UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
(X) Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 For the quarterly period ended July 31, 1999
OR
( ) Transition Report pursuant to 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 (IRS Employer Identification No.)
or Organization)
1081 King St., E 2nd Floor
Kitchener, Ontario N2G 2N1
----------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
-------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
------- ------
As of July 31, 1999, 93,320,677 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 30, 1999 was $6,746,889.
<PAGE>1
PART I Financial Information
ITEM 1. Financial Statements TREASURY INTERNATIONAL, INC.
ACCOUNTANTS' REVIEW REPORT
1183 Finch Ave.West, Suite 305
Toronto, Ontario M3T 2G2
CHARTERED ACCOUNTANTS Phone: (416) 663-7521
Fax: (416) 663-1546
Board of Directors and Shareholders
Treasury International, Inc.
We have reviewed the accompanying interim consolidated balance sheet of Treasury
International, Inc. as at July 31, 1999 and interim consolidated statements of
operations and cash flows for the six month period then ended, in accordance
with statements on standard for accounting and review services issued by the
American Institute of Certified Public Accountants. All information included in
these interim consolidated financial statements is the representation of
management of Treasury International, Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted audit standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to be in conformity with generally accepted accounting principles.
BROMBERG & ASSOCIATE
CHARTERED ACCOUNTANTS
TORONTO, CANADA
NOVEMBER 19, 1999
<PAGE>2
Treasury International, Inc.
Interim Consolidated Balance Sheet
As at July 31, 1999
(Unaudited)
ASSETS
<TABLE>
<S> <C> <C>
July 31, 1999 January 31, 1999
---------------- -----------------
Current
Bank $ - $ 19,956
Accounts Receivable 262,516 850,000
Due from Wexcap Group 3,000 -
Sundry Assets 16,404 3,098
---------------- -----------------
TOTAL CURRENT ASSETS 281,920 873,054
Promissory Note Receivable (Note 3) 3,990,000 4,000,000
goodwill (Notes 2b & 4) 384,214 -
Research and development costs (Note 2c & 5) 52,770 -
capital assets (Notes 2d & 6) 13,394 6,935
----------------- ------------------
TOTAL ASSETS $ 4,722,298 $ 4,879,989
================= ==================
LIABILITIES
Current Liabilities
Bank Indebtedness $ 28,620 $ -
Account Payable and Accrued Liabilities 85,450 83,807
Current portion of long-term debt (Note 7) 1,240,602 1,240,602
----------------- -----------------
1,354,672 1,324,409
Notes Payable (Note 8) 285,180 -
----------------- -----------------
TOTAL LIABILITIES $ 1,639,852 $ 1,324,409
----------------- -----------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL
Authorized
100,000,000 common shares
Issued
93,320,677 common shares
9,332 8,832
CONTRIBUTED SURPLUS (Note 10) 4,746,576 4,455,076
DEFICIT (Note 11) (1,673,462) (908,328)
----------------- -----------------
3,082,446 3,555,580
----------------- -----------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 4,722,298 $ 4,879,989
================= =================
<PAGE>3
Treasury International, Inc.
Interim Consolidated Statement of Deficit
Six Months Ended July 31, 1999
(Unaudited)
July 31, 1999 July 31, 1998
----------------- ------------------
Balance, Beginning of Period ($908,328) ($2,975,167)
Adjustment to Selling Price of Mega Blow Mouldings Limited (Note 11) ($850,000) -
Net (Income) Loss for the Period 84,866 (189,595)
----------------- -----------------
Balance, End of Period ($1,673,462) ($3,164,762)
================= =================
<PAGE>4
Treasury International, Inc.
Interim Consolidated Statement of Operations
Three Months Ended July 31, 1999
(Unaudited)
July 31,1999 July 31,1998
----------------- ----------------
REVENUE From Operations $ 83,350 $ 920,374
MANAGEMENT FEE INCOME 23,333 -
Interest and Penalty Income 251,097 -
----------------- -----------------
TOTAL INCOME 357,780 -
COST OF GOODS SOLD 74,262 909,459
----------------- -----------------
GROSS PROFIT 283,518 10,915
EXPENSES
General and administrative 133,254 207,295
----------------- -----------------
INCOME (LOSS) FROM OPERATIONS BEFORE UNDER NOTED ITEM 150,264 (196,380)
Interest Expense 4,419 15,018
----------------- -----------------
NET INCOME (LOSS) $ 145,845 $ (211,398)
================ =================
Income (Loss) per Share 0.0002 (0.004)
================ =================
Weighted Average Number of Common Shares Outstanding 91,540,103 48,716,510
================ =================
<PAGE>5
Treasury International, Inc.
