilized for working capital purposes.
The Company also holds a promissory note receivable from the purchasers of
its subsidiary in the amount of $4,000,000. This promissory note was due on May
31, 1999 but the Company's management agreed to extend the due date of the
promissory note to July 22, 1999. As of July 20, 1999 the note is still
outstanding.
As of January 31, 1999, current liabilities totalled $1,324,409 compared
to $2,496,876 as of January 31, 1998. The decrease is attributable to the sale
of the Company's subsidiary.
As of January 31, 1999, the Company remained as guarantor to Mega Blow
and, its banker, the Royal Bank of Canada to a maximum amount of $850,000 that
was negotiated as part of the sale of Mega Blow. This amount is reflected as the
current portion of long-term debt as referenced in note 6 of the financial
statements.
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 realize on
its promissory and notes receivables and therefore be able to repay its debts.
If the funds available after the existing promissory and note receivables,
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 establishing lending facilities,
project-specific financings and additional public or private debt or equity
financings.
The Company also received proceeds from the transactions listed in the
table regarding unregistered sales of common stock in Item 5 ("Market For Common
Equity and Related Stockholder Matters").
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 F-I.
ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
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
- ---- --- ------
Dale Doner 43 Chief Executive Officer, President
and Chairman of the Board
Marlin Doner 33 Chief Operating Officer, Chief
Financial Officer and Director
Lawrence Zeiben 32 Director
Mark Murphy 37 Director
James Hal (a.k.a. James 37 Director
Halioua)
Messrs. Dale Doner and Marlin Doner are brothers.
Mr. Dale Doner has been the Chief Executive Officer, President and
Chairman of the Board of Treasury since January 22, 1999. Since 1992 as an
independent business consultant, Mr. Doner has directed corporate mergers,
acquisitions and restructuring and been involved in public company turnarounds.
In addition, Mr. Doner and family operate a 960 acre foundation pedigree forge
seed production farm.
Mr. Marlin Doner has been the Chief Operating Officer and a director of
Treasury since March 1, 1999 and Chief Financial Officer since June 1, 1999. In
1993, Mr. Doner founded Pioneer Media Group, a leading Canadian publisher of
industrial catalogs. From 1987 to 1992 he was President of Pioneer Safety Inc.
("PSI"), a Canadian distributor of industrial and occupational health and safety
products. Upon the sale of the assets of PSI, Mr. Doner served as Marketing
Coordinator for the acquiring company. Mr. Doner received his Bachelor of
Economics from Wilfrid Laurier University in 1987. Since 1995, he has been a
director for the Evangelical Missionary Church of Canada.
Mr. Mark Murphy has been a director of Treasury since July 20, 1999. From
1990 to 1998, Mr. Murphy served as President of Virtual Systems Inc. where he
oversaw the product development and VAR channel management for an award winning
retail point of sale system. In 1998, Mr. Murphy established Virtual Systems
Solutions Inc. to provide custom software products and business automation
solutions. Mr. Murphy received his Bachelor of Economics from Albion College in
1982.
<PAGE>
Mr. Lawrence Zeiben has been a director of Treasury since January 22, 1999.
From 1990 to 1995, Mr. Zeiben was a consultant in tax and estate planning. Since
1998, as President of Corporate Tax he has been controller for several
multi-national firms. Further, Mr. Zeiben has extensive knowledge of taxation,
corporate finance and strategic planning.
Mr. James Hal has been a Director of the Company since the Company's
inception in August 1995. From August 1995 to January 1999, Mr. Hal also served
as Chief Executive Officer and Chairman of the Board. 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).
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, 1998, or
written representations that no Forms 5 were required, the Company believes that
during the fiscal year ended January 31, 1999, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with, including each of the officers and
directors of the Company named above have filed initial statements of beneficial
ownership and have filed reports on Form 4 regarding transactions in the
securities.
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 the (i) the Company's Chief Executive officer
during the fiscal year ended January 31, 1999 and (ii) each other executive
officer of the Company whose compensation during the fiscal year ended January
31, 1999 exceeded $100,000.
