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, 2001
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.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2483405
-------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
2300 Glades Road, Suite 450, West Tower, Boca Raton, Florida 33431
------------------------------------------------------------------
(Address of principal executive offices)
(531) 750-7535
--------------------------------------------------
(Registrant's telephone number, including area code)
--------------------------------------------------
(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, 2001, 28,990,756 shares of Common Stock of the
issuer were outstanding.
TREASURE AND EXHIBITS INTERNATIONAL
INDEX
Page Number
-----------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheet - June 30, 2001......................................3
Condensed Statements of Operations - For the three months and
six months ended June 30, 2001 and 2000......................................4
Condensed Statements of Cash Flows - For the six months
ended June 30, 2001 and 2000.................................................5
Notes to Condensed 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.....................................8
SIGNATURES...................................................................9
Item 1 - Financial Statements
TREASURE AND EXHIBITS INTERNATIONAL, INC.
CONDENSED BALANCE SHEET
June 30, 2001
--------------
ASSETS
Current Assets:
Cash $ 11,169
Total current assets 11,169
Other 7,622
-----------
$ 18,791
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $324,145
Notes and loans payable - related parties 580,384
Put option liability 1,044,407
-----------
Total current liabilities 1,948,936
===========
Stockholders' equity (deficit):
Common stock, $.0001 par value, 50,000,000
shares authorized: 28,990,756 2,899
shares issued and outstanding: 2,111,706
Additional paid in capital (4,044,750)
------------
Accumulated deficit (1,930,145)
------------
Total stockholders' equity (deficit) $ 18,791
============
3
AFFINITY INTERNATIONAL MARKETING, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2001 2000 2001 2001
------------ ------------ ------------ ------------
Revenues:
Interest and dividend income $ - $ 138 $ 9 $ 214
Realized and unrealized gain on investments in
marketable securities - 10,711 - 10,711
----------- ------------ ------------ ------------
Net revenues - 10,849 9 10,925
----------- ------------ ------------ ------------
General and administrative - 93,390 104 115,665
----------- ------------ ------------ ------------
Loss from operations - (82,541) (95) (104,740)
Income tax benefit $ - - - 5,569
----------- ------------ ------------ ------------
Net loss - $ (82,541) $ (95) $ (99,171)
=========== ============ ============ ============
Basic and diluted income (loss) per common $ 0.00 $ 0.00 $ 0.00 $ 0.00
share
=========== ============ ============ ============
Weighted average shares outstanding 11,467,931 28,990,756 28,990,756 28,990,756
=========== ============ ============ ============
4
AFFINITY INTERNATIONAL MARKETING, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
2001 2000
-------------- -------------
Cash flows from operating activities:
Net loss $ (95) $ (99,171)
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization - -
Changes in operating assets and liabilities
Other assets - 9,544
Accounts payable and accrued expenses - 37,351
------------ --------------
Net cash used in operating activities (95) (52,276)
------------ --------------
Cash flows from financing activities:
Proceeds from notes payable-affiliates - 53,414
------------ --------------
Net cash provided by financing activities - 53,414
------------ --------------
Net increase (decrease) in cash and cash equivalents (95) 1,138
Cash and cash equivalents at beginning of period 11,264 4,095
------------ --------------
Cash and cash equivalents at end of period $ 11,169 $ 5,233
============ ==============
Cash paid for:
Interest $ - $ -
5
TREASURE AND EXHIBITS INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2001
1. INTERIM PRESENTATION
The interim Condensed 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, 2000. 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,
2001.
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.
6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
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 AND SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS AND SIX
MONTHS ENDED JUNE 30, 2000
The Company has no ongoing business activities and has not had such since 1999,
except to seek an entity to acquire. Accordingly, its sole revenues are interest
income and its sole expenses are bank charges. Its office space is being
provided free of charge by a shareholder of the Company.
Liquidity and Capital Resources
The Company had a cash balance of $11,169 and a working capital deficit of
$1,937,767 at June 30, 2001 compared to a cash balance of $11,264 and a working
capital deficit of $1,937,672 at December 31, 2000. The decrease in the working
capital deficit was attributable to the current period net operating loss.
For the six months ended June 30, 2001 net cash used in operating activities
totaled $95 compared to $52,276 used in operating activities for the
corresponding period of the prior year. This change resulted from an increase in
the net loss.
We received no cash from either investing or financing activities during either
the three months ended June 30, 2001, or June 30, 2000.
By December 1999 we had ceased all operations and had defaulted on our master
loan agreement with our affiliate First Capital Services, Inc. ("First Capital")
whereby we had acquired funds to purchase certain treasured artifacts and lease
a casino cruise ship, as well as a $750,000 note to First Capital which we
assumed in connection with the acquisition of an adult gaming facility. 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.
In January 2000, we entered into a letter of intent to acquire 100% of Union IPO
Corporation ("Union IPO"), a Nevada corporation in exchange for 15,000,000
shares of the Company's common stock. Union IPO is an investment firm targeting
labor resources and union based venture capital, and promoting union friendly
technology companies. This acquisition was never consumated because we were
unable to obtain audited financial statements of Union IPO and because of
outstanding litigation against the Company. We are dependent upon the efforts of
our President to seek out, and negotiate other business opportunities. Even if
we do not acquire an operating company, there can be no assurance that we will
ever operate at a profit.
7
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
None
b) Reports on Form 8-K
1. Form 8-K dated May 9, 2001 re: Changes in Registrant's Certifying
Accountants
8
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AFFINITY INTERNATIONAL MARKETING, INC.
Date: September 17, 2001 By:/s/ Kenneth DeFilipo
-----------------------------------
Kenneth DeFillipo,
Chief Executive Office and Chief