Interim Consolidated Statement of Operations
six months Ended July 31, 1999
(Unaudited)
July 31,1999 July 31,1998
--------------- ---------------
REVENUE From Operations $ 83,350 $ 2,028,737
MANAGEMENT FEE INCOME 23,333 -
Interest and Penalty Income 251,097 -
--------------- ---------------
TOTAL INCOME 357,780 2,028,737
--------------- ---------------
COST OF GOODS SOLD 74,262 1,833,049
--------------- ---------------
GROSS PROFIT 283,518 195,688
--------------- ---------------
EXPENSES
General and administrative 194,233 380,032
--------------- ---------------
INCOME (LOSS) FROM OPERATIONS BEFORE UNDER NOTED ITEM 89,285 (184,344)
Interest Expense 4,419 51,149
--------------- ---------------
NET INCOME (LOSS) $ 84,866 $ (235,493)
=============== ===============
Income (Loss) per Share 0.0001 (0.005)
=============== ===============
Weighted Average Number of Common Shares Outstanding 91,540,103 48,716,510
=============== ===============
</TABLE>
<PAGE>6
TREASURY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
SIX MONTH PERIOD JULY 31, 1999
(UNAUDITED)
<TABLE>
<S> <C> <C> <C>
COMMON PAID-IN CONTRIBUTED
SHARES CAPITAL SURPLUS
--------------- ------------- --------------------
Balance-January 31, 1999 88,320,677 $ 8,832 $ 4,455,076
Issued 1,800,000 shares of common stock for cash 1,800,000 180 99,820
consideration of $100,000
Issued 3,200,000 shares of common stock for all of 3,200,000 320 191,680
the outstanding issued shares of Compelis Corporation
(formerly Pioneer Media Group)
--------------- ------------- --------------------
Balance-July 31, 1999 93,320,677 $ 9,332 $ 4,746,576
=============== ============= ====================
</TABLE>
<PAGE>7
Treasury International, Inc.
Interim Consolidated Statement of cash flows
Six Months Ended July 31, 1999
(Unaudited)
<TABLE>
<S> <C> <C>
July 31,1999 July 31,1998
--------------- ---------------
Cash flows from operating activities
Net income (loss) $ 84,866 $ (235,493)
Adjustment to reconcile net income (loss) to net cash used in operating
activities
Amortization 10,677 114,379
(Increase) decrease in accounts receivable (262,516) 168,642
Increase in amount due from Wexcap Group (3,000) -
Increase in inventories - (15,801)
Increase (decrease) in sundry assets (13,306) 48,555
Increase (decrease) in accounts payable 1,643 (177,873)
---------------- ---------------
Net cash used for operating activities (181,636) (97,591)
---------------- ---------------
Cash flows from financing activities
Promissory note receivable 10,000 -
Notes payable 285,180 -
Long-term debt - (79,595)
Proceeds on issue of common shares 292,000 132,265
---------------- ---------------
Cash provided by financing activities 587,180 52,670
---------------- ---------------
Cash flows from investing activities
Goodwill (388,810) -
Research and development costs (57,566) -
Purchase of capital assets (7,744) (9,846)
---------------- ---------------
Cash used for investing activities (454,120) (9,846)
---------------- ---------------
Increase in bank indebtedness (48,576) (54,767)
Bank balance (indebtedness), beginning of period 19,956 (492,012)
---------------- ---------------
Bank indebtedness, end of period ($28,620) $ (546,779)
================ ===============
</TABLE>
<PAGE>8
TREASURY INTERNATIONAL, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JULY 31, 1999
The financial information for the six-month periods ended July 31, 1999 and 1998
presented in this Form 10-QSB has been prepared from accounting records of
Treasury International, Inc. (the "Company") without audit. The information
furnished reflects all adjustments which are, in the opinion of management,
necessary for a fair statement of the results of interim periods.
The results of operations for the six months ended July 31, 1999 are not
necessarily indicative of the results to be expected for a full year. The
consolidated balance sheet as of January 31, 1999 has been derived from audited
financial statements. This report should be read in conjunction with the
consolidated financial statements included in the Company's Form 10-KSB for the
Fiscal Year Ended January 31, 1999, as filed with the Securities and Exchange
Commission.
1. Nature of business
Treasury International, Inc. is a holding company which through its wholly
owned subsidiary, Compelis Corporation, is involved in the development of
E-Commerce and Web-enabled databases.
