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, 2000
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 (IRS Employer Identification No.)
Incorporation or Organization)
1081 King St., E 2nd Floor
Kitchener, Ontario N2G 2N1
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(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
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As of July 31, 2000, 92,196,677 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 31, 2000 was $9,233,148. Shares
of Common Stock held by each executive officer and director and by each person
who beneficially owns more than 5% of the outstanding Common Stock have been
excluded in that such persons may under certain circumstances be deemed to be
affiliates. This determination of executive officer or affiliate status is not
necessarily a conclusive determination for other purposes.
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PART I Financial Information
--------------------------------
ITEM 1. Financial Statements
Bromberg & Associate
---------------------------- 1183 Finch Ave. West, Suite 305
CHARTERED ACCOUNTANTS Toronto, Ontario M3J 2G2
Phone: (416) 663-7521
Fax: (416) 663-1546
ACCOUNTANTS' REVIEW REPORT
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, 2000, and the interim consolidated
statements of operations, and cash flows for the period then ended in accordance
with statements on standards 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 audited 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 the accompanying interim consolidated financial
statements in order for them to be in conformity with generally accepted
accounting principles.
BROMBERG & ASSOCIATE
CHARTERED ACCOUNTANTS
TORONTO, CANADA
September 5, 2000
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TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED BALANCE SHEET
AS AT JULY 31, 2000
(UNAUDITED)
ASSETS
July 31, 2000 January 31, 2000
CURRENT
Accounts receivable $ 785,102 $ 662,531
Due from Wexcap Group, LLC 3,000 3,000
Marketable Securities (Note 7) 182,509 -
Sundry assets 19,797 2,607
----------- ---------------
990,408 668,138
Promissory Note Receivable (Note 3) 2,649,398 2,649,398
Goodwill (Notes 2b & 4) 177,009 381,929
Research & Development Costs (Notes 2c & 5) 286,350 160,002
Capital Assets (Notes 2d &6) 24,841 14,925
Long Term Investments (Note 7) 107,413 -
----------- ---------------
$ 4,235,419 $ 3,874,392
=========== ===============
LIABILITIES
CURRENT
Bank Indebtedness $ 1,515 $ 56,547
Accounts payable and accrued liabilities 316,284 153,839
Current portion of long-term debt (Note 8) 398,644 197,344
----------- ---------------
716,443 407,730
Long Term Debt (Note 8) 477,003 45,903
Loan Payable - 43,772
----------- ---------------
$ 1,193,446 $ 497,405
=========== ===============
SHAREHOLDERS' EQUITY
SHARE CAPITAL July 31, 2000 January 31, 2000
Authorized
100,000,000 common shares at $.0001
Issued
92,196,677 common shares (Note 9) 9,219 9,510
Contributed surplus (Note 10) 4,751,814 4,896,694
Deficit (1,719,060) (1,529,217)
----------- ---------------
3,041,973 3,376,987
----------- ---------------
Total Liabilities & Shareholders Equity $ 4,235,419 $ 3,874,392
=========== ===============
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TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF DEFICIT
SIX MONTH PERIOD ENDED JULY 31, 2000
(UNAUDITED)
July 31, 2000 1999
Balance, Beginning of Period $ 1,529,217 $ 1,758,328
Net (Income) Loss for the Period 189,843 (149,578)
----------- -----------
Balance, End of Period $ 1,719,060 $ 1,608,750
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TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JULY 31, 2000
(UNAUDITED)
July 31,2000 July 31,1999
REVENUE
Operations $ 191,069 $ 83,350
Management Fee Income - 23,333
Interest and Penalty Income (Note 3) - 251,097
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TOTAL INCOME 191,069 357,780
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COST OF GOODS SOLD 109,864 74,262
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GROSS PROFIT 81,205 283,518
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EXPENSES
General and Administrative 177,445 183,556
Amortization 80,914 10,677
Financial 12,689 4,419
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NET INCOME (LOSS) $ (189,843) $ 84,866
============= =============
Income (Loss) per Share (0.0002) 0.0001
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Weighted Average Number of Common 91,796,677 91,540,103
Shares Outstanding ============= =============
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TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTH PERIOD ENDED JULY 31, 2000
(UNAUDITED)
COMMON PAID-IN CONTRIBUTED
SHARES CAPITAL SURPLUS
------------ ------------- -------------
Balance-January 31, 2000 95,101,777 $ 9,510 $ 4,896,694
Issued 323,900 shares of common stock 323,900 32 35,597
at $0.11 per share under the Company's
Employee Benefit Plan Registration
Statement of February 25, 1998.
