FORM 10-Q


                     SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C. 20549


              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
  

                     For Quarter Ended September 30, 1998


                                   2-96366-A        
                            (Commission File Number)


                    TREASURES & EXHIBITS INTERNATIONAL, INC.
             (Exact name of Registrant as specified in its charter)


          Florida                                     59-2483405     
(State of other jurisdiction                        (IRS Employer
 of incorporation or organization)                Identification No.)


       2300 Glades Road, Suite 450, West Tower, Boca Raton, FL 33431
                  (Address of Principal Executive Offices)


                               (561) 750-7535                  
            (Registrant's Telephone Number, including area code)



            (Former name, former address and former fiscal years,
                      if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports 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      

There were 25,990,756 shares of Common Stock, $.0001 par value, issued and 
outstanding at November 6, 1998.

<PAGE>

                 TREASURES & EXHIBITS INTERNATIONAL, INC.

                                  INDEX


PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

           Balance Sheets - September 30, 1998 (Unaudited) and December
           31, 1997.

           Statement of Operations - Three months and Nine months ended
           September 30, 1998 and 1997 (Unaudited).

           Statement of Shareholders' Equity - December 31, 1994 through
           September 30, 1998 (Unaudited).

           Statement of Cash Flows - Nine months ended September 30, 1998
           and 1997 (Unaudited).

           Notes to Consolidated Financial Statements.

Item 2.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations.

PART II.OTHER INFORMATION

     Item 1.   Legal Proceedings

     Item 2.   Changes in Securities

     Item 3.   Defaults Upon Senior Securities

     Item 4.   Submission of Matters to a Vote of Security-Holders

     Item 5.   Other Information

     Item 6.   Exhibits and Reports on Form 8-K

SIGNATURES


<PAGE>    2



                  TREASURES & EXHIBITS INTERNATIONAL, INC.


                       PART I - FINANCIAL INFORMATION


Item I.     Financial Statements



<PAGE>   3


Board of Directors and Shareholders
Treasure & Exhibits International, Inc.
Boca Raton, Florida



                   INDEPENDENT ACCOUNTANT'S REPORT




I have reviewed the accompanying balance sheet of Treasure & Exhibits 
International, Inc. as of September 30, 1998, and the statement of operations, 
shareholders' equity and cash flows for the nine months then ended.  These 
financial statements are the responsibility of the Company's management.

I conducted my review in accordance with standards established by the American 
Institute of Certified Public Accountants.  A review of interim financial 
information consists principally of applying analytical procedures to 
financial data and making inquiries of persons responsible for financial and 
accounting matters.  It is substantially less in scope than an audit conducted 
in accordance with generally accepted auditing standards, the objective of 
which is the expression of an opinion regarding the financial statements taken 
as a whole.  Accordingly, I do not express such an opinion.

Based on my review, I am not aware of any material modifications that should 
be made to the accompanying financial statements for them to be in conformity 
with generally accepted accounting principles.



Thomas W. Klash
Certified Public Accountant
Hollywood, Florida
November 5, 1998


<PAGE>   4


                    TREASURE & EXHIBITS INTERNATIONAL, INC.
                    (Formerly Vanderbilt Square Corporation)
                                BALANCE SHEETS

<TABLE>
<CAPTION>

                         ASSETS

                                       September 30,      December 31,
                                           1998               1997    
                                        (Unaudited)     
<S>                                    <C>                <C>
CURRENT ASSETS:
     Cash and cash equivalents          $   51,827         $  179,795
     Investment in marketable
       trading securities - at market       22,073             16,143

     TOTAL CURRENT ASSETS                   73,900            195,938

  Accounts Receivable - Affiliate          102,000                -

INVESTMENT IN ARTIFACTS                  2,432,500                -    

           TOTAL ASSETS                 $2,608,400         $  195,938

</TABLE>





See accompanying notes to financial statements.


