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 April 30, 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.
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(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
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(Address of Principal Executive Offices) (Zip Code)
1183 Finch Ave West, Suite 508, North York, Ontario Canada M3J 2G2
- -------------------------------------------------------------------------------
(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
------- -------
2
As of April 30, 1999, 88,320,677 shares of the registrant's common
stock were outstanding.
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of July 20, 1999 was $6,528,009.
3
PART I Financial Information
ITEM 1. Financial Statements
Bromberg & Associate
1183 Finch Ave. West, Suite 305
- ---------------------- Toronto, Ontario M3J 2G2
Phone: (416) 663-7521
CHARTERED ACCOUNTANTS Fax: (416) 663-1546
ACCOUNTANTS' REVIEW REPORT
Board of Directors and Shareholders
Treasury International, Inc.
We have reviewed the accompanying interim consolidated balance sheets of
Treasury International, Inc. as at April 30, 1999, and the interim consolidated
statements of operations, and cash flows for the years 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 & ASSOCIATES
CHARTERED ACCOUNTS
TORONTO, CANADA
August 26, 1999
4
TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED BALANCE SHEET
AS AT APRIL 30, 1999
(UNAUDITED)
ASSETS
April 30, January 31,
1999 1999
---------- -----------
CURRENT
Bank $ 3,707 $ 19,956
Accounts receivable (Note 3) 850,000 850,000
Due from Wexcap Group, LLC 3,000 -
Sundry assets 1,770 3,098
------------------- -------------------
858,477 873,054
PROMISSORY NOTE RECEIVABLE (Note 3) 4,000,000 4,000,000
capital assets (Notes 2 and 4) 6,588 6,935
------------------- -------------------
$ 4,865,065 $ 4,879,989
=================== ===================
LIABILITIES
current
Accounts payable and accrued liabilities 129,862 83,807
Current portion of long-term debt (Note 5) 1,240,602 1,240,602
------------------- -------------------
$1,370,464 $1,324,409
=================== ===================
SHAREHOLDERS' EQUITY
SHARE CAPITAL
Authorized
100,000,000 common shares at $.0001
Issued
88,320,677 common shares 8,832 8,832
Contributed surplus (Note 7) 4,455,076 4,455,076
DEFICIT (969,307) (908,328)
------------------- -------------------
3,494,601 3,555,580
------------------- -------------------
$4,865,065 $4,879,989
=================== ===================
5
TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF DEFICIT
THREE MONTHS ENDED APRIL 30, 1999
(UNAUDITED)
April 30, April 30,
1999 1998
----------- ---------
Balance, beginning of period $(908,328) $(3,066,963)
Net loss for the period (60,979) (24,095)
-------------------- --------------------
Balance, end of period $ (969,307) $(3,091,058)
==================== ====================
6
TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTH PERIOD ENDED APRIL 30, 1999
(UNAUDITED)
April 30, April 30,
1999 1998
--------- ---------
REVENUE $ - $ 1,108,363
COST OF GOODS SOLD - 923,590
---------------- ------------------
GROSS PROFIT - 184,773
---------------- ------------------
EXPENSES
General and administrative 60,979 172,737
---------------- ------------------
INCOME (LOSS) FROM OPERATIONS 60,979 12,036
---------------- ------------------
before under noted items
Financial - $ 36,131
---------------- ------------------
NET LOSS $ 60,979 $ 24,095
================ ==================
Earnings per share $ 0.00 $ 0.00
================ ==================
Weighted average number of common shares outstanding 88,320,677 34,594,427
================ ==================
7
TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTH PERIOD ENDED APRIL 30, 1999
(UNAUDITED)
COMMON PAID-IN CONTRIBUTED
SHARES CAPITAL SURPLUS
---------------- ------------- -------------------
Balance-January 31, 1999 88,320,677 $ 8,832 $4,455,076
No shares of common issued during period - - -
---------------- ------------- -------------------
Balance-April 30, 1999 88,320,677 $ 8,832 $ 4,455,076
================ ============= ===================
8
TREASURY INTERNATIONAL, INC.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTH PERIOD ENDED APRIL 30, 1999
(UNAUDITED)
April 30, April 30,
1999 1998
--------- ---------
Cash flows from operating activities
Net income (loss) $ (60,979) $ (24,095)
Adjustment to reconcile net loss to net cash
used in operating activities
Amortization 347 58,610
Decrease in accounts receivable - 13,005
Increase in inventories - (109,206)
Decrease in sundry assets 1,328 42,137
Increase (Decrease) in accounts payable 46,055 (169,554)
Increase in amount due from Wexcap Group 3,000 -
---------------- ------------------
Net cash used for operating activities (16,249) (189,103)
---------------- ------------------
Cash flows from financing activities
Long-term debt - (25,531)
Proceeds on issue of common shares - 112,525
---------------- ------------------
Cash provided by financing activities - 86,994
---------------- ------------------
Cash flows from investing activities
Purchase of capital assets - 1,492
---------------- ------------------
Cash used for investing activities - 1,492
---------------- ------------------
Increase in bank indebtedness (16,249) (103,601)
Cash (bank indebtedness), beginning of period 19,956 (492,012)
---------------- ------------------
Cash (bank indebtedness), end of period $ 3,707 $ (595,613)
================ ==================
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TREASURY INTERNATIONAL, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT APRIL 30, 1999
1. Nature of business
Treasury International, Inc. is a holding company which was
incorporated on August 18, 1995 in the State of Delaware.