Issued 171,000 shares of common 171,000 17 34,183
stock in consideration for the
reduction of Notes Payable by
$34,200.
Returned 3,200,000 shares of (3,200,000) (320) (199,680)
common stock to the company from
its subsidiary Pioneer Media
Group (Compelis Corporation).
Returned & cancelled 600,000 shares (600,000) (60) (54,940)
of common stock for cash
consideration of $55,000
Issued 400,000 shares of common 400,000 40 39,960
stock at $0.10 per share under the
Company's Employee Benefit Plan
Registration Statement of
February 25, 1998. ------------- -------- ------------
Balance-July 31, 2000 92,196,677 $ 9,219 $ 4,751,814
============= ======== ============
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TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTH PERIOD ENDED JULY 31, 2000
(UNAUDITED)
July 31, 2000 July 31, 1999
Cash flows from operating activities
Net income (loss) ($ 189,843) $ 84,866
Amortization 80,914 10,677
(Increase) in accounts receivable (122,571) (262,516)
Increase in amount due from Wexcap Group - (3,000)
(Increase) in sundry assets (17,190) (13,306)
Increase (decrease) in accounts payable 162,445 1,643
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Net cash used for operating activities ($ 86,245) ($ 181,636)
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Cash flows from financing activities
Loan Payable (43,772) -
Promissory note receivable - 10,000
Notes payable 632,400 285,180
Proceeds on issue of common shares (145,171) 292,000
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Cash provided by financing activities $ 443,457 $ 587,180
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Cash flows from investing activities
Long Term Investments (289,922) -
Goodwill 200,000 (388,810)
Research and development costs (198,325) (57,566)
Purchase of capital assets (13,933) (7,744)
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Cash used for investing activities ($ 302,180) ($ 454,120)
------------- --------------
Decrease (Increase) in bank indebtedness 55,032 (48,576)
Bank balance (indebtedness), beginning of period (56,547) 19,956
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Bank indebtedness, end of period ($ 1,515) ($ 28,620)
============= ==============
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TREASURY INTERNATIONAL, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JULY 31, 2000
1. Nature of business
Treasury International, Inc. is a holding company which through
its wholly owned subsidiaries, Compelis Corporation and Retailport.com,
Inc., is involved in business to business E-Commerce, Web-enabled
database publishing, Internet-based Applications and Internet Portal
development.
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 Compelis Corporation,
its wholly owned subsidiary.
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. During the period, the goodwill amount
was reduced by $200,000 as a result of the cancellation of
3,200,000 shares related to the purchase of Compelis Corporation
(formerly Pioneer Media Group).
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
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.
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.
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3. Promissory Note Receivable
The promissory note receivable was received from the purchaser of
the company's former subsidiary, Mega Blow Moulding Limited on November 30,
1998.