<PAGE>   5


                  TREASURE & EXHIBITS INTERNATIONAL, INC.
                  (Formerly Vanderbilt Square Corporation)
                              BALANCE SHEETS


<TABLE>
<CAPTION>

          LIABILITIES AND SHAREHOLDERS' EQUITY

                                         September 30,    December 31,
                                             1998             1997*
                                          (Unaudited)
<S>                                       <C>              <C>
CURRENT LIABILITIES:
  Notes payable                           $  782,500       $      -  
     Accounts payable and accrued
          expenses                            57,137            2,083 
     Due to Affiliate - Consulting Fee        15,000           15,000 

          TOTAL CURRENT LIABILITIES          854,637           17,083 

DEFERRED REVENUE                             112,000              -

PUT OPTION                                 1,615,000              -  

    TOTAL LIABILITIES                      2,581,637           17,083

SHAREHOLDERS' EQUITY:
     Common stock $.0001 par value;
       authorized 50,000,000 shares;
       issued and outstanding
       25,990,756 shares in 1998 and
       16,490,756 shares in 1997               2,599            1,649 
    Additional paid-in capital             1,136,413        1,137,363 
    Accumulated deficit                   (1,112,249)        (960,157)

    TOTAL SHAREHOLDERS' EQUITY                26,763          178,855 

    TOTAL SHAREHOLDERS' EQUITY
        AND LIABILITIES                   $2,608,400       $  195,938 


</TABLE>



* Reclassified for comparative purposes

See accompanying notes to financial statements.


<PAGE>   6

                   TREASURE & EXHIBITS INTERNATIONAL, INC.
                   (Formerly Vanderbilt Square Corporation)
                         STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                         Three Months Ended              Nine Months Ended
                                             September 30,                  September 30,
                                          1998          1997              1998          1997     
                                       (Unaudited)   (Unaudited)       (Unaudited)   (Unaudited)
<S>                                    <C>           <C>               <C>           <C>
REVENUES:
     Interest and dividend income      $       750   $     9,747       $     1,745   $    17,660
     Realized and unrealized  
          gain (loss) on investment
    in marketable trading
    securities                               4,942        (9,068)            5,929        (8,436)
      Direct finance lease income               -            223               -             464
                                             5,692           902             7,674         9,688
OPERATING EXPENSES:
     General and
       administrative expenses              68,151        21,472           159,766        33,653

LOSS FROM OPERATIONS                       (62,459)      (20,570)         (152,092)      (23,965)

OTHER INCOME (EXPENSES):
     Equity in earnings (loss)
          of unconsolidated subsidiary          -           (396)              -         (13,293)
 
LOSS BEFORE INCOME TAXES                   (62,459)      (20,966)         (152,092)      (37,258)

INCOME TAX CREDIT PROVISION                     -             -                -           2,500
 
NET LOSS                               $   (62,459)  $   (20,966)      $  (152,092)  $   (39,758)

WEIGHTED AVERAGE NUMBER
     OF COMMON SHARES OUTSTANDING       25,990,756    16,398,356        23,281,496    16,398,356

EARNINGS PER COMMON SHARE              $       -     $       -         $      (.01)  $       -   

EARNINGS PER COMMON SHARE
  ASSUMING DILUTION                    $       -     $       -         $      (.01)  $       -  

</TABLE>


See accompanying notes to financial statements.


<PAGE>   7


                   TREASURE & EXHIBITS INTERNATIONAL, INC.
                  (Formerly Vanderbilt Square Corporation)
                     STATEMENT OF SHAREHOLDERS' EQUITY
           FROM DECEMBER 31, 1994 THROUGH SEPTEMBER 30, 1998  

<TABLE>
<CAPTION>
                                    Common Stock
                                   $.0001 Par Value          Additional    Retained
                               Authorized 50,000,000 Shares  Paid-In        Earnings     Treasury
                                   Shares         Amount     Capital       (Deficit)     Stock       Total   
<S>                            <C>               <C>         <C>           <C>           <C>
Balance - December 31, 1994      14,429,750      $  1,499     $   970,557  $  (10,719)   $(36,239) $   925,098 

