SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
2-96366-A
(Commission File Number)
TREASURE AND EXHIBITS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Florida 59-2483405
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2300 Glades Road, Suite 450-West
Boca Raton, Florida 33431
(Address of Principal Executive Offices)
(561) 750-7200
(Registrant's Telephone Number)
Vanderbilt Square Corp.
3040 E. Commercial Boulevard, Ft. Lauderdale, Florida 33308
(Former Name, Former Address and former Fiscal Year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act
None None
(Title of Each Class) (Name of Each Exchange
on which Registered)
Securities registered pursuant to Section 12(g) of the Act
None None
(Title of Each Class) (Name of Each Exchange
on which Registered)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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
The aggregate market value of the voting stock held by non-
affiliates of the Registrant as of March 25, 1998, was
approximately $975,500.00.
The number of shares of Common Stock issued as of March 25, 1997,
was 25,990,756.
INDEX
Item Page
Part I 1. Business 2
2. Properties 5
3. Legal Proceedings 5
4. Submission of Matters to a Vote of
Security Holders 5
Part II 5. Market for Registrant's Common Equity
and Related Stockholder Matters 6
6. Selected Financial Data 7
7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
8. Financial Statements and Supplementary
Data 11
9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure 11
Part III 10. Directors and Executive Officers of the
Registrant 12
11. Executive Compensation 14
12. Security Ownership of Certain Beneficial
Owners and Management 14
13. Certain Relationships and Related
Transactions 16
Part IV 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 17
PART I
ITEM 1. Business
Vanderbilt Square Corp. (the "Registrant" or "Company") was
organized under the laws of the State of Florida on January 16,
1985. Until mid-1997 the Company was engaged in leasing equipment
to customers through its wholly-owned subsidiary, Hi-Tech Leasing,
Inc. ("Hi-Tech"); deriving revenue from investments in marketable
securities; and rendering consulting advice and administrative and
office management services to its affiliate, Corrections Services,
Inc. ("CSI"). CSI is a publicly-held company engaged in marketing
an electronic monitoring system to corrections agencies and
facilities.
Through Hi-Tech, the Company entered into equipment leasing
with customers pursuant to which the Company retained title and
ultimate ownership of the leased equipment. The customer, or
lessee, was entitled to possession and use of the equipment for the
purposes for which the equipment is intended so long as the
customer continued the scheduled lease payments and so long as all
other performance obligations incumbent upon the customer under the
lease agreement were performed and satisfied.
At year end, 1996, the Company owned a 27.7% interest in CSI
and was otherwise affiliated with CSI through common management and
control. On July 28, 1997, the Company sold its entire investment
in Hi-Tech Leasing, Inc. to CSI in exchange for 2,000,000
restricted shares of CSI's authorized but previously unissued
restricted Common Stock. The Company valued the common shares
received in the purchase and sale transaction at $731,000 and
reported a loss on the sale of its subsidiary, Hi-Tech, amounting
to $5,988. See "Financial Statements".
On August 28, 1997, the Company distributed substantially all
of its holdings in CSI to the Company's shareholders pro-rata with
their respective ownership interests in the Company. Each
Vanderbilt Square shareholder received .17 shares of CSI Common
Stock for each share of the Company's Common Stock held. No
fractional shares were issued and no cash was distributed in lieu
of fractional shares. Instead, a full share of CSI Common Stock
was distributed for each remaining fractional share held by a
Company stockholder at the time of the distribution. The Company
treated the distribution of its CSI Common Stock as a dividend to
its shareholders.
The sale of Hi-Tech by the Company to its affiliate, CSI, was
one aspect of a change of control of the Company which occurred
during August, 1997. See "Change of Control" below.
With disposition of its Hi-Tech subsidiary, the Company
stepped out of its equipment leasing business, and at December 31,
1997, it had no commercial operations in that area.
Change of Control
On August 27, 1997, the Company's former President and
Director, Norman H. Becker and its former Secretary/Treasurer and
Director, Diane Aquino, resigned as officers and directors of the
Company following the appointment of Messrs. Larry Schwartz and
Edward Meyer as all of the members of the Registrant's Board of
Directors. The Board thereafter appointed Mr. Schwartz as the
Company's President and Mr. Meyer as its Secretary/Treasurer.