Name Fiscal Annual Compensation Long-Term Compensation
Year
-----------------------------------------------
Annual Annual Securities
Salary Bonus underlying options
- ----------------------------------------------------------------------
James Hal (1) 1999 $47,517 -- 200,000
Dale Doner(2) 1999 $15,000 -- --
- ------------------
1. Resigned on January 22, 1999.
2. Appointed on January 22, 1999.
<PAGE>
Stock Option Grants Table
The following table provides information with regard to stock options
granted to the persons named in the foregoing compensation table:
Number of % Total Options
Securities Granted to Exercise Expiration
Name of Grantee Underlying Employees in Price Date
Options Fiscal Year
Granted
- ------------------------------------------------------------------------
James Hal 200,000 41.7% $0.10 06-25-98
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 20, 1999 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:
Name and Address Beneficial Ownership of Current Percent
Common Stock of Class (1)
---------------------------------------------------------------------
Dale Doner
1081 King St., E 28,537,599 31%
Kitchener, Ontario
Canada N2G 2N1
Marlin Doner
1081 King St., E 3,630,000 4%
Kitchener, Ontario
Canada N2G 2N1
<PAGE>
Name and Address Beneficial Ownership of Current Percent
Common Stock of Class (1)
---------------------------------------------------------------------
Mark Murphy
37630 Interchange 4,929,000 5%
Dr.,
Farmington Hills, MI
USA 48335
All directors,
executive officers 37,096,599 41%
and 5% owners, as a
group:
- ------------------------------------------
* Less than one percent.
(1) Computed on the basis of 89,320,677 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.
ITEM 12. Certain Relationships and Related Transactions
On August 10, 1998, the Company issued to James Hal, a director and the
former Chief Executive Officer of the Company, and Howard Halpern, the former
Chief Financial Officer and a former director of the Company, 8,000,000 and
4,000,000 shares, respectively, in consideration of $1,200 for services rendered
and the cancellation of 19,000,000 options exercisable at $.05 per share.
ITEM 13. Exhibits, List and Reports on Form 8-K
(a) 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 Stock Purchase Agreement, dated as August 11, 1998 and amendment thereto
dated as of September 30, 1998, by and between Treasury International,
Inc. and 1299004 Ontario
Corporation.***
<PAGE>
21 Subsidiaries of the Company
23.1 Consent of Bromberg & Associate
27.0 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 by reference from the Company's Current Report on Form 8-K,
as filed with the SEC on May 27, 1999.
(b) Reports on Form 8-K
None.
<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/ Dale Doner
__________________________________
Dale Doner
Chief Executive Officer
By: /s/ Marlin Doner
__________________________________
Marlin Doner
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/ Dale Doner Chief Executive Officer, President July 28, 1999
Dale Doner and Chairman of the Board
/s/ Marlin Doner Chief Financial Officer July 28, 1999
Marlin Doner and Director
/s/ Lawrence Zeiben Director July 28, 1999
Lawrence Zeiben
/s/ Mark Murphy Director July 28, 1999
Mark Murphy
/s/ James Hal Director July 28, 1999
James Hal
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
AS AT JANUARY 31, 1999
INDEX
Page
Auditors' report.......................................... F-2
Consolidated balance sheet................................ F-3
Consolidated statement of deficit......................... F-5
Consolidated statement of operations...................... F-6
Consolidated statement of changes in shareholders' equity. F-7
Consolidated statement of cash flows...................... F-8
Notes to consolidated financial statements................ F-9
F-1
<PAGE>
AUDITORS' REPORT
Bromberg & Associate
1183 Finch Ave. West, Suite 305
Toronto, Ontario M3J 2G2
Phone: (416)663-7521
CHARTERED ACCOUNTANTS Fax: (416) 663-1546
Board of Directors and Shareholders
Treasury International, Inc.
We have audited the consolidated balance sheets of Treasury International, Inc.
as at January 31, 1999 and 1998, and the consolidated statements of operations,
deficit, shareholders' equity 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,
1999 and 1998 and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.