  Purchase of Treasury Stock       (826,900)          -              -            -       (71,477)     (71,477)
  Sale of Treasury Stock            333,000           -              -            -        24,981       24,981 
  Net income for the period             -             -              -          1,498         -          1,498

Balance - December 31, 1995      13,935,850         1,499         970,557      (9,221)    (82,735)     880,100 

  10% Stock Dividend              1,499,156           150         166,806    (166,956)         -           -   
  Purchase of Treasury Stock       (249,100)          -            -              -       (33,070)     (33,070)
  Sale of Treasury Stock          1,212,450           -            -              -       105,773      105,773 
  Net income for the period             -             -            -           59,443         -         59,443 

Balance - December 31, 1996      16,398,356         1,649       1,137,363    (116,734)    (10,032)   1,012,246 

  Sale of treasury stock             92,400           -             -             -        10,032       10,032
  Dividend distribution                 -             -            -         (864,263)        -       (864,263)
  Net income for the period             -             -            -           20,840         -         20,840 

Balance - December 31, 1997      16,490,756         1,649    1,137,363       (960,157)        -        178,855

  Net loss for the period               -             -            -         (152,092)        -       (152,092)
  Issuance of stock               9,500,000           950    1,614,050            -           -      1,615,000
  Reclassification of put option        -             -     (1,615,000)           -           -     (1,615,000)

Balance - September 30, 1998     25,990,756      $  2,599  $ 1,136,413    $(1,112,249)  $     -    $    26,763 

</TABLE>


See accompanying notes to financial statements.


<PAGE>   8


                  TREASURE & EXHIBITS INTERNATIONAL, INC.
                 (Formerly Vanderbilt Square Corporation)
                        STATEMENT OF CASH FLOWS
                             (Unaudited)


<TABLE>
<CAPTION>

             INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

                                                  Nine Months Ended
                                                    September 30,
                                                 1998           1997   
<S>                                           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                           $ (152,092)   $  (39,758)
  Adjustments to reconcile net income 
    to net cash provided by (used in)
    operating activities:
      (Gain) loss on sale of
        marketable securities                        -         (27,569)
      Equity in (earnings) or loss
        of unconsolidated subsidiary                 -          13,293 
      Allowance for market price 
        of securities                             (5,930)       36,005 
  Changes in operating assets and liabilities:
      Increase (Decrease) in accounts
        payable and accrued expenses              55,054       (40,109)
      Decrease in accrued interest receivable        -             143 
      (Increase) decrease in
        accounts receivable                          -           2,493 
      (Decrease) Increase in income
        taxes payable                                -          (1,450)
      Proceeds from sale of marketable
        trading securities                           -          61,918 
      Purchase of marketable trading
        securities                                   -         (65,539)

      Net cash provided by (used in)
           operating activities                 (102,968)      (60,573)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Principal collections of loans
     to affiliates                                   -           3,085 
  Advance paid on notes receivable
     - other                                         -          (2,000)
  Principal collections of notes
     receivable - other                              -          15,998 
  Principal collections of direct
     financing leases                                -           1,693 
  Advances to affiliates                        (125,000)          -
  Investment in unconsolidated
     subsidiaries                                    -         (11,103)
  
     Net cash provided by
       (used in) investing activities           (125,000)        7,673 

</TABLE>


<PAGE>   9

                  TREASURE & EXHIBITS INTERNATIONAL, INC.
                  (Formerly Vanderbilt Square Corporation)
                         STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>

          INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

                                                  Nine Months Ended
                                                     September 30, 
                                                 1998          1997   
<S>                                         <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings from affiliates                $  100,000     $      -  

     Net cash provided by
       financing activities                        -              -   

NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                            (127,968)       (52,900)

CASH AND CASH EQUIVALENTS -
  BEGINNING OF PERIOD                          179,795        250,209 

CASH AND CASH EQUIVALENTS -
  END OF PERIOD                             $   51,827     $  197,309 

</TABLE>















See accompanying notes to financial statements.