Mr. Schwartz also entered into option agreements with the
Company's former officers and directors pursuant to which Mr.
Schwartz was granted the right to purchase an aggregate of
3,500,000 shares of the Registrant's Common Stock from the former
officers and directors at the rate of $0.10 per their share. The
options granted Mr. Schwartz in that transaction by its terms would
have expired on January 15, 1998. Mr. Schwartz exercised those
options timely and in the process became a control shareholder of
the Company. In four unrelated transactions, four other
stockholders of the Registrant sold an aggregate of 2,000,000
shares of the Registrant's Common Stock at $0.15 per share to three
unrelated purchasers. The purchasers of those latter shares were
not and are not affiliated with either Messrs. Schwartz or Meyer,
nor are they affiliated with one another.
With disposition of its prior holdings in CSI, and with the
resignation of former officers and directors, Mr. Becker and Ms.
Aquino, the Company's affiliation with CSI and its prior activity
of rendering consulting advice and administrative and office
management services to CSI, was also terminated. Affiliation of
the Registrant and CSI was based in addition to the services
rendered by the Company to CSI, on their prior common management
and control. At December 31, 1997, the only remaining nexus
between the Company and CSI were the common shareholders generated
primarily by the Company's distribution of its CSI Common Stock to
its own shareholders on August 26, 1997. With termination of the
Company's affiliation with CSI, the Company stepped out of its
previous consulting activity rendering advice and administrative
and office management services to that company. For all practical
purposes, at the beginning of September, 1997, the Company became
inactive with no current commercial operations.
Recent Developments
On September 9, 1997, the Company entered into a preliminary
Letter of Intent to acquire all of the issued and outstanding
capital stock of Michael's International Treasure Jewelry, Inc., a
closely-held Florida corporation with several operating locations
in the cities of Miami and Key West, Florida. Michael's
International Treasure Jewelry, Inc. ("Michael's") is engaged in
the manufacture of rare treasure jewelry at its facility in the
Seybold Building in Miami, Florida. It manufactures treasure
jewelry for its own sales and distributions operations and has
represented to the Company that its sales are, accordingly, made at
margins above customary margins in the personal jewelry industry.
The September 9, 1997 Letter of Intent continues to be preliminary
and specifies by its terms that the combination/acquisition
contemplated is contingent upon the parties' subsequent ability to
negotiate and execute a definitive acquisition agreement. Upon its
entry into the letter of intent, the Company undertook and
continues at April 1, 1998, due diligence efforts to ensure that
the proposed acquisition presents an audit-able combination and
that the operations and financial condition of Michael's is both
well known to and well understood by the Company. Those efforts
continue at the date of this report and the Company continues to
intend to proceed with the acquisition. It has recently given
written assurance to a third party in another transaction that it
intends to complete some form of acquisition/combination with
Michael's prior to December 31, 1998.
Despite that current intent, however, there can be no
assurance that the Company's efforts will not encounter one or more
insurmountable obstacles to the contemplated transaction. In that
event, the parties may be required to abandon the proposed
transaction and the Company will have, in the premises, sustained
significant legal and accounting costs, the expenditure of which
will have an adverse, rather than a beneficial, effect on the
Company's financial condition.
On October 1, 1997, the Company, as co-lessee, entered into a
one (1) year lease/purchase agreement with Seahawk Deep Ocean
Technology, Inc. ("Seahawk"), a publicly-held corporation with
principal offices in Tampa, Florida. The other co-lessee in the
lease purchase agreement with Seahawk is Michael's International
Treasure Jewelry, Inc. The lease purchase agreement obligated
Seahawk to lease certain artifacts and display items referred to in
the lease purchase agreement as the "Treasure" to the co-lessees
for a term of one (1) year in exchange for quarterly payments in
the amount of $67,500 each. The lease purchase agreement provided
for a buy-out after one (1) year for a purchase price of
$2,500,000, payable $750,000 in cash with the balance in the
Company's restricted Common Stock. It was the intent of the co-
lessees to display the artifacts at Michael's flagship store at 400
Duval Street in Key West, Florida and to use the display to
generate retail traffic for Michael's Treasure Jewelry business.