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
subsidiary, Compelis Corporation, from May 7, 1999, the date of
acquisition, to July 31, 1999.
b) Goodwill
The goodwill arises on the purchase of common shares of Compelis
Corporation. Amortization is provided on a straight line basis
over a twenty year period.
c) Research and development costs
The research and development costs relate to the work done in
developing an e-commerce software package and an Internet point
of sale package, together with database development. Amortization
is provided on a straight line basis over a three year period.
d) Capital assets
Capital assets are recorded at cost less accumulated
amortization. Amortization is provided as follows:
Office equipment - 20% diminishing balance
Computer equipment - 30 % diminishing balance
Leasehold improvements - term of lease
<PAGE>9
e) Revenue Recognition
Revenue is recognized when customers are invoiced for products
shipped by the company.
f) Income per share
Income per share is calculated based on the weighted average
number of shares outstanding during the period of 91,540,103.
g) 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. Promissory Note Receivable
The promissory note receivable arose on the sale of the company's
subsidiary, Mega Blow Moulding Limited on November 30, 1998.
Further to an Addendum to the Stock Purchase Agreement dated November 5,
1999, the company agreed to extend the due date of the note to January 31,
2000.
4. Goodwill
<TABLE>
<S> <C> <C> <C>
July 31, 1999 January 31, 1999
----------------------------------------------------------------- ---------------------
Accumulated Net book Net book
Cost Amortization value value
---------------- ------------------- --------------- ---------------------
$388,810 $4,596 $ 384,214 $ -
================ =================== =============== =====================
</TABLE>
5. Research & Development Costs
<TABLE>
<S> <C> <C> <C>
July 31, 1999 January 31, 1999
------------------------------------------------------------------ ---------------------
Accumulated Net book Net book
Cost Amortization value value
------------------ ------------------- --------------- ---------------------
$57,566 $4,796 $ 52,770 $ -
================== =================== =============== =====================
</TABLE>
6. Capital assets
<TABLE>
<S> <C> <C> <C> <C>
July 31, 1999 January 31, 1999
--------------------------------------------------- ---------------------
Accumulated Net book Net book
Cost Amortization value value
-------------- ----------------- ------------ ---------------------
Office equipment $21,715 $12,073 $ 9,642 $6,935
Computer equipment 16,406 12,881 3,525 -
Leasehold improvements 1,407 1,180 227 -
-------------- ----------------- ------------ ---------------------
$39,528 $26,134 $13,394 $6,935
============== ================= ============ =====================
</TABLE>
<PAGE>10
7. 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.
8. Notes payable
The notes payable consist of the following:
Due Date Principal Amount Interest Rate
----------------- -------------
September 30, 1999 $34,000 12%
December 31, 1999 $8,160 12%
December 31, 1999 $52,020 15%
July 15, 2000 $40,000 15%
July 31, 2000 $100,000 15%
July 20, 2005 $51,000 12%
----------------
Total
9. Income taxes
As at July 31, 1999, the company had a net operating loss carryover of
approximately $2,538,000 expiring in various years through 2014.
10. Contributed surplus
Contributed surplus represents the premium paid on the issuance of common
shares.
11. Adjustment to selling price of Mega Blow Moulding Limited
Results from an adjustment to the November 30, 1998 selling price of the
Company's subsidiary, Mega Blow Moulding Limited from $5,100,000 to
$4,250,000.
<PAGE>11
ITEM 2. Management's Discussion and Analysis or Plan of Operation
Overview
The information contained in this Item 2, Management's Discussion and
Analysis or Plan of Operation, contains "forward looking statements" within the
meaning of Section 27A of the Securities Act 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.
Treasury is an asset management company in the business of acquiring other
organizations and thereby creating resultant synergies, enhanced business
development opportunities and strengthened management structures for its other
business assets.
On November 30, 1998, Treasury sold its only operating subsidiary, Mega
Blow Mouldings Limited ("MBML"). The Company received a non-refundable deposit
of $250,000, a Promissory Note ("Note") of $4,000,000 and the release of
Treasury as guarantor for MBML's debt at the Royal Bank of Canada. On November
5, 1999 the Company extended the due date of the promissory note to January 31,
2000. In exchange for this extension the Company will book a payment on the note
in the amount of $1,394,266 and apply this against the current portion of long
term debt shown as a liability on the Company's Balance Sheet. Further the
Company will receive its release as a third party guarantor for MBML's debt at
the Royal Bank of Canada.
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 communications.
Pioneer is also involved in the development of Internet based enterprise
commerce solutions that allow companies to link their trading partners as well
as integrate internal applications on a variety of networks and platforms.