<PAGE>   9


                   TREASURE & EXHIBITS INTERNATIONAL, INC.
                  (Formerly Vanderbilt Square Corporation)
                       NOTES TO FINANCIAL STATEMENTS
                           September 30, 1998
                               (Unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents - For purposes of the balance sheet and statement of 
cash flows, the Company considers all highly liquid debt instruments purchased 
with a maturity of three months or less to be cash equivalents.

Income Taxes - Deferred income taxes reflect the tax consequences on future 
years of differences between the tax basis of assets and liabilities and their 
financial reporting amounts.  Future tax benefits, such as net operating loss 
carryforwards, are recognized to the extent that realization of such benefits 
are more likely than not.

Accounting Estimates - The preparation of financial statements in conformity 
with generally accepted accounting principles require management to make 
estimates and assumptions that affect the reported amounts of assets and 
liabilities and disclosure of contingent assets and liabilities at the date of 
the financial statement and the reported amounts of revenues and expenses 
during the reporting period.  Actual results could differ from these 
estimates.

NOTE 2 - FAIR PRESENTATION

The balance sheet as of September 30, 1998, the statement of operations for 
the nine months ended September 30, 1998 and 1997, the statement of 
shareholders' equity as of September 30, 1998, and the statement of cash flows 
for the nine months ended September 30, 1998 and 1997, have been prepared by 
the Company without audit.  In the opinion of management, all adjustments 
necessary to present fairly the financial position and results of operations 
at September 30, 1998 and for all periods presented have been made.

The operations for the nine months ended September 30, 1998 are not 
necessarily indicative of the results of operations to be expected for the 
Company's fiscal year. 

The condensed financial statements as of December 31, 1997, 1996 and 1995 have 
been derived from audited financial statements.

<PAGE>   10


                   TREASURE & EXHIBITS INTERNATIONAL, INC.
                   (Formerly Vanderbilt Square Corporation)
                        NOTES TO FINANCIAL STATEMENTS
                           September 30, 1998
                               (Unaudited)


NOTE 2 - FAIR PRESENTATION (Cont'd)

Certain information and footnote disclosures normally included in financial 
statements prepared in accordance with generally accepted accounting 
principles have been condensed or omitted.  It is suggested that these 
condensed financial statements be read in conjunction with the consolidated 
financial statements and notes thereto as of December 31, 1997 and for the 
year then ended.

NOTE 3 - BASIS OF PRESENTATION

The September 30, 1997 statement of operations includes the accounts of 
Vanderbilt Square Corp. and its wholly-owned subsidiary, Hi-Tech Leasing, 
Inc..  All significant intercompany accounts and transaction have been 
eliminated in such financial statements.

NOTE 4 - NAME CHANGE

On February 27, 1998, the Company changed its name to Treasure & Exhibits 
International, Inc.

NOTE 5 - EARNINGS (LOSS) PER SHARE

Per share information was computed using the weighted average number of common 
shares outstanding during the reporting periods.  Per share information 
computed to be less than one cent is not shown on the accompanying financial 
statements.

The Company's adoption of FASB - 128, earnings per share, did not have a 
material impact upon reported per share amounts.

The assumed exercise of the outstanding "put option" was not considered in the 
calculation of fully diluted earnings per share because the effect is 
anti-dilutive.

NOTE 6 - INVESTMENT IN MARKETABLE TRADING SECURITIES

Marketable trading securities are stated at market value at the balance sheet 
date.  The cost of these investments is $40,180 at September 30, 1998 and 
December 31, 1997, respectively.  Unrealized gains and losses resulting from 
fluctuations in the market price of the related securities are currently 
reflected in the statement of operations under the caption "Realized and 
unrealized gain (loss) in marketable trading securities".