Under the lease arrangement, Michael's was obligated to make the
quarterly lease payments and the Company's interest in the lease
was focused on the lessee's right to purchase the artifacts and
display items at the end of the lease at what the Company viewed as
a very favorable purchase price. The Company itself was not bound
to make any of the quarterly lease payments but in the event that
Michael's failed to make them, or any of them, the Company reserved
the right to elect to do so in order to protect its interest in the
buy-out right at the end of the lease. Michael's expected to
garner additional retail revenues through its display of the
artifacts and display items with which to make the quarterly lease
payments.
Subsequent Developments
At March 1, 1998, a total of $135,000 in lease payments had
been paid to Seahawk and, pursuant to additional on-going
discussions and negotiations between Seahawk and the co-lessees
during the first quarter of 1998, the Company determined to
exercise the purchase option prior to lease-end itself with the
amiable consent and waiver of Michael's. See Item 7., Management's
Discussion and Analysis of Financial Condition and Results of
Operations - "Liquidity".
ITEM 2. Properties
The Company does not own or lease any real property. The
Company maintained its executive offices in Ft. Lauderdale, Florida
pursuant to an oral month-to-month tenancy with an affiliate at a
cost of $1,350 per month until September, 1997. Since October,
1997, the Company has maintained its executive offices in Boca
Raton, Florida, cost free, with its affiliate, First Capital
Services, Inc.
ITEM 3. Legal Proceedings
No legal proceedings are currently pending or, to the
knowledge of management, threatened against the Company.
ITEM 4. Submission Of Matters To A Vote Of Security Holders
No matters were submitted to a vote of security holders,
through a solicitation of proxies during the fourth quarter of the
fiscal year covered by this report. During the first quarter of
1998, a majority of the shareholder interest in the Company
consented without meeting to change of the Company's name from
Vanderbilt Square Corp. to Treasure and Exhibits International,
Inc.
PART II
ITEM 5. Market For Registrant's Common Equity And Related
Stockholder Matters
The Company's Common Stock is traded in the over-the-counter
market on the National Association of Securities Dealers, Inc. OTC
Bulletin Board under the symbol "VNSR". The Company intends to
change the trading symbol to "TEII" as soon as practicable after
the filing of this Annual Report on Form 10-K. Set forth below is
the range of high and low bid and asked information for the
Company's Common Stock for the two most recent fiscal years. This
information represents prices between dealers and does not reflect
retail mark-up or mark-down or commissions, and does not
necessarily represent actual market transactions.
During the period between January 1, 1996 and March 31, 1997,
the range of the reported high and low bid and asked quotations for
the Company's Common Stock was as follows:
PERIOD BID PRICE ASKED PRICE
HIGH LOW HIGH LOW
First Quarter - 1996 $ .375 $ .25 $ .50 $ .375
Second Quarter - 1996 $ .375 $ .25 $ .50 $ .375
Third Quarter - 1996 $ .40 $ .18 $ .40 $ .25
Fourth Quarter - 1996 $ .375 $ .18 $ .40 $ .25
First Quarter - 1997 $ .325 $ .16 $ .38 $ .22
Second Quarter - 1997 $ .30 $ .16 $ .35 $ .20
Third Quarter - 1997 $ .375 $ .25 $ .40 $ .25
Fourth Quarter - 1997 $ .25 $ .18 $ .35 $ .20
First Quarter - 1998 $ .20 $ .25 $ .25 $ .16
April 1, 1998 - May 13, 1998 $ .065 $ .05 $ .095 $ .09
As of May 1, 1998, there were approximately 210 record holders
of the Registrant's outstanding Common Stock. Moreover, shares of
the Company's Common Stock are held for additional stockholders at
brokerage firms and/or clearing houses. The Company, therefore,
was unable to determine the precise number of beneficial owners of
its Common Stock as of May 1, 1998.
The Company has never paid any cash dividends on its Common
Stock and does not anticipate paying cash dividends in the
foreseeable future. See Item 7., Management's Discussion and
Analysis and Results of Operations - "Liquidity". The Registrant
intends to retain earnings, if any, for future growth and expansion
opportunities. Payment of cash dividends in the future will be
dependent upon the Company's earnings, financial condition, capital
requirements and other factors determined to be relevant by the
Board of Directors. See Item 7., Management's Discussion and
Analysis and Results of Operations - "Liquidity".
