SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 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 No. 2-96366-A
TREASURE AND EXHIBITS INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Florida 59-2483405
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
2300 Glades Road, Suite 450, West Tower, Boca Raton, Florida 33431
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(Address of principal executive offices)
(531) 750-7535
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(Registrant's telephone number, including area code)
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(Former name, former address and formal 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 No X
As of September 15, 2000, 28,990,756 shares of Common Stock of the issuer
were outstanding.
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TREASURE AND EXHIBITS INTERNATIONAL
INDEX
Page
Number
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 2000 and
December 31, 1999.......................................... 3
Consolidated Statements of Operations - For the three
months and six months ended June 30, 2000 and 1999......... 4
Consolidated Statements of Cash Flows - For the six months
ended June 30, 2000 and 1999............................... 5
Notes to Consolidated Financial Statements................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................... 9
SIGNATURES............................................................ 10
<PAGE>
Item 1 - Financial Statements
TREASURE AND EXHIBITS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
June 30, December 31,
2000 1999
-------------- -----------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 5,233 $ 4,095
Investment in marketable securities - 9,544
-------------- -----------------
Total current assets 5,233 13,639
Other assets
Total assets 7,622 7,622
-------------- -----------------
LIABILITIES & STOCKHOLDERS EQUITY $ 12,855 $ 21,261
============== =================
Current liabilities:
Accounts payable and accrued liabilities $ 406,996 $ 369,645
Notes and loans payable-related parties 576,963 523,549
Estimated liability related to put option 1,044,407 1,044,407
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Total current liabilities 2,028,366 1,937,601
Stockholders' Deficiency:
Common stock $.0001 par value, 50,000,000
authorized, 28,990,756 shares outstanding as of June
30, 2000 and December 31, 1999
Additional paid in capital 2,899 2,899
2,111,706 2,111,706
Accumulated deficit (4,130,116) (4,030,945)
-------------- -----------------
Total stockholders' equity (2,015,511) (1,916,340)
-------------- -----------------
Total liabilities & stockholders' equity $ 12,855 $ 21,261
============== =================
</TABLE>
The accompanying notes are an integral part of these financial statements
1
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TREASURE AND EXHIBITS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
Three Months Ended June 30, Six Months Ended June
30,
----------------------------------- -------------------------------------
2000 1999 2000 1999
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue:
Interest and dividend income
Realized and unrealized gain on $ 138 $ 221 $ 214 $ 465
investments in marketable securities
10,711 - 10,711 0
--------------- --------------- ---------------- ----------------
Net revenues 10,849 221 10,925 465
General and administrative expenses
93,390 198,392 115,665 398,037
--------------- --------------- ---------------- ----------------
Income (loss) from continuing operations
before income tax (expense) benefit
(82,541) (198,171) (104,740) (397,572)
Income tax (expense) benefit - (81,000) 5,569 (385,000)
--------------- --------------- ---------------- ----------------
Net income (loss) from continuing
operations (82,541) (279,171) (99,171) (782,572)
Discontinued operations: (1999)
Loss from operations of discontinued
operations (net of tax benefit of
$181,000 and $385,000)
$ - $(137,000) - $(655,000)
--------------- --------------- ---------------- ----------------
Net income (loss) (82,541) $(416,171) (99,171) (1,437,572)
=============== =============== ================ ================
Basic net income (loss) from continuing
operations per share - $(.01) - $(.03)
=============== =============== ================ ================
Basic income (loss) per share - $(.01) - $(.05)
=============== =============== ================ ================
Weighted average shares outstanding
28,990,756 28,990,756 28,990,756 28,990,756
=============== =============== ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE>
TREASURE AND EXHIBITS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
Six Months Ended June 30,
--------------------------------
2000 1999
------------- -----------
<S> <C> <C>
Cash Flows from operating activities:
Net income (loss) $ (99,171) $ (1,437,572)
Adjustments to reconcile net income (loss) to net cash and
cash equivalents provided by (used in) operating activities:
Expenses paid by affiliate on behalf of Company
Depreciation
Realized and unrealized gain on sale of marketable securities - 271,267
Changes in operating assets and liabilities: - 25,523
(Increase) decrease in other assets
Increase (decrease) in accounts payable and accrued liabilities - 0
9,544 (7,122)
37,351 419,602