<PAGE>   11


                   TREASURE & EXHIBITS INTERNATIONAL, INC.
                  (Formerly Vanderbilt Square Corporation)
                        NOTES TO FINANCIAL STATEMENTS
                            September 30, 1998
                               (Unaudited)



NOTE 7 - INVESTMENT IN ARTIFACTS

On March 19, 1998, the Company exercised its option to purchase artifacts 
known as the "Dry Tortugas Treasure".  The "treasure" is comprised of a 
collection of seventeenth century artifacts which were recovered from a sunken 
Spanish galleon in an area known as The Dry Tortugas.

Consideration named in the purchase agreement amounted to $2,432,500 comprised 
of $617,500 cash, a $200,000 promissory note, and 9,500,000 shares of the 
Company's restricted Common Stock valued by the Buyer and Seller at 
$1,615,000.

The Company retained the right to repurchase up to 8,000,000 shares of the 
restricted Common Stock at prices ranging from $.135 to $.15 per share.  The 
repurchase right expired on June 10, 1998 with no shares bought by the 
Company.

The Company granted the artifacts seller a one year right to put all or any of 
the 9,500,000 shares of restricted common stock to the Company at per share 
prices ranging from $.085 to $.17 per share.  The Company's repurchase price 
of $.085 per share is dependent upon the successful registration of the shares 
used in the transaction.  The put option is reflected as a liability in the 
accompanying balance sheet.

The artifact purchase agreement also provides the Sellers with the right to 
receive additional Common Stock.  If the average market bid price of the 
Company's Common Stock is less than $.12 per share during the first five 
market days following March 19, 1999 the Company shall issue additional 
restricted Common Stock to the Sellers in proportion to their original 
holdings to cause the Seller to have the equivalent per share valuation of 
$.17 for shares issued in connection with this transaction.



<PAGE>   12


                   TREASURE & EXHIBITS INTERNATIONAL, INC.
                   (Formerly Vanderbilt Square Corporation)
                        NOTES TO FINANCIAL STATEMENTS
                             September 30, 1998
                                (Unaudited)


NOTE 8 - NOTES PAYABLE

Notes payable consist of the following:
                                                                 
         18% Promissory Note - Interest payments
         scheduled to commence April 19, 1998.
         Maturing on March 19, 1999.  This note
         is owed to an affiliated company.             $482,500

    
         Secured Promissory Note - Due August 1, 1998.
         Collateralized by certain Dry Tortugas
         Artifacts valued at $250,000.  This note is
         Owed to the Seller of the artifacts         (a) 50,000

         12% Promissory Note - Payable to an
         affiliate.  Maturing on August 18, 1999.       150,000
 
         12% Promissory Note - Payable to an
         affiliate.  Proceeds used for working
         capital.  Maturing on July 7, 1999.            100,000

                                                       $782,500

(a)   The Company is presently negotiating the settlement of this note.
      Management expects this obligation to be satisfied in the fourth
      calendar quarter.

Interest expense amounts to $51,195 for the nine months ended September 30, 
1998.  Accrued interest payable amounted to $49,112 as of September 30, 1998.

NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION

(a) Payments made directly to the Seller of the Dry Tortugas artifacts by 
affiliates amounted to $617,500.

 (b) Advances to affiliates amounting to $125,000 were considered to be repaid 
to the Company through a like amount of direct payments to the Dry Tortugas 
artifacts Seller as indicated in item (a) above.

(c) Common Stock (and put option) issued in connection with artifact asset 
acquisition amounted to $1,615,000.

(d) Interest paid on notes payable amounted to $2,083 for the nine months 
ended September 30, 1998.


<PAGE>   13


                    TREASURE & EXHIBITS INTERNATIONAL, INC.
                    (Formerly Vanderbilt Square Corporation)
                         NOTES TO FINANCIAL STATEMENTS
                              September 30, 1998
                                (Unaudited)

NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION (Cont'd)

(e) An affiliate paid $150,000 on behalf of the Company in partial settlement 
of the note owing to the seller of the Dry Tortugas Artifacts.