ITEM 6. Selected Financial Data
Years Ended December 31,
1997 1996 1995 1994 1993
Revenues $ 144,283 $ 227,902 $ 99,710 $ 108,928 $ 172,354
Operating Expenses $ 130,047 $ 169,509 $ 91,595 $ 110,129 $ 153,895
Net Income (loss) $ 20,840 $ 59,443 $ 1,498 $ 6,642 $ 254,483
Weighted number of
shares outstanding 16,437,088 14,847,281 14,224,096 14,515,066 12,799,737
Net income (loss)
per share of Common
Stock outstanding $ .001 $ -0- $ -0- $ -0- $ .02
Total Assets $ 195,938 $1,063,919 $ 920,910 $1,004,085 $1,011,870
Total Liabilities $ 17,083 $ 51,673 $ 40,810 $ 78,987 $ 76,818
Cash Dividends $ -0- $ -0- $ -0- $ -0- $ -0-
See Financial Statements and Notes to Financial Statements
ITEM 7. Management Discussion And Analysis Of Financial Condition
And Results Of Operations
This analysis of the Company's financial condition, liquidity,
capital resources and results of operations should be viewed in
conjunction with the accompanying financial statements, including
the notes thereto.
Financial Condition
At December 31, 1997, the Company had current assets of
$195,938 as compared to $763,977 at December 31, 1996, total assets
of $195,938 at December 31, 1997 as compared to $1,063,919 at
December 31, 1996, current liabilities of $17,083 at December 31,
1997, as compared to $48,447 at December 31, 1996, total
liabilities of $17,083 at December 31, 1997, as compared to $51,673
at December 31, 1996, and a net worth of $178,855 at December 31,
1997, as compared to $1,012,246 at December 31, 1996. See
"Financial Statements". The decrease in assets was principally due
to the decrease in cash and cash equivalents and marketable trading
securities and disposition of the Company's consolidated
subsidiary, Hi-Tech Leasing, Inc. The decrease in liabilities was
principally due to an increase in retained earnings deficiency.
Liquidity
During the year ended December 31, 1997, the Company had a
decrease in cash and cash equivalents of $70,414, from $250,209 to
$179,795. The Company's decrease in cash was principally due to
the sale disposition of its investment in its consolidated
subsidiary, Hi-Tech, in August, 1997. At year-end the Company had
limited liabilities and no present commitments that were reasonably
likely to result in its liquidity increasing or decreasing in any
material way. During the first quarter of 1998, however, the
Company determined to pursue exercise of the lease purchase option
contained in an artifacts and display items lease of treasure
artifacts from a joint venture between Seahawk Deep Ocean
Technology, Inc. and a Seahawk affiliate in Tampa, Florida. See
Item 1., Business, Subsequent Developments. The Company and its
intended acquisition, Michael's International Treasure Jewelry,
Inc., were co-lessees in the Seahawk lease. The Company determined
during the first quarter of 1998 to seek to exercise the lease
purchase option to acquire the leased items itself prior to the
completion of its due diligence efforts in connection with its
intended acquisition of Michael's International Treasure Jewelry,
Inc. ("Michael's"). On March 19, 1998, the Company closed its
purchase of the artifacts with Michael's consent to the transaction
and without Michael's participation in exercise of the lease
purchase option.
Under the terms of the purchase agreement, lease payments in
the amount of $135,000 which had been previously paid were credited
to the cash portion of the agreed purchase price totaling $617,500.
The balance of the purchase price was paid with 9,500,000
additional shares of the Company's authorized but previously
unissued Common Stock and a secured promissory note due on August
1, 1998 in the original principal amount of $200,000. All of the
cash funds required to complete the transaction on March 19, 1998
($482,500), were borrowed by the Company from its affiliate, First
Capital Services, Inc., a closely held Florida corporation. First
Capital Services, Inc. is affiliated with the Company through
common management and control in that the Company's President and
Chief Executive Officer, Larry Schwartz, is also President and
Chief Executive Officer of First Capital Services, Inc.