4. Goodwill
July 31, 2000 January 31, 2000
------------------------------------- --------------------------
Accumulated Net book
Cost Amortization value Net book value
---------- --------------- ---------- --------------------------
$196,809 $19,800 $177,009 $381,929
========== =============== ========== ==========================
5. Research & Development Costs
July 31, 2000 January 31, 2000
-------------------------------------- -------------------------
Accumulated Net book
Cost Amortization value Net book value
---------- -------------- ----------- -------------------------
$431,865 $145,515 $286,350 $ 160,002
========== ============== =========== =========================
6. Capital assets
July 31, 2000 January 31, 2000
------------------------------------ -------------------
Accumulated Net book Net book
Cost Amortization value value
---------- ------------- ---------- -------------------
Office equipment $21,715 $14,227 $7,488 $8,320
Computer equipment 35,252 17,899 17,353 6,483
Leasehold improvements 1,407 1407 - 122
---------- ------------- ---------- -------------------
$58,374 $33,533 $24,841 $14,925
========== ============= ========== ===================
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7. Long Term Investments
During the period the Company made certain equity investments in
other Corporations that management considers to be strategic or
synergistic to the Company's growth.
8. Notes payable
The notes payable consist of the following:
Due Date Principal Amount Interest Rate
Current $398,644 12% - 15%
July 20, 2005 $477,003 12%
-----------------------
Total $875,647
-----------------------
9. Stock Options
a) Options to purchase common shares have been issued under the
Employee Benefit Plan Registration Statement, registered February
25, 1998, to officers and key employees of the company and its
subsidiary. Options outstanding at July 31, 2000 are as follows:
Year Granted Expiry Date Price Range No. of Shares
-------------------------------------------------------------------------
November 1, 2000 October 31, 2001 $ 0.11 85,000
November 1, 2001 October 31, 2002 $0.11 410,000
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Total Outstanding 495,000
------------------
b) As at July 31, 2000, 400,000 warrants were issued and exercised at
a price of $0.10 per share, 1,097,500 warrants were issued and
exercised at a price of $0.11 per share and 7,500 warrants were
issued and exercised at a price of $0.16 per share, for each
warrant owned. These warrants covered in this plan are exercisable
over a 3 year period and expire in November 2002.
10. Contributed surplus
Contributed surplus represents the premium paid on the issuance of
common shares.
11. Income taxes
As at July 31, 2000 the company had a net operating loss carryover
of approximately $2,448,000 expiring in various years through 2015.
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ITEM 2. Management's Discussion and Analysis or Plan of Operation
Overview
--------
The information contained in 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
development and acquisition of proprietary assets that offer
significant growth potential. Treasury's mandate is to enhance
shareholder value through an asset management and acquisition strategy
that targets companies or activities where Treasury's management,
shareholders and corporate structure can be leveraged to improve
strategic market position, asset productivity and growth potential.
Operating Plan
--------------
The Company, through its operating subsidiaries, is involved in
the development of Internet-based Enterprise management and
communication solutions. The Company's operations include Compelis
Corporation, Retailport.com, Inc. and Webco-ops.com, Inc. and the
Company owns the following suite of proprietary software assets and
activities known as the Active Business Solutions: ActiveRMS,
ActiveCommerce, ActiveCatalog, ActiveCD, ActiveDataBank, ActiveHost and
ActiveDesign.
The Company has further intentions to integrate ActiveRMS
(Enterprise Management toolset for Retailers) and Active Commerce
(E-business toolset) into ActiveCo-op a new web-based product to manage
the relationships of trading partners within vertically defined
communities (or co-operatives). This toolset will enable trading
partners to interact, collaborate and conduct business over the
Internet while also integrating with internal operations and online
E-commerce initiatives.
Compelis Corporation
--------------------
Compelis Corporation is a technology solutions provider with a
primary focus on helping its clients aggregate their knowledge assets
into databases and publishing that content to a variety of media:
Internet, CD-ROM and Print. The Company's target markets include
manufacturers, distributors and retailers who require integrated
communication solutions that improve their business processes by
automating the flow of information and transactions through their
supply chains with anyone, anywhere and at anytime.