2. Summary of significant accounting policies
(a) Basis of consolidation
These consolidated financial statements include the accounts of
the Company and the revenues and expenses of its wholly-owned
subsidiaries, Megatran Investments Ltd. and Mega Blow Moulding
Limited, from November 1, 1996 to November 30, 1998, which was the
date Mega Blow Moulding Limited was sold.
(b) Capital assets
Capital assets are recorded at cost less accumulated amortization.
Amortization is provided as follows:
Office equipment - 20% diminishing balance
(c) Revenue recognition
Revenue is recognized when customers are invoiced for products
shipped by the Company.
(d) Income per share
Income per share is calculated based on the weighted average
number of shares outstanding during the period of 88,320,677.
(e) General
These financial statements have been prepared in accordance with
United States generally accepted accounting principles (GAAP), as
they relate to these financial statements.
3.
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Promissory note receivable
The promissory note receivable was due May 31, 1999 in the amount of
$4,000,000. There was a note also due May 31, 1999 in the amount of
$850,000 as a result of the sale of Mega Blow Moulding Limited relating
to the repayment of the inter-company payable and bank debt.
Further to the Stock Purchase Agreement, dated August 11, 1998, the
Company agreed to extend the due date of the notes to September 10, 1999.
4. Capital assets
April 30 January 31
1999 1999
----------------------------------------------------- ---------------
Accumulated Net book Net book
Cost Amortization value value
--------------- ---------------- ------------- ---------------
Office equipment $18,314 $11,726 $ 6,588 $ 6,935
--------------- ---------------- ------------- ---------------
$18,314 $11,726 $ 6,588 $6,935
=============== ================ ============= ===============
5. Current portion of long term debt
The current portion of long-term debt includes an amount owed to the
Company's former subsidiary Mega Blow Moulding Limited.
6. Income taxes
As at April 30, 1999 the Company had a net operating loss carryover of
approximately $2,684,000 expiring in various years through 2014.
7. Contributed surplus
Contributed surplus represents the premium paid on the issuance of common
shares.
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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"). In exchange for its interest in MBML the
Company received a non-refundable deposit of $250,000, a promissory note of
$4,000,000 and the release of Treasury's as guarantor for MBML's debt at the
Royal Bank of Canada. The promissory note is due on September 10, 1999, the date
to which management has agreed to extend the original due date of May 31, 1999.
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.
Pioneer has built a proprietary database of product information regarding
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 3rd party sources with Pioneer
providing all pre-press and authoring services.
Pioneer also builds dynamic web sites which enable Internet users to access
the information available from a company's print catalog. Efficiencies are built
into the publishing process using a single database to serve information to each
publishing media. 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,
fastener, fluid power, power transmission, electrical, plumbing, occupational
health and safety products.
12
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 following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company included in this annual report.
(1) INTERIM PERIODS
Result of Operations
For the three months ended April 30, 1999.
During the three months period ended April 30, 1999 the Company had no
sales of products or services. The decrease in sales is the result of the
disposition of MBML, the Company's only operating subsidiary. The Company
experienced a net loss of $60,979 in the three month period ended April 30,
1999, compared to a net loss of $24,095 in the three month period ended April
30, 1998. Principally this amount is the result of professional fees, compliance
reporting and restructuring expenses related to the ongoing administration of
the public company.
Operating, general and administrative expenses in the three month period
ended April 30, 1999 were $60,979, representing a 65% decrease from the same
period in the previous year.
The Company will continue to reduce operating, general and administrative
expenses during this transitional phase.
Liquidity and Capital Resources
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 Pioneer Media Group, 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.
Current assets totalled $858,477 at April 30, 1999 compared to $873,054 at
January 31, 1999. At April 30, 1999, the Company had $3,707 in cash and
short-term deposits and a note receivable for $850,000 from the disposition of
MBML. The Company also holds a promissory note from the purchasers of its
subsidiary in the amount of $4,000,000. This promissory note was due on May 31,
1999 but the Company's management agreed to extend the due date of the
promissory note to September 10, 1999.
Current liabilities totalled $1,370,464 at April 30, 1999 compared to
$1,324,409 at January 31, 1999. As of April 30, 1999 the Company remained
guarantor to MBML and its banker, the Royal Bank of Canada, to a maximum amount
of $850,000; negotiated as part of the sale of MBML. This amount is included in
the current portion of long-term debt (Note 5) of the financial statements.
13
Where the amount due on the completion date of the Prommissory Note and Note
Receivable is to be paid to retire the long-term debt with the Royal Bank of
Canada.
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 Mega Blow. However, there can be no assurance that the Company will be
able to realize on its promissory and notes receivables and therefore be able to
repay its debts. If the funds available after the existing promissory and note
receivables, together with its current cash and cash equivalents are not
sufficient to meet the Company's cash needs, the Company may, from time to time,
seek to raise capital from additional sources, including establishing lending
facilities, project-specific financings and additional public or private debt or
equity financings.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.01 - Financial Data Schedule
(b) Reports on Form 8-K. None
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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: August 30, 1999 By /s/ DALE DONER
_____________________________________
Dale Doner, President
Dated: August 30, 1999 By /s/ MARLIN DONER
______________________________________
Marlin Doner, Chief Financial Officer