The debt incurred by the Company in the process of acquiring
the Seahawk treasure artifacts, exceeds the Company's total assets
at year-end 1997 by a factor approaching four (4). While the debt
to its affiliate, First Capital Services, Inc., is demand in nature
and requires no immediate and on-going debt service, the Company's
prospective ability to repay the debt with revenues from commercial
operations is largely dependent, at March 31, 1998, on its
subsequent ability to complete the intended acquisition of
Michael's and to deploy the artifacts acquired from Seahawk as
inventory and exhibits in a commercial manner which will generate
revenues and profits to the Company. There is no present assurance
that the Company will in fact be able to successfully complete
those plans due to the potential occurrence of one or more
presently unforseen, insurmountable obstacles to completion of that
transaction. In the event that it is unable to do so, the Company
will be required to modify its present plan to attempt in some
other, presently unforseen, way to otherwise commence commercial
operations with a view toward generating revenues or resale
proceeds from the treasure and display items it has acquired with
substantial debt and dilution to its shareholders.
Pursuant to additional terms of the exercised lease purchase
option with Seahawk, the Company has the right to repurchase
8,000,000 of the 9,500,000 shares issued as part of the
consideration in the transaction within a ninety (90) day period
ending on or about June 19, 1998. The Company has no current
ability to exercise its Common Stock repurchase option with Seahawk
and will likely be faced with the need for additional, substantial
borrowing from one or more affiliates in order to exercise the
repurchase option should it choose to do so within the exercise
period.
In general, at March 31, 1998, the Company's liquidity is
limited and will likely diminish in the near term in the absence of
current commercial operations and on-going general and
administrative expenses. See Item 1., "Business". The Registrant
knows of no other trend, additional demand, event or uncertainties
that will result in, or that are reasonably likely to result in,
its liquidity increasing or decreasing in any material way.
Capital Resources
At year end 1997, the Company has no outstanding unused credit
lines or credit commitments in place. There were no significant
liabilities and the Company was meeting its on-going expenses with
its diminishing cash and cash equivalents. Lease payments for
lease of the Seahawk treasure artifacts and display items were the
obligation of the Company's co-lessee, Michael's International
Treasure Jewelry, Inc. In order to close its exercise of the
Seahawk lease purchase option, the Company sought and secured
credit from an affiliate, First Capital Services, Inc., a closely-
held Florida corporation under common control with the Company
through its President and Chief Executive Officer, Larry Schwartz.
See "Liability". It is the Company's intent at March 31, 1998, to
continue to rely upon its affiliate as needed for additional debt
financing and to pursue some form of equity financing in the near
term, in a manner, and under terms and conditions yet to be
determined.
In the event that its current due diligence efforts with
regard to the acquisition of Michael's International Treasure
Jewelry, Inc. are successfully completed, the Company will require
further capital financing to complete that acquisition and to repay
or partially repay the debt to its affiliate, First Capital
Services, Inc. incurred in the Company's acquisition of the Seahawk
artifacts. In the interim, the Company will continue to lease the
artifacts and display items to Michael's pending completion of the
intended acquisition. If the Company is ultimately unable to
secure additional debt financing or to raise capital from an equity
financing, it will be adversely affected in that it will likely be
unable to repay its current debt and subsequently, similarly, be
unable to complete the planned acquisition of Michael's. While the
Company currently anticipates completion of the Michael's
acquisition transaction, there is and can be no present assurance
that it will be able to do so.
Results of Operations
The Company's revenues for the year ended December 31, 1997,
were $144,283 as compared to $127,902 for the year ended December
31, 1996, and $99,710 for the year ended December 31, 1995. The
principal reason for the decrease in revenues was a decrease in
income from sales of marketable equity securities.
Operating expenses decreased to $130,047 for the year ended
December 31, 1997 as compared to $169,509 at December 31, 1996 and
$91,595 at December 31, 1995. The difference between operating
expenses at December 31, 1997 and December 31, 1996, was $39,462.
The difference in operating expenses at December 31, 1996 and
December 31, 1995 was $77,914. The principal reason for the
difference between December 31, 1997 and 1996, and a decrease in
Selling General and Administrative Expenses. Income before
provision for income taxes for the year ended December 31, 1997,
was $8,248 as compared to income of $86,846 for the year ended
December 31, 1996 and a loss of ($480) for the year ended December
31, 1995. The decrease in income of $78,598 for the year ended
December 31, 1997 as compared to December 31, 1996, was principally
due to a decrease in earnings from the sale of marketable equity
securities.