Further, Pioneer's internet-based hosted applications and web-enabled industry
databases for manufacturers, distributors and retailers drive down the total
cost of technology ownership and support.
Pioneer has built a proprietary database of product information
representing over 300 of the leading manufacturers 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 third 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. Management believes that 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,
<PAGE>12
fastener, fluid power, power transmission, electrical, plumbing, occupational
health and safety products.
During the next 12 to 24 months, Treasury intends to continue its expansion
goals. The Company's acquisition strategy includes 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 during this important
growth phase.
The Company's management is developing a business plan that summarizes its
business strategy. The plan details the Company's entry into new and emerging
e-commerce initiatives through Compelis Corporation, its wholly owned
subsidiary. Management believes the future for Treasury is its ability to
capitalize on emerging technologies that link trading partners in end to end
enterprise commerce solutions.
Subsequent Events
On November 1, 1999 the Company launched its web site www.compelis.com to
attract new business and inform interested parties about these intiatives.
Further the Company plans to launch its Industrial Portal www.commerceIS.com in
late November. This web site will host product information from the leading
industrial product manufacturers to give Compelis a strategic advantage in the
evolution of e-commerce and e-business for the Industrial Supply ("IS") and
Maintenance Repair and Operations ("MRO") markets. Compelis will maintain its
proprietary databases and provide access through subscription in order to reduce
the total cost of ownership and support for implmenters of these technologies.
The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company included in this report.
(1) INTERIM PERIODS
Result of Operations
For the three months ended July 31, 1999.
During the three months period ended July 31, 1999 the Company generated
total income of $357,780. The sale of products and services contributed $83,350
and $274,430 came from Management Fee Income and form Interest and Penalty
Income charged to the purchasers of the Company's former operating subsidiary
Mega Blow Mouldings Ltd. ("MBML"). The sale of MBML, formerly the Company's only
operating subsidiary, resulted in a revenue decrease from $2,028,737 at July 31,
1998 to $357,780 at July 31, 1999.
Operating expenses declined 51% to $194,233 during the reporting period
which reflects the streamlining of operations plus the sale of MBML. Principally
this amount is the result of professional fees, compliance reporting and
restructuring expenses related to the ongoing administration of the public
company and the purchase of Pioneer Media Group (now known as Compelis
Corporation). Also included are the three month operating expenses of Compelis
Corporation, currently the Company's only operating subsidiary.
<PAGE>13
The Company experienced a net profit of $145,845 for the three month period
ended July 31, 1999, compared to a net loss of $211,398 for the same period in
1998. The year to date net profit of $84,866 is a 136% improvement from July 31,
1998. These year over year improvements in profitability are the result of more
streamlined operations plus were impacted by the interest accrued and penalty
income due as a result of the Promissory Note the Company holds from the sale of
MBML.
The Company is continuing its focus to reduce operating, general and
administrative expenses during this transitional phase.
Liquidity and Capital Resources
Current assets totalled $281,920 at July 31, 1999. This amount reflects a
one time adjustment for activity in a previous period of $850,000. On November
30, 1998 the sale of MBML was inaccurately reported by previous management to
include an $850,000 note receivable in addition to the $250,000 non-refundable
deposit plus the $4,000,000 Promissory Note ("Note") being held from the
purchasers, for an aggregated sale price of $5,100,000. Upon further review,
subsequent to the year end audit dated January 31, 1999, it is the opinion of
management that this adjustment was required to more accurately state the amount
realizable from the sale of MBML as $4,250,000 not the $5,100,000 previously
reported.
On June 30, 1999 the Company received a $10,000 payment from the purchasers
of MBML that was applied against the outstanding balance of the Note. The due
date of the Note has been extended to January 31, 2000 at which time the
principal balance plus interest and penalty becomes due.
Total liabilities totalled $1,639,852 at July 31, 1999. Reflected in this
amount is $1,240,602, the current portion of long-term debt, which is an amount
Treasury owes to its former subsidiary related to the original purchase of the
asset on October 31,1996. On November 5, 1999 Treasury executed an Addendum to
the MBML Stock Purchase Agreement with the purchaser of MBML. Treasury will
receive its release as guarantor to MBML and its banker, the Royal Bank of
Canada within 30 days of the effective date of the Addendum. In addition,
Treasury has been released by MBML for the balance of the Inter-company Loan
payable by Treasury to MBML in the amount of $1,240,602 plus interest. The total
consideration being applied against the balance of the Note is $1,394,266 which
includes the $1,240,602 principal payment plus $153,664 interest expense. The
result of this transaction is the elimination of the Company's obligations on
the Inter-company payable due to its former subsidiary MBML (see Note7 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. The
primary sources of liquidity for the Company are the funds generated from the
sale of MBML and the revenue from its Compelis subsidiary. However, there can be
no assurance that the Company will be able to realize on its promissory note or
generate sufficient revenues from Compelis to be able to repay its debts. If the
funds available from the collection of the promissory note, 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.