NOTE 10 - PROPOSED ACQUISITION

On September 10, 1997, the Company entered into a Letter of Intent to acquire 
all of the outstanding capital stock of Michael's International Treasure 
Jewelry, Inc. ("Michael's"), a privately-held corporation.  The entity is 
affiliated to the Company by virtue of common principal shareholders.  
"Michael's" operates retail jewelry stores in Miami and Key West.  The stores 
specialize in the sale of jewelry designed with coins of antiquity.

Management has concluded that the planned acquisition of "Michaels" is no 
longer feasible as originally conceived.  All costs incurred in connection 
with the proposed acquisition have been included in the accompanying statement 
of operations.

NOTE 11 - RELATED PARTY TRANSACTIONS

Consulting Agreement - The Company paid $45,000 to an affiliate in accordance 
with a (modified) consulting agreement during the nine months ended September 
30, 1998.  A modification reducing consulting fee expense from $120,000 per 
annum to $60,000 per annum was effective January 1, 1998.

Interest Expense - Interest expense incurred in connection with borrowing from 
affiliates amounts to $51,195 for the nine months ended September 30, 1998.

Deferred Revenue - Income recognition relating to a lease of artifacts to an 
affiliate has been deferred and will be recognized as collected. 

NOTE 12 - INCOME TAXES 

A deferred tax benefit relating to the Company's net operating loss 
carryforward of approximately $246,000 is offset by a valuation allowance 
since future realization of such benefit cannot be assured from profitable 
operations.

The net operating loss expires in the year 2013.


<PAGE>   14

  
ITEM 2 -  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS                       

     The analysis of the Company's financial condition, liquidity, capital 
resources and results of operations should be reviewed in conjunction with the 
accompanying financial statements, including the notes thereto.

Financial Condition

At September 30, 1998, the Company had current assets of $73,900, compared to 
$195,938 at December 31, 1997; total assets of $2,608,400 as compared to 
$195,938 at December 31, 1997; current liabilities of $54,637 as compared to 
$17,083 at December 31, 1997, and a current net worth of $26,763 as compared 
to $178,855 at December 31, 1997. (See "Financial Statements").  The increase 
in total assets is due to the Company's acquisition of "treasure artifacts" 
from Seahawk Deep Ocean Technology, Inc. on March 19,1998 for $817,500 and 
9,500,000 shares of the Company's restricted Common Stock.  See Financial 
Statements Note 7.

Liquidity

During the nine months ended September 30, 1998, the Company had a decrease in 
cash and cash equivalents of $(127,968).  The decrease was principally 
attributed to a net loss of ($152,092) from operations in the period and  the 
Company's use of its cash in operating activities and advances to affiliates.

     At September 30, 1998, the Company had substantial liabilities and 
present commitments that are likely to place significant downward pressure on 
the Company's liquidity.  During the first quarter of 1998, 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.  The Company determined to seek exercise of the lease purchase 
options to acquire the leased items itself prior to 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 debt proceeds borrowed from 
an affiliate and now comprising a note payable liability in this reporting 
period in the amount of $682,500.  The obligation to repay those debt proceeds 
and the Company's potential exposure to exercise of the "put" option granted 
to the artifacts seller, when coupled with the Company's current lack of 
revenues from operations, represents a current lack of liquidity and portend a 


<PAGE>   15


deepening liquidity problem in the near term.

     Under the terms of the artifacts 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, 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.

     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 
has been significantly hampered by the recent need to abandon the Michael's 
acquisition plan now determined to be unworkable due to a lack of auditability 
of all of the Michael's operations.  The Company will now be required to 
modify its 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 had 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 had no ability 
to exercise its Common Stock repurchase option with Seahawk and the option 
period expired without exercise by the Company.  