At March 31, 1998, the Company had no current commercial
operations. Having only recently completed acquisition of the
Seahawk treasure artifacts and exhibits items, through exercise of
the lease purchase option, using debt proceeds secured from its
affiliate, First Capital Services, Inc., the Company (at March 31,
1998), intends to immediately begin commercial operations through
its collection of lease payments, albeit reduced to $14,000 per
month since the lease payments no longer contain a component
reflecting a purchase option, from Michael's for continued lease of
the Seahawk artifacts and display items otherwise under the same
terms and conditions of the Seahawk lease. The Company intends to
continue this arrangement with Michael's pending completion of its
current due diligence efforts toward developing, entering into and
closing a definitive acquisition agreement with Michael's. While
there can be no present assurance that the Company will not
encounter an insurmountable obstacle to successful completion of
that transaction, the Company believes that it will be able to do
so during the first half of 1998. Completion of that transaction,
at this point, however, is primarily dependent on the Company's
ability to raise additional debt or equity financing.
Once closed, if closed, the Company expects its acquisition of
Michael's to enable it to, and to continue to, buy unique shipwreck
artifacts and to carry out its ultimate plan to become a leading
retailer of quality treasure jewelry and artifacts. The many
uncertainties surrounding completion and implementation of this
plan however may preclude its successful implementation. In that
event, the Company will be adversely affected.
ITEM 8. Financial Statements And Supplementary Data
Financial information pursuant to this Item appears elsewhere
in this Report. See Item 14. Exhibits, Financial Statements,
Schedules and Reports on Form 8-K.
ITEM 9. Disagreements On Accounting And Financial Disclosure
No change of the Company's independent, certified auditor
accountants took place with respect to the preparation of the
Company's financial statements for the two (2) most recent fiscal
years contained in this report. There are and have been no
disagreements on accounting or financial disclosure.
PART III
ITEM 10. Directors And Executive Officers Of The Registrant
The directors and executive officers of the Company, as of
the date of this Report are as follows:
Name Age Offices Held
Larry Schwartz 50 President, Secretary,
Treasurer and Director
Edward Meyer 40 Former Secretary,
Treasurer and Director
Norman H. Becker 60 Former President and
Director
Glenn Shaffren 42 Former Vice President and
Director
Diane Aquino 49 Former Secretary/
Treasurer and Director
Larry Schwartz, was appointed President and Chief Executive
Officer of the Registrant on August 27, 1997 following the
resignation of its prior management. With the resignation of Mr.
Meyer (see below) on April 30, 1998, Mr. Schwartz also assumed the
duties of Secretary and Treasurer of the Company. Mr. Schwartz is
also President and Chief Executive Officer of First Capital
Services, Inc. and First Consolidated Financial Corporation, as
well as various affiliated entities and is presently engaged in the
business of asset based lending, financial consulting services for
corporate clients, and financial placement services. Mr. Schwartz
has been engaged in those activities for the last five years and
has assumed management of the Registrant as his initial engagement
with a publicly-held enterprise. Mr. Schwartz holds the BS Degree
from Boston State College and an MA Degree from Boston College. In
addition, Mr. Schwartz was a doctoral candidate at Boston College
attending post-masters course work in 1973. Boston State College
and Boston College are both located in the City of Boston,
Massachusetts. In addition his formal education, Mr. Schwartz has
attended numerous seminars on a broad variety of topics related to
asset based lending operations.
Edward Meyer, was appointed Secretary, Treasurer and a
Director of the Company on August 27, 1997 coincident with the
change of control reflected in Item 1., Business, Change of
Control, herein. Mr. Meyer is also the controller of the Company's
affiliate, First Capital Services, Inc., an enterprise affiliated
with the Registrant due to common control. Mr. Meyer has been the
controller of First Capital Services, Inc. since 1994. Prior to
1994, he was controller and officer manager of Zimmerman Tree
Service. Mr. Meyer holds the BBA Degree in accounting from the
Bernard Baruch College of the City University of New York and is a
licensed certified public accountant in both the State of Florida
and the State of Colorado. On April 30, 1998, however, Mr. Meyer
resigned as the Company's Secretary, Treasurer and a member of its
Board of Directors due to excess demand on his time generated by
his other duties. The Company was informed by Mr. Meyer at the
time of resignation that he had no disagreement with the Company's
management, financial or otherwise.
Norman H. Becker, resigned as an officer and director of the
Company on August 26, 1997 in connection with the transaction
changing control of the Company to Messrs. Schwartz and Meyer.