<PAGE>14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
Exhibit A - Addendum to Stock Purchase Agreement
(b) Reports on Form 8-K.
None
<PAGE>15
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TREASURY INTERNATIONAL, INC.
Dated: November 19, 1999 By /s/ DALE DONER
______________________
Dale Doner, President
Dated: November 19, 1999 By /s/ MARLIN DONER
_____________________
Marlin Doner, Chief
Financial Officer
EXHIBIT A
ADDENDUM TO STOCK PURCHASE AGREEMENT
This Addendum is entered into on this 4th day of November, 1999, by and
between Treasury International, Inc. and Megatran Investments Limited
(collectively referred to as "Treasury"), 1299004 Ontario Corporation ("129"),,
Mega Blow Mouldings, Inc. ("Mega") and Global Financial Investments, LLC
("Global") (collectively referred to as the "Purchasers").
WHEREAS, on August 11, 1998, Treasury and 129 entered into a Stock
Purchase Agreement (the "Agreement") whereby Treasury agreed to sell all of the
issued and outstanding shares of Mega Blow Mouldings, Ltd. ("Mega") to 129 (the
"Transaction") for an aggregate consideration of $4,250,000 U.S., payable
$250,000 down and the delivery of a promissory note in the amount of $4,000,000
U.S. due on or about June 1, 1999 (the "Promissory Note"); and
WHEREAS, Treasury and 129 have entered into three Extension Agreements
dated June 16, 1999, August 13, 1999 and October 8, 1999, respectively,
extending the date of payment of the $4,000,000 U.S. Promissory Note in exchange
for, among other things, the payment of interest penalty through October 29,
1999 of $451,077 U.S., and
WHEREAS, 129 is currently in default of their obligations to Treasury
under the Agreement and, as of the date of this Addendum, 129 owes Treasury
$4,451,077 U.S., including penalties and interest, and
WHEREAS, Treasury is willing to continue the obligations owed to it by
129 provided the parties hereto enter into this Addendum with Treasury, whereby
the terms and conditions of the Agreement, Promissory Note, any extensions, or
side agreements thereto, will be restructured, all as set forth below;
NOW, THEREFORE, in consideration of the above premises, the covenants
and agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. In exchange for a release of any and all obligations owing to
Mega in the amount of $1,394,266 U.S. (including interest),
Treasury hereby credits such amount as a payment on the
Promissory Note, leaving a balance of $3,056,811 U.S. (including
interest and penalties).
2. 129 hereby acknowledges and affirms its liability to Treasury for
the balance of the Promissory Note of $3,056,811 U.S. plus $1,670
U.S. per day (the "Obligation") until paid. 129 hereby further
acknowledges and agrees that it has no defense, counterclaim,
right of offset, cross-complaint, claim or demand of any kind or
nature whatsoever that can be asserted to reduce or eliminate all
or any part of its liability to Treasury for the Obligation, nor
any right to seek affirmative relief or damages of any kind or
nature from Treasury arising out of or relating to the
Obligation. Notwithstanding the foregoing, Treasury acknowledges
and confirms that, in regard to the Transaction, it has no claim,
whether known or unknown, against 129's officers, directors,
stockholders, agents or representatives at this time.
<PAGE>
3. Treasury hereby agrees to extend the payment date of the
Obligation to on or before 5:00 p.m. Eastern Time, on January 31,
2000. Treasury also agrees to release all parties hereto,
including their officers directors, stockholders, agents and
representatives, except 129, from any liability to pay the
Obligation. Treasury specifically gives up its right to call the
Mega stock or in any way attempt to reclaim or repurchase the
Mega stock for non-payment of the Obligation. In that regard,
Treasury and Whitehall Enterprises, Inc. shall execute the
Acknowledgement and Confirmation in the form attached hereto as
Exhibit A.
4. Within thirty (30) days from the date of this Addendum, Global
shall have issued by the Royal Bank of Canada ("Bank") a full
release for any and all liabilities Treasury may have to the Bank
as a third party guarantor regarding Mega. Global agrees to
secure this release by paying off the term loans owed by Mega to
the Bank, and guaranteed by Treasury. Global agrees to execute a
Guarantee and Indemnity Agreement (the "Guarantee") in favor of
Treasury in the amount guaranteed by Treasury to the Bank as
security for Global's agreement to effect a release of Treasury's
obligation to the Bank. The Guarantee will be cancelled upon
receipt by Treasury of the release from the Bank.