BROMBERG & ASSOCIATES
CHARTERED ACCOUNTS
TORONTO, CANADA
JUNE 15, 1999
F-2
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
AS AT JANUARY 31, 1999
ASSETS
1999 1998
CURRENT
Bank $ 19,956 $ -
Accounts receivable (Note 4) 850,000 608,659
Inventories - 345,783
Sundry assets 3,098 72,020
------------ -----------
873,054 1,026,462
PROMISSORY NOTE RECEIVABLE (Note 4) 4,000,000 -
GOODWILL - 1,744,122
CAPITAL ASSETS (Notes 3 and 5) 6,935 620,279
$4,879,989 $3,390,863
============ ===========
LIABILITIES
CURRENT
Bank indebtedness (Note 6) $ - $ 492,012
Accounts payable and accrued 83,807 997,188
liabilities
Current portion of long-term 1,240,602 1,007,676
debt (Note 6)
----------- -----------
1,324,409 2,496,876
DEFERRED INCOME TAXES - 52,957
LONG-TERM DEBT - 1,117,392
----------- -----------
$1,324,409 $3,667,225
=========== ===========
F-3
<PAGE>
SHAREHOLDERS' EQUITY
SHARE CAPITAL
Authorized
100,000,000 common shares at $.0001
Issued
88,320,677 common shares 8,832 2,461
Contributed surplus (Note 9) 4,455,076 2,788,140
DEFICIT (908,328) (3,066,963)
----------- -----------
3,555,580 (276,362)
----------- -----------
$4,879,989 $3,390,863
=========== ===========
APPROVED ON BEHALF OF THE BOARD
/s/ James Hal /s/ Marlin Doner
____________________________ _____________________________________
James Hal, Director Marlin Doner, Director
F-4
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF DEFICIT
YEAR ENDED JANUARY 31, 1999
1999 1998
Balance, beginning of year $(3,066,963) $(1,556,912)
Net income (loss) for the year 2,158,635 (1,529,782)
Adjustments to prior year taxes - 19,731
------------- ------------
Balance, end of year $(908,328) $(3,066,963)
============= ============
F-5
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1999
1999 1998
REVENUE $3,583,715 $6,128,827
COST OF GOODS SOLD 2,714,875 4,628,960
----------- -----------
GROSS PROFIT 868,840 1,499,867
----------- -----------
EXPENSES
Warehouse and factory 320,320 568,465
General and administrative 978,769 1,403,193
Selling and delivery 147,248 155,340
----------- -----------
1,446,337 2,126,998
----------- -----------
LOSS FROM OPERATIONS before undernoted (577,497) (627,131)
items
Financial 80,463 128,191
----------- -----------
LOSS BEFORE INCOME TAXES (657,960) (755,322)
Deferred income taxes (5,364) (1,204)
----------- -----------
NET LOSS FROM CONTINUED OPERATIONS (652,596) (754,118)
NET GAIN ON SALE OF SUBSIDIARY (Note 3) 2,811,231 -
NET LOSS FROM DISCONTINUED OPERATIONS - (282,260)
NET LOSS ON DISPOSAL OF DISCONTINUED - (493,404)
OPERATIONS
----------- -----------
NET INCOME (LOSS) $2,158,635 $(1,529,782)
=========== ===========
Income (loss) per common share $ 0.03 $ (0.09)
=========== ===========
Weighted average number of common $67,679,323 $17,955,714
shares outstanding
=========== ===========
F-6
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
YEAR ENDED JANUARY 31, 1999
COMMON PAID-IN CONTRIBUTED
SHARES CAPITAL SURPLUS
------ ------- ----------
Balance-January 31, 1998 24,610,495 $ 2,461 $2,788,140
Issued 4,500,000 shares of 4,500,000 450 61,750
common stock for cash
consideration of $62,200
Issued 5,332,500 shares of 5,332,500 533 49,792
common stock for consulting and
public relations services
Issued 2,353,932 common shares 2,353,932 235 39,765
toward reduction of debentures
payable
-----------------------------------
Balance-April 30, 1998 36,796,927 3,679 2,939,447
-----------------------------------
Issued 33,670,000 common shares 33,670,000 3,367 1,318,513
toward reduction of debentures
payable
Issued 3,740,000 common shares 3,740,000 374 19,366
for consulting and public
relations services
-----------------------------------
Balance-July 31, 1998 74,206,927 7,420 4,277,326
-----------------------------------
Issued 12,000,000 common shares 12,000,000 1,200 -
in lieu of compensation
-----------------------------------
Balance-October 31, 1998 86,206,927 8,620 4,277,326
-----------------------------------
Issued 113,750 common shares 113,750 12 7,950
for consulting and public
relations services
Issued 2,000,000 common shares 2,000,000 200 169,800
for consulting and public
relations services
-----------------------------------
Balance-January 31, 1999 88,320,677 $8,832 $ 4,455,076
===================================
F-7
<PAGE>
TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED JANUARY 31, 1999
1999 1998
Cash flows from operating activities
Net income (loss) $2,158,635 $(1,529,782)
Adjustment to reconcile net loss to - -
net cash used in operating
activities
Proceeds on issue of common shares 78,227 730,946
for services received
Adjustment to prior year income taxes - 19,731
Decrease in deferred income taxes (52,957) (1,204)
Amortization 84,147 229,450