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Net cash provided by (used in) operating activities (52,276) (728,302)
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Cash Flows from investing activities:
Loan advances to affiliates - $ 0
Principal payments received from others - 750,000
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Net cash provided by (used in) investing activities
- 750,000
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Cash Flows from financing activities:
Proceeds from notes payable - affiliates 53,414 56,483
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Net cash provided by (used in) financing activities
53,414 56,483
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Net (decrease) increase in cash and cash equivalents
1,138 78,181
Cash & cash equivalents, as of beginning of period 4,095 1,544
------------- ----------------
Cash & cash equivalents, as of end of period $ 5,233 $ 79,725
============= ================
</TABLE>
The accompanying notes are an integral part of these financial statements
3
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TREASURE AND EXHIBITS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
1. INTERIM PRESENTATION
The interim consolidated financial statements are prepared pursuant to the
requirements for reporting on Form 10-Q. These statements include the
accounts of Treasure and Exhibits International, Inc. (the "Company") and
all of its wholly owned and majority owned subsidiary companies. The
December 31, 1999 balance sheet data was derived from audited financial
statements but does not include all disclosures required by generally
accepted accounting principles. The interim financial statements and notes
thereto should be read in conjunction with the financial statements and
notes included in the Company's Form 10-K for the year ended December 31,
1999. In the opinion of management, the interim financial statements
reflect all adjustments of a normal recurring nature necessary for a fair
statement of the results for the interim periods presented. The current
period results of operations are not necessarily indicative of results
which ultimately will be reported for the full year ending December 31,
2000.
2. SIGNIFICANT RISKS AND UNCERTAINTIES
During 1999, the Company discontinued all of its business operations and
surrendered all of its remaining assets to First Capital Services, Inc., an
entity related by common control and ownership, in settlement of
outstanding loans payable, in lieu of foreclosure. Additionally the Company
is a defendant in several lawsuits, the outcome of which cannot be
determined. These factors raise substantial doubt as to the ability of the
Company to continue as a going concern.
4
<PAGE>
Item 2. Management's Discussion and Analysis Of Financial Condition And Results
Of Operations
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of Securities Exchange
Act of 1934. Statements contained herein which are not historical facts are
forward-looking statements that involve risks and uncertainties. All phases of
the Company's operations are subject to a number of uncertainties, risks and
other influences. Therefore, the actual results of the future events described
in such forward-looking statements in this Form 10-Q could differ materially
from those stated in such forward-looking statements. Among the factors which
could cause the actual results to differ materially are the risks and
uncertainties described both in this Form 10-Q and the risks, uncertainties and
other factors set forth from time to time in the Company's other public reports,
filings and public statements. Many of these factors are beyond the control of
the Company, any of which, or a combination of which, could materially affect
the results of the Company's operations and whether the forward-looking
statements made by the company ultimately prove to be accurate.
Results Of Operations
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Revenues. Net revenues increased $10,628, or 4,808% to $10,849 for the
three months ended June 30, 2000 from $221 for the three months ended June 30,
1999. The increase is attributable to realized gains on investments in
marketable securities for the three month period ended June 30, 2000 compared to
no realized gain from investments in marketable securities during the same
period in 1999 which was partially offset by a decrease of $83 in interest and
dividend income from the three months ended June 30, 1999.
General and Administrative Expenses. General and administrative expenses
totaled $93,390 for the three months ended June 30, 2000 a decrease of $105,002
or 52.9% from $198,392 during the same period in the prior fiscal year. The
decrease is attributable to a lack of expenses incurred in building the required
infrastructure to open the gaming operations during the the three months ended
June 30, 2000 which was partially offset by increased legal and accounting
costs.
Losses from continuing operations. Losses from continuing operations
totaled $82,541 for the three months ended June 30, 2000 a decrease of $196,630
or 70.4% from $279,191 during the same period in 1999. This decrease is
primarily attributable to increased revenues and to the absence of expenses
incurred in building the required infrastructure to open the gaming operations
which was partially offset by increased legal and accounting fees.