5. Upon the execution of this Addendum, Global shall purchase from
Treasury for $100,000 U.S. an 8% Subordinated Convertible
Debenture (the "Debenture") due January 31, 2001. If the
Obligation is not paid on or before January 31, 2000, the
Debenture shall be cancelled and the $100,000 U.S. shall be
applied against the Obligation. If the Obligation is paid on or
before January 31, 2000, Global shall have the right, prior to
the Debenture's due date or redemption date, whichever is
earlier, to convert the Debenture into 1,000,000 shares of
Treasury common stock.
6. As collateral security for 129's prompt and faithful payment and
performance of the Obligation, and any and all future
indebtedness and obligations of 129 to Treasury, whether
evidenced or arising out of this Addendum or any other future
oral or written agreement between 129 and Treasury, 129 hereby
grants and assigns to Treasury a continuing and first-priority
security interest in and lien on all of 129's present and future
assets, including accounts, equipment, inventory, general
intangibles, chattel paper, deposit accounts, goods, documents
and in any and all other personal property of 129 and the
proceeds (including, without limitation, insurance proceeds) and
products of any and all of the foregoing (collectively, the
"Collateral").
7. The Obligation and any and all accrued per diem thereon or other
amounts payable in connection therewith shall mature and be due
and payable in full on January 31, 2000 (the "Maturity Date").
<PAGE>
8. Except as to such rights or claims as may be created by this
Addendum, Treasury hereby releases, remises and forever
discharges 129, Mega, and Global, and each of their respective
present and former heirs, successors, predecessors, agents,
officers, directors, shareholders, attorneys, employees and
assigns from any and all claims, demands, debts, losses,
obligations, warranties, costs, expenses, rights of action and
causes of action, of every kind and nature whatsoever, whether
known or unknown, suspected or unsuspected, arising out of or in
any way connected to the Transaction prior to the date of
execution of this Addendum.
9. Except as to such rights or claims as may be created by this
Addendum, 129, Mega and Global hereby release, remise and
discharge Treasury and each of its present and former heirs,
successors, predecessors, assigns, agents, officers, directors,
shareholders, attorneys and employees from any and all claims,
demands, debts, losses, obligations, warranties, costs, expenses,
rights of action and causes of action or every kind and nature
whatsoever, whether known or unknown, suspected or unsuspected,
arising out of or in any way connected to the Transaction prior
to the date of the execution of this Addendum.
10. Upon execution of this Addendum, Treasury hereby relinquishes all
of its right to appoint, nominate and/or elect a director or
directors to the Board of Directors of Mega.
11. As an inducement to Treasury to enter into this Addendum, 129
hereby acknowledges and reaffirms each and every representation
and warranty set forth in the Agreement, and acknowledges and
agrees that such representations and warranties apply to this
Addendum with the same effect as if they were contained herein.
In addition, 129 hereby represents and warrants to Treasury as
follows, which representations and warranties shall replace and
supersede any conflicting representations and warranties in the
Agreement:
(i) 129 is a corporation properly organized, existing and
in good standing under the laws of Ontario;
(ii) 129 has all requisite power and authority to own its
property and to carry on the business that is now being
conducted and as is presently proposed to be conducted,
and is properly qualified and authorized to do business
and is in good standing as a foreign corporation in any
jurisdiction or territory where the ownership or
character of its property or the nature of its business
and activities make such qualification necessary and
where the failure to qualify would have a materially
adverse effect on its business or financial condition;
(iii)129 has the corporate power and authority to execute,
deliver and perform this Addendum and all of the other
agreements, documents and instruments contemplated
hereunder, and this Addendum and all other documents,
instruments and agreements executed in connection
herewith have been duly authorized, executed and
delivered by 129;
<PAGE>
(vii) Neither the execution or delivery of this Addendum, or
any of the other agreements, documents or instruments
executed in connection herewith, nor the fulfillment of
or compliance with the terms and provisions hereof or
thereof will conflict with or result in a breach of the
terms, conditions, provisions of, constitute a default
under or result in any violation of any contract or
agreement to which 129 is a party or may be bound.