Decrease (Increase) in accounts (241,341) 203,698
receivable
Decrease in income taxes receivable - 6,182
Decrease in inventories 345,783 40,132
Decrease in sundry assets 68,922 72,521
Decrease in accounts payable (913,381) (21,740)
----------- -----------
Net cash provided by (used for) operating 1,528,035 (250,066)
activities
----------- -----------
Cash flows from financing activities
Promissory note receivable (4,000,000) -
Long-term debt (884,466) (217,205)
Proceeds on issue of common shares 1,595,080 404,300
----------- -----------
Cash provided by (used for) financing (3,289,386) 187,095
activities
----------- -----------
Cash flows from investing activities
Goodwill 1,744,122 -
Net (purchase) disposal of capital 529,197 (34,634)
assets
----------- -----------
Cash provided by (used for) investing 2,273,319 (34,634)
activities
----------- -----------
Decrease (increase) in bank indebtedness 511,968 (97,605)
Bank indebtedness, beginning of year (492,012) (394,407)
----------- -----------
Cash (Bank indebtedness), end of year $ 19,956 $(492,012)
=========== ===========
F-8
<PAGE>
TREASURY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS AT JANUARY 31, 1999
1. Nature of business
Treasury International, Inc. is a holding company which 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 the revenues and expenses of its wholly-owned subsidiaries,
Megatran Investments Ltd. and Mega Blow Moulding Limited, from November
1, 1996 to November 30, 1998, which was the date Mega Blow Moulding
Limited was sold.
(b) Capital assets
Capital assets are recorded at cost less accumulated amortization.
Amortization is provided as follows:
Office equipment - 20% diminishing balance
(c) Revenue recognition
Revenue is recognized when customers are invoiced for products shipped
by the company.
(d) Income per share
Income per share is calculated based on the weighted average number of
shares outstanding during the period of 67,679,323.
(e) General
These financial statements have been prepared in accordance with United
States generally accepted accounting principles (GAAP), as they relate
to these financial statements.
3. Business combination and sale
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.
F-9
<PAGE>
The purchase price of $2,863,182 consisted of $1,361,302 cash and debentures
of $1,501,880. On November 30, 1998, the company sold Mega Blow Moulding
Limited for $5,100,000 of which $250,000 was received as a deposit and
$4,850,000 of notes receivable are owed to the company by the purchasers.
4. Promissory note receivable
The promissory note receivable is due May 31, 1999 in the amount of
$4,000,000. There is a note also due May 31, 1999 in the amount of $850,000
as a result of the sale of Mega Blow Moulding Limited relating to the
repayment of the intercompany payable and bank debt.
Further to the Stock Purchase Agreement, dated August 11, 1998, the company
agreed to extend the due date of the notes to July 22, 1999.
5. Capital assets
1999 1998
------------------------------- --------
Accumulated Net Net
Cost Amortization book book
value value
--------- ---------- -------- --------
Leasehold $ - $ - $ - $2,556
improvements
Machinery and - - - 575,488
equipment
Office equipment 18,314 11,379 6,935 42,235
--------- ---------- -------- --------
$18,314 $11,379 $6,935 $620,279
========= ========== ======== ========
6. Current portion of long term debt
The current portion of long-term debt is owed to the company's former
subsidiary Mega Blow Moulding Limited.
7. Income taxes
As at January 31, 1999 the company had a net operating loss carryover of
approximately $2,623,000 expiring in various years through 2014.
8. General and administrative expenses
General and administrative expenses for the year ended January 31, 1999
include fees paid by the company for consulting and public relations
services in the amount of $289,707.
9. Contributed surplus
Contributed surplus represents the premium paid on the issuance of common
shares.
F-10
<PAGE>
EXHIBIT 21
None.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JANUARY 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 19,956
<SECURITIES> 0
<RECEIVABLES> 4,850,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,873,054
<PP&E> 18,314
<DEPRECIATION> (11,379)
<TOTAL-ASSETS> 4,879,989
<CURRENT-LIABILITIES> 1,324,409
<BONDS> 0
0
0
<COMMON> 8,832
<OTHER-SE> 4,455,076
<TOTAL-LIABILITY-AND-EQUITY> 4,879,989
<SALES> 3,583,715
<TOTAL-REVENUES> 6,394,946
<CGS> 2,714,875
<TOTAL-COSTS> 1,446,337
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80,463
<INCOME-PRETAX> 2,158,635
<INCOME-TAX> 0
<INCOME-CONTINUING> (652,596)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,158,635
<EPS-BASIC> .03
<EPS-DILUTED> .02
</TABLE>