Prior to his appointment as the Company's President and Chief
Executive Officer during February 1987, Mr. Becker was
Secretary/Treasurer and a Director of the Company since its
inception, January 16, 1985. Since January, 1993, Mr. Becker was
also President of CSI, former affiliate of the Company. (See
"Business" and "Financial Statements" and accompanying notes).
Since January 1985, Mr. Becker has been self-employed in the
practice of public accounting. Mr. Becker is a graduate of City
College of New York (Bernard Baruch School of Business) and is a
member of a number of professional accounting associations
including the American Institute of Certified Public Accountants,
the Florida Institute of Certified Public Accountants, and the Dade
County Chapter of the Florida Institute of Certified Public
Accountants.
Glenn Shaffren became Vice President and a Director of the
Company in November, 1996. Since 1994, Mr. Shaffren has been an
officer and director of Digitel Network Services, Inc., a private
Georgia corporation, and its Chief Executive Officer and Chief
Financial Officer since March, 1995. He has been involved in cable
television since 1979 and has owned, operated and sold two outside
plant construction and installation companies specializing in fiber
optic cable and coaxial cable, aerial and underground construction,
splicing and activation. In 1992, Mr. Shaffren was Vice President
of Operations for American Fiber Optics. Mr. Shaffren resigned as
an officer and director of the Company on January 29, 1997.
Diane Aquino resigned as an officer and director of the
Company on August 26, 1997 in connection with the transaction
changing control of the Company to Messers. Schwartz and Meyer.
Ms. Aquino was been Secretary/Treasurer and a Director of the
Company since February 15, 1989. Since January 1993, Ms. Aquino
was Secretary and Treasurer of CSI, an affiliate of the Company.
ITEM 11. Executive Compensation
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payments
Restricted Securities
Name of Individual Other Annual Stock Underlying/ LTIP All Other
and Principal Position Year Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Larry Schwartz 1997 $ -0- -0- $15,000 -0- -0- -0- -0-
President
Edward Meyer 1997 $ -0- -0- $ -0- -0- -0- -0- -0-
Secretary/Treasurer
Norman H. Becker 1996 $ 4,000 -0- $ 1,163 -0- -0- -0- -0-
Former President 1997 $ 4,000 -0- $ 3,338 -0- -0- -0- -0-
Glenn Shaffren 1996 -0- -0- -0- -0- -0- -0- -0-
Former Vice President 1997 -0- -0- -0- -0- -0- -0- -0-
Diane Aquino 1996 $7,500 -0- -0- -0- -0- -0- -0-
Former Secretary/
Treasurer 1997 $7,500 -0- -0- -0- -0- -0- -0-
During the 1997 fiscal year, there were no stock options,
stock appreciation rights, restricted stock awards, LTIP awards, or
similar compensation issued. None of the Company's former or
present officers and directors had formal employment agreements
with the Company.
ITEM 12. Security Ownership Of Certain Beneficial Owners And
Management
The following table sets forth, as of the date of this Report,
certain information concerning beneficial ownership of the
Company's Common Stock, by (i) each person known to the Company to
own five percent (5%) or more of the Company's outstanding Common
Stock, (ii) all directors of the Company, naming them and (iii) all
directors and officers of the Company as a group, without naming
them.
Amount and Nature of Percent
Name and Address Beneficial Ownership (1) of Class(1)
Larry Schwartz (2) 3,907,637 Shares 15%
Seahawk I, Ltd(4) 5,903,066 Shares 23%
5102 S. Westshore Blvd.
Tampa, FL 33611
Seahawk Deep Ocean
Technology, Inc. (4) 2,529,286 Shares 10%
5102 S. Westshore Blvd.
Tampa, FL 33611
Edward Meyer (2) -0- -0-
All Officers and Directors
as a Group (1 persons) 3,907,637 Shares 15%
(1) As used in the Annual Report, the term beneficial ownership
with respect to a security is defined by Rule 13d-3 under the
Securities Exchange Act of 1934 as consisting of sole or
shared voting power (including the power to vote or direct the
vote) and/or sole or shared investment power (including the
power to dispose or direct the disposition of) with respect to
the security through any contract, arrangement, understanding,
relationship or otherwise, including a right to acquire such
power(s) during the next 60 days. Unless otherwise noted,
beneficial ownership consists of sole ownership, voting and
investment rights.