12. 129 hereby agrees to not, without Treasury's prior written
consent, which will not be unreasonably withheld:
(i) Sell, lease or otherwise dispose of, move, relocate or
transfer, whether by sale or otherwise, any of 129's
assets other than sales of inventory in the ordinary
and usual course of business as currently conducted;
(ii) make any change in 129's financial structure or in any
of its business operations which could materially
adversely affect 129's ability to repay the Obligation;
(iii)prepay, modify or repay any obligation or any existing
debt to officers or shareholders of 129 or relatives
thereof for borrowed money, or enter into or modify any
agreement in a way which would be materially adverse to
Treasury's interests or, as a result of which, the
terms of payment of any of the foregoing debt are
accelerated, waived or modified;
(iv) pay, whether directly or indirectly, in money or
otherwise, compensation, including salaries,
withdrawals, fees, bonuses, commissions, drawing
accounts and other payments, and management or
consulting fees to 129's directors, or any other
shareholders (or any relatives, consultants, advisers
or any affiliates of any of the foregoing) on terms no
less favorable than could be obtained from an unrelated
party.
13. The effectiveness of this Agreement and of the transactions
contemplated hereunder shall be conditioned upon the prior
satisfaction of each of the following conditions precedent in a
manner acceptable to Treasury and its counsel: (i) Treasury shall
have received an original of this Addendum, executed by 129, Mega
and Global;
(ii) Treasury shall have received $100,000 U.S. from Global,
and shall have delivered to Global a $100,000 U.S. 8%
Subordinated Convertible Debenture due January 31,2001
<PAGE>
(iii)129 shall not object to Treasury filing an appropriate
Ontario Financing Statement executed by 129 as debtor
and reflecting Treasury as secured party and 129 as
debtor.
(iv) Treasury shall receive a payment of $1,394,266 U.S. on
its Promissory Note from Mega in the form of a credit
and release of all monies owed to Mega by Treasury,
currently in the amount of $1,394,266 U.S.
14. Any one or more of the following events shall constitute an event
of default (an "Event of Default") hereunder:
(i) If 129 fails to pay when due and payable or when
declared due and payable, all or any portion of the
Obligations (whether of principal, interest, penalties
or per diem);
(ii) If 129, Mega, Global or any other party thereto other
than Treasury fails or neglects to perform, keep or
observe any term, provision, condition or covenant in
this Addendum, in any agreement, document or instrument
entered into in connection with this Addendum, in the
Agreement, or in any other present or future agreement
between 129, Mega or Global and Treasury;
(iii)If there is a material impairment of the prospect of
repayment of the Obligation or of the value or priority
of Treasury's interest in the Collateral;
(iv) If any material portion of 129's assets are attached,
seized, subjected to a writ or distress warrant, or are
levied upon, or come into the possession of any
trustee, receiver, controller, custodian, assignee for
the benefit of creditor;
(v) If any proceeding under any provision of the federal
Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency law, including assignments for
the benefit of creditors and formal or informal
moratoriums, compositions or extensions generally with
129's creditors is commenced by 129;
(vi) If 129 is enjoined, restrained or in any way prevented
by court order from continuing to conduct all or any
material part of its business affairs;
<PAGE>
(vii)If a release of all liabilities, including guarantees,
owed by Treasury to the Bank is not received from the
Bank within thirty (30) days from the date of this
Addendum.
15. Upon the occurrence of an Event of Default, Treasury may, in its sole
and absolute discretion, and without notice to 129, do any one or more
of the following:
(i) accelerate the Obligation and declare it to be
immediately due and payable;
(ii) exercise any and all legal or equitable remedies
afforded to Treasury under the Agreement, as amended
hereby, or under any other agreement, document, or
instrument heretofore or hereafter entered into between
Treasury and 129, and as provided for under Ontario
lien laws or any other applicable law; and
(iii) seek the appointment of a receiver for 129.
The rights and remedies granted to Treasury in this Section 14 are
cumulative, and Treasury shall have the right to exercise any one or
more of such rights and remedies alternatively, successively or
concurrently as Treasury may, in its sole and absolute discretion,
deem advisable.
16. 129 (the "Debtor") shall immediately, upon demand, reimburse Treasury
for all sums expended by Treasury which constitute Lender Expenses and
Debtor hereby authorizes and approves all advances and payments by
Treasury for items constituting Lender Expenses. For the purposes of
this Section 16, Lender Expenses means all (i) reasonable costs and
expenses incurred by Treasury to cure any default or enforce any
provision of this Addendum, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale
or advertising to sell the Collateral, irrespective of whether a sale
is consummated; (ii) reasonable costs and expenses of suit incurred by
Treasury in enforcing or defending this Addendum or any portion
thereof, including, without limitation, actions brought by a trustee
or any third party; or (iii) Treasury's attorneys' fees and expenses
incurred in relation to terminating, enforcing, defending or
concerning this Addendum, or any portion thereof, irrespective of
whether suit is brought.