Compelis offers its clients a single technology partner for
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Internet-based Electronic Commerce (on-line shopping), Electronic
Business (online Request for Quote, Quoting, Purchase Order and trading
co-operatives), Electronic Catalogs (Internet and CD ROM), Print
Catalogs, Brochures and Flyers, Creative Design including Corporate Web
Sites and Corporate Identity, Aggregated Industry Data and Information
Asset Management.
Compelis generates revenue from the sale and delivery of its
Active Business Solutions suite. These include revenues from the
creation of content for catalogs, project management fees, software
license sales (ActiveCommerce, ActiveCD), the resale of third party
services (print, CD replication, hardware and software), custom
programming, website hosting, creative design and strategic planning.
Retailport.com, Inc.
-------------------
Retailport.com, Inc. is a retail industry portal endeavoring to
link trading partners in these initial retail verticals: sporting
goods, specialty card, gift and hard goods. The Company believes that
creating unique Internet portals where Industry partners can interact
and transact business in a secure online environment will create a
compelling reason for key players to be involved. The site will include
online auctions, Industry news, business to business forums, aggregated
industry E-catalogs and classifieds for excess inventory, employment
opportunities, business directories, etc.
These portals will be powered by ActiveRMS and ActiveCommerce, an
E-commerce, E-business suite built on Microsoft's Industry Standard
Internet technologies: SQL Server, NT and Site Server, Commerce
Edition. With the growth in use and functionality of business to
business Internet systems, the opportunity to tie together trading
partners (manufacturers, distributors and retailers) as well as
E-commerce (retailers and their customers), Retailport.com, Inc. has
the favorable position of being an early entrant in the thin-client,
Internet-based, retail systems market. ActiveRMS is an Internet-based
Retail Management System (including Point-of-Sale, Inventory Control,
Customer Database, Inventory Transfer & Allocation, Consolidated Chain
Management and Reporting) that enables companies to make the link
between their in store operations and their E-commerce initiatives.
ActiveRMS is deployed by Application Service Providers (ASP).
These ASPs host and manage the technology infrastructure for the
retailer thereby reducing the overhead burden associated with
management of the enterprise's Information Technology systems. The
retail store accesses the software through their Internet browser at
the POS terminal. This model allows for anywhere, anytime access to
mission critical enterprise data and provides a significantly lower
total cost of technology ownership for the retailer.
As an outsourced Internet-based software solution, ActiveRMS
generates revenues from three sources: first, from Value Added Reseller
(VAR) partners who sell product licenses for each customer
installation; second, Application Service Provider (ASP) partners who
host and support the ongoing technology infrastructure requirements for
ActiveRMS customers; third, from professional services custom
programming, consulting and project management - billings to meet the
more sophisticated technology requirements of larger installations.
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Ongoing revenues are generated from application hosting, help desk
support contracts and product training.
Webco-ops.com, Inc.
-------------------
Webco-ops.com, Inc. intends to create trading environments
(exchanges, co-operatives) for trading partners, within targeted
vertical market sectors, that aggregate industry information and
facilitates the exchange of goods, service and transactions through
their established supply chains. These co-operatives are designed to
more quickly and cost effectively move products through the supply
chain, automate business processes for the participants and create an
infrastructure where trading partners can safely and securely exchange
information and conduct transactions.
AMR Research recently estimated that the growing B2B e-commerce
market would hit $5.7 trillion by the end of 2004, over 52% of those
transactions are predicted to flow through online exchanges.
These online trading co-operatives will be architected on the
Company's ActiveCommerce E-commerce/E-business infrastructure.
ActiveCommerce is a feature rich web development toolset that enables
companies to deploy their online E-commerce initiatives powered by
Microsoft's Industry Standard Internet technologies: SQL Server, NT and
Site Server, Commerce Edition.
Online Trading Co-operatives link buyers and sellers in an
electronic marketplace designed to process transactions and exchange
information in real-time. This automation of business processes allows
trading partners to build more integrated and profitable relationships
and to track more efficiently the movement on goods, services and
transactions through their supply chains. These co-operatives
strengthen the supply chain relationships between manufacturer,
distributor, retailer and end consumer. WebCo-ops.com intends to create
Internet portals with key partners and market influencers in order to
maximize the co-operative's reach to manufacturers, distributors and
consumers.