Losses from discontinued operations. The Company had no losses from
discontinued operations during the three months ended June 30, 2000. Losses from
discontinued operations resulted from the shutting down of the casino operations
and totaled $137,000 (net of a tax benefit of $181,000), for the three months
ended June 30, 1999.
5
<PAGE>
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999
Revenues. For the six months ended June 30, 2000, net revenues increased
$10,460 or 2,249.5%, to $10,925 as compared to total revenues of $465 for the
six months ended June 30, 1999. The increase is attributable to earnings from
realized gains on investments in marketable securities which was partially
offset by a decrease in interest income of $251 or 54% to 214 from $465 in
interest income for the six months ended June 30, 2000.
General and Administrative Expenses. General and administrative expenses
totaled $115,665 during the six months ended June 30, 2000 a decrease of
$282,372 or 70.9% from $398,037 during the same period in the prior fiscal year.
This decrease is primarily attributable to the absence during the six months
ended June 30, 2000 of start up costs associated with the maiden voyage of our
casino cruise ship and the acquisition of an adult gaming complex in Sunny
Isles, Florida, as well as leasing costs to berth the ship which was partially
offset by increased legal and accounting costs.
Losses from continuing operations. Losses from continuing operations
totaled $99,171 for the six months ended June 30, 2000, a decrease of $683,401
or 87.3% from $782,572 during the same period in 1999. This decrease is
primarily attributable to the absence during the six months ended June 30, 2000
of start up costs associated with the maiden voyage of our casino cruise ship
and the acquisition of an adult gaming complex in Sunny Isles, Florida, as well
as leasing costs to berth the ship which was partially offset by increased legal
and accounting costs.
Losses from discontinued operations. The Company had no losses from
discontinued operations for the six months ended June 30, 2000. Losses from
discontinued operations for the six months ended June 30, 2000 resulted from the
shutting down of the casino ship operations and totaled $655,000 (net of a tax
benefit of $385,000).
Financial Condition, Liquidity and Capital Resources
The Company had a cash balance of $5,233 and a deficit working capital of
$2,023,133 at June 30, 2000 compared to a cash balance of $4,095 and a deficit
in working capital of $1,923,962 at June 30, 1999.
For the six months ended June 30, 2000 cash used in operating activities
amounted totalled $52,276 as compared to cash used by operating activities of
$728,302 for the corresponding period of the prior year. This change resulted
primarily from a reduced net operating loss which was partially offset by the
absence of expenses paid by affiliates. The absence of depreciation, a decrease
in other assets and a reduced increase in accounts payable and accrued
liabilities.
Net cash provided by investing activities decreased to $0 during the six
months ended June 30, 2000 from $750,000 used in investing activities during the
six months ended June 30, 1999. This decrease is attributable to the payment of
a $750,000 note related to the sale of artifacts during the six months ended
June 30, 1999 and no comparable payment during the six months ended June 30,
2000.
Net cash provided by financing activities decreased to $53,414 during the
six months ended June 30, 2000 from $56,483 during the six months ended June 30,
1999. This decrease was attributable to reduced proceeds from the issuance of
promissory notes.
6
<PAGE>
By December, 1999 the Company had ceased all operations and had defaulted
on its master loan agreement with its affiliate, First Capital Services, Inc.
("First Capital"). At close of business of December 31, 1999, First Capital
accepted the artifacts and gambling machines and related assets as settlement of
amounts due under both the master loan agreement and the $750,000 note.
The Company experienced significant net operating losses throughout its
history. Therefore, the Company's ability to survive is dependent on its ability
to raise capital through the issuance of stock or the borrowing of additional
funds. Without the success of one of these options, the Company will not have
sufficient cash to satisfy its working capital and investment requirements for
the next twelve months.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
7
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TREASURE AND EXHIBITS
INTERNATIONAL, INC.
By: /s/ Brian Murphy
--------------------------------
Brian Murphy
President, Chief Executive Officer
and Chief Financial Officer
Dated: September 21, 2000
8