17. This Addendum, and all agreements, documents and instruments referred
to or executed in connection herewith, including, without limitation,
the Agreement, shall constitute the complete agreement of the parties
hereto with respect to the subject matter referred to herein, and
shall supersede all prior or contemporaneous negotiations, promises,
covenants, agreements or representations of every kind or nature
whatsoever with respect thereto, all of which have become merged and
finally integrated into this Addendum. Each of the parties understands
that in the event of any subsequent litigation, controversy or dispute
concerning any of the terms, conditions or provisions of this
Addendum, neither party shall be permitted to offer or introduce any
<PAGE>
oral evidence concerning any other oral promises or oral agreements
between the parties relating to the subject matters of this Addendum
not included or referred to herein and not reflected by writing. This
Addendum cannot be amended, modified, or supplemented except by
written document signed by all parties hereto. In the case of a
conflict between the provisions of this Addendum and the Agreement,
the provisions of this Addendum shall control.
18. All parties agree that they will execute such other documents and
instruments and perform such other acts as the parties hereto may
reasonably deem necessary or advisable, in their sole and absolute
discretion, to carry out and effectuate the purpose and intent of this
Addendum.
19. All notices, requests and demands required to be given hereunder,
shall be in writing and shall be deemed to have been duly given upon
the date of such service if served personally upon the party for whom
intended, or if mailed, by first class, registered or certified mail,
return receipt requested, postage prepaid, upon three days after the
date of such mailing, to such party at its address as shown below or
otherwise hereafter designated by such party in writing:
If to Treasury: If to Mega:
Treasury International, Inc. Mega Blow Mouldings Ltd.
1081 King Street East, 2nd Floor 7040 Tranmere Drive
Kitchener, ON N2G 2N1 Mississauga, ON L58 1L9
CANADA CANADA
Attention: Dale Doner, President Attention: William Sorentos
If to 129: If to Global:
1299004 Ontario Corporation Global Financial Investments, LLC
3101 Bathurst Street 42475 North 112th Street
Suite 600 Scottsdale, AZ
Toronto, ON M6A 2A6 85262
CANADA
Attention: Joseph Lebovics Attention: Al Bowen, Authorized Agent
20. This Addendum may be assigned by Treasury in whole or in part in its
sole and absolute discretion. This Addendum is personal to 129, Mega
and Global and shall not be assigned by them to any other person or
entity, and any such assignment shall be in violation hereof and null
and void. Notwithstanding the above, this Addendum shall be binding
upon and shall inure to the benefit of the respective parties hereto
and their respective successors, and upon the assigns of Treasury.
<PAGE>
21. Notwithstanding anything to the contrary contained in the Agreement,
the Agreement as amended by this Addendum shall be governed by and
construed in accordance with the laws of Ontario and the laws of
Canada applicable therein.
22. If any provisions of this Addendum shall be invalid, illegal or
otherwise unenforceable, such provision shall be severable from the
remainder of such agreement, instrument or document, and the validity,
legality and enforceability of the remaining provisions shall not be
adversely affected or impaired thereby and shall remain in full force
and effect.
23. This Addendum may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
24. This Addendum may be accepted via facsimile, and a facsimile
transmission of the executed signature page hereof shall make this
Addendu7m legally binding upon the parties so executing and faxing
such signature page to the other parties.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as
of the date first above written.
TREASURY INTERNATIONAL, INC.
By:
Name: Dale Doner
Title: President
MEGA BLOW MOULDINGS, LTD:
By:
Name: William Sorentos
Title: President
1299004 ONTARIO CORPORATION:
By:
Name: Joseph Lebovics
Title: President
GLOBAL FINANCIAL INVESTMENTS, LLC
By:
Name: Al Bowen
Title: Authorized Agent
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
FINANCIAL STATEMENTS FOR THE PERIOD ENDED July 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS Filed with Form 10-QSB
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> JUL-31-1999
<CASH> (28,620)
<SECURITIES> 0
<RECEIVABLES> 4,255,516
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 281,920
<PP&E> 39,528
<DEPRECIATION> (26,134)
<TOTAL-ASSETS> 4,722,298
<CURRENT-LIABILITIES> 1,639,852
<BONDS> 0
0
0
<COMMON> 9,332
<OTHER-SE> 4,746,576
<TOTAL-LIABILITY-AND-EQUITY> 4,722,298
<SALES> 83,350
<TOTAL-REVENUES> 357,780
<CGS> 74,262
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 133,254
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,419
<INCOME-PRETAX> 145,845
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,845
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