Revenue opportunities are twofold: transaction fees charged on the
sale of goods and services flowing through the co-operative and
subscription fees paid by participants in the co-operative. Each
co-operative can be set-up as independent business units with ownership
shared with participants or outside investors and will be responsible
for its development, market penetration and operation.
During the next 12 to 24 months, Treasury intends to continue its
expansion goals. The Company plans to achieve its asset building
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 by
continuing to build its current technology assets and by seeking
strategic alliances or acquisitions to expand its market reach. To
increase its future subsidiaries' market share, the Company will seek
to acquire or partner with other companies which have important
products and synergies with existing company operations.
The following discussion should be read in conjunction with the
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Consolidated Financial Statements of the Company included in this
annual report.
(1) INTERIM PERIODS
------------------------
Result of Operations
--------------------
For the six months ended July 31, 2000.
---------------------------------------
For the six month period ended July 31, 2000, the Company has seen
operating revenues increase plus growing demand for its products and
services as evidenced by year over year growth in its Work In Progress
(WIP) backlog. Operating revenues include only the sales activities
completed during the period as the Company books its revenue only on
the completion of the contract. Revenues from operations increased to
$191,069 for the period, a 229% increase compared with the same period
ending July 31, 1999.
The Company incurred a net loss of $96,240 from operations,
exclusive of Interest, Depreciation and Amortization, for the
six-month period ended July 31, 2000. During the same period in 1999,
the Company had a net profit of $84,866 which included interest and
penalty income of $251,097 related to the Promissory Note the Company
holds on the sale of Mega Blow Mouldings Ltd. ("Mega Blow"). During the
period ended July 31, 2000, the Company did not report any interest and
penalty income as the Note is in default and the Company is
investigating what remedies it has against the purchaser. The year to
date loss is the result of increased cost of sales and extraordinary
expenses related to the development of its software assets. In
addition, all professional fees, compliance reporting and restructuring
expenses related to the ongoing administration of the public company
are included in this amount along with the general and administrative
costs of the Company's operating subsidiaries.
Liquidity and Capital Resources
-------------------------------
The Company's management believes it has developed a sound plan to
capture a growing segment of the global E-commerce, E-business and
Database Publishing markets. As a technology solutions provider and
content service provider the future for Treasury is related to its
ability to capitalize on emerging technologies that link trading
partners in end-to-end enterprise commerce solutions. The plan details
the Company's entry into new and emerging e-commerce initiatives
through Compelis Corporation, Retailport.com, Inc. and Webco-ops.com,
Inc, its wholly owned subsidiaries.
Current assets totalled $990,408 at July 31, 2000 and consists of
trade receivables from operations, marketable securities and interest
due on the Promissory Note the Company holds relating to the sale of
Mega Blow in November 1998.
Current liabilities totaled $716,443 as of July 31, 2000 compared
to $407,730 at January 31, 2000. This change in the Company's current
liabilities consist of an increase in trade payables from operations
but has increased principally from notes payable to private investors
and officers of the Company.
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The Company believes it will generate sufficient positive cash
flow from operations and other capital investments to meet its
operating requirements for the next twelve months. The primary sources
of liquidity for the Company are debt financings, equity offerings and
funds to be generated from the sale of Mega Blow. However, there can be
no assurance that the Company will be able to realize on its promissory
note and therefore be able deliver on its plan and repay its debts. If
the funds available from these activities, together with its current
cash and cash equivalents are not sufficient to meet the Company's
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.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K. None
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: September 12, 2000 By /s/ Dale Doner
-------------------------------------------
Dale Doner, President
Dated: September 12, 2000 By /s/ Marlin Doner
-------------------------------------------
Marlin Doner, Chief Financial Officer
16