(2) The address for such person is c/o Treasures & Exhibits
International Inc., 2300 Glades Road, Suite 450, West Tower,
Boca Raton, Florida 33431.
(3) Calculations are based upon 25,990,756 issued and outstanding
shares of the Company's Common Stock. The total reflects
subsequent issuance, on March 19, 1998, of 9,500,000 shares of
the Company's restricted Common Stock to persons designated by
the Seller as part of the purchase price paid by the Company
in its acquisition of the Seahawk artifacts and display items.
See Item. 1, "Business".
(4) Seahawk I, Ltd. and Seahawk Deep Ocean Technology, Inc. are
affiliated by common control with each other. All of the
shares owned of record by those entities accordingly may be
deemed to be held by a single beneficial owner.
ITEM 13. Certain Relationships And Related Transactions
During the fiscal year ended December 31, 1997, there were no
material transactions between the Company and any of its officers
and/or Directors which involved $60,000 or more. However, the
Company entered into a management consulting arrangement with First
Consolidated Financial Corporation, an affiliate under common
control with the Company in that company's President and Chief
Executive Officer, Larry Schwartz, is also President and Chief
Executive Officer of First Consolidated Financial Corporation.
Pursuant to the consulting arrangement, First Consolidated renders
management consulting services to the Company in exchange for a
monthly fee in the amount of $5,000. On an annualized basis, the
consulting arrangement represents a $60,000 expense to the Company.
Monthly payments, each in the amount of $5,000 have continued since
December 31, 1997 through the date of this report.
In addition, the Company has borrowed from its affiliate,
First Capital Services, Inc. in order to acquire the Seahawk
artifacts and display items through exercise of the lease purchase
option. See Item 7., Management's Discussion and Analysis of
Financial Condition and Results of Operations - "Liquidity". In
addition, on December 31, 1997, the Company loaned its affiliate,
First Capital Services, Inc. $153,649.32 on a short term basis at
an annual interest rate of 12%. On January 15, 1998, First Capital
Services repaid $125,000 of the Company's loan. The loan
transactions were entered into by and between the Company and First
Capital Services, Inc. in an effort to generate a modicom of
interest income for the Company pending its own development and
implementation of revenue producing commercial operations.
PART IV
ITEM 14. Exhibits, Financial Statements, Schedules And Reports On
Form 8-K
(a) 1. Financial Statements:
(i) Report of Independent Certified Public Accountant;
(ii) Consolidated Balance Sheet - December 31, 1997 and
December 31, 1996;
(iii) Consolidated Statement of Operations - Three years
ended December 31, 1997;
(iv) Consolidated Statement of Shareholders' Equity -
Three years ended December 31, 1997;
(v) Consolidated Statement of Cash Flows - Three years
ended December 31, 1997;
(vi) Notes to Consolidated Financial Statements
(a)(3)Exhibits
(b)(10) Letter of Intent dated September 10, 1997
for proposed acquisition of Michael's
International Treasure Jewelry, Inc.
(b)(10) Agreement for Purchase of Artifacts and
Displays for purchase by the Registrant
of certain artifacts and display items
from Seahawk Deep Ocean Technology, Inc.
(b) Reports of Form 8-K
The Registrant filed no reports on Form 8-K during
the fourth quarter of 1997. On March 27, 1998, the
Company filed a report on Form 8-K of its purchase
on March 19, 1998 of the artifacts previously
leased to the Company as co-lessee for cash, newly
issued restricted Common Stock and a secured
promissory note. The March 19, 1998 Form 8-K was
amended on May 14, 1998 to correct an error in the
cash portion of the reported purchase price which
had been overstated by $200,000 inadvertently in
the original Form 8-K current report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
TREASURE AND EXHIBITS
INTERNATIONAL, INC.
Date: May 14, 1998 By: /s/Larry Schwartz
Larry Schwartz, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report have been signed below by the following persons
on behalf of the Registrant in the capacities and on the dates
indicated.
Signatures Title Date
(i) Principal Executive Officer
/s/Larry Schwartz Chief Executive May 14, 1998
Larry Schwartz Officer
(ii) Principal Financial and
Accounting Officer
/s/Larry Schwartz Treasurer May 14, 1998
Larry Schwartz
(iii) A Majority of the Board
of Directors
/s/Larry Schwartz Director May 14, 1998
Larry Schwartz