     On July 20, 1998, First Consolidated Financial Corp., a closely held 
Florida corporation under common control with the Registrant acquired 
5,302,087 shares (the "Shares") of the restricted Common Stock of the Company 
from Seahawk Deep Ocean Technology, Inc., a Colorado corporation with 
principal offices in Tampa, Florida.  Seahawk acquired the shares as an 
original issue from the Registrant as part of the consideration paid by the 
Registrant in the acquisition of the certain treasure artifacts from Seahawk 
on or about March 19, 1998.


<PAGE>  16


     The purchaser in the transaction, First Consolidated Financial Corp., is
under common control with the Registrant in that the Company's Director and 
Chief Executive Officer, Mr. Larry Schwartz, is also a director and Chief 
Executive Officer of First Consolidated Financial Corp.  In addition, First 
Consolidated Financial Corp. has a consulting agreement with the Registrant 
pursuant to which the Company pays First Consolidated Financial Corp. for 
financial and management consulting services.  

     The transaction in which First Consolidated Financial Corp. acquired the 
Shares from Seahawk closed on Friday, July 24, 1998.  Pursuant to the terms of 
the Stock Purchase Agreement, First Consolidated Financial Corp. paid a total 
purchase price of $450,677, or approximately $.085 per Share.  Approximately 
forty (40%) percent of the purchase price was paid at Closing.  The balance is 
scheduled in installments beginning in September, 1998 and extending through 
December 31, 1998.

     The Shares acquired in this transaction between First Consolidated 
Financial Corp. as Buyer, and Seahawk Deep Ocean Technology, Inc. as Seller, 
may be attributed to Mr. Larry Schwartz who shall be deemed to control the 
Shares in all respects.  The acquisition of the Shares in this transaction 
increased Mr. Schwartz' beneficial ownership interest in the Company to 
9,209,274 shares, or 35.4%, based upon a total of 25,990,756 shares of the 
Registrant's Common Stock issued and outstanding on November 6, 1998.

     The Registrant was informed that Mr. Schwartz negotiated the restricted 
stock purchase agreement with Seahawk following the Company's failure to 
exercise its option to re-acquire up to 8.5 Million of the shares issued to 
acquire the Seahawk artifacts during the option period provided in the 
artifacts purchase agreement.  The exercise period having expired, without 
exercise by the Company, Mr. Schwartz disclosed his intent to cause First 
Consolidated Corp. to negotiate directly with Seahawk for the purchase of 
5,302,087 shares of that stock as reflected in the transaction reported in 
this Item 1.

     The Company did not participate in this reported stock purchase 
transaction in any way other than by acknowledging, at the request of Mr. 
Schwartz, that it had no conflicting interest in reacquiring the Shares 
itself.

     In general, at November 1, 1998, the Company's liquidity is worse than 
limited and will likely diminish in the near term in the continuing absence of 
current commercial operations and in the face of on-going general and 
administrative expenses.  The Registrant knows of no other trend, additional 


<PAGE>   17


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

     The Company has no outstanding unused credit lines or credit commitments 
in place.  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.  It is the 
Company's continuing intent at November 1, 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 and continuing effort to determine and 
implement an alternative transaction with Michael's Treasure Jewelry, Inc., 
are successful a plan is determined and 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.  In 
the interim, the Company will continue to lease the artifacts and display 
items to Michael's.  If the Company is ultimately unable to secure needed 
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, it will be unable to complete an as 
yet undetermined transaction with Michael's.  While the Company currently 
anticipates implementation of another acquisition transaction, there is and 
can be no present assurance that it will be able to do so.

Results of Operations

     The Company had revenues for the nine months ended June 30, 1998 of 
$7,674, as compared to $9,688 at September 30, 1997.  The principal reason for 
the decrease in revenues was a decrease in interest and dividend income.

     Operating expenses increased to $68,151 for the quarter ended September 
30, 1998 as compared to $21,472 at September 30, 1997.  The difference between 
operating expenses at September 30, 1998 and September 30, 1997, was $46,679.  
The difference between September 30, 1998 and 1997, is directly attributable 
to an increase in General and Administrative Expenses.  During the quarter 
ended Sepember 30, 1998 the Company sustained a net loss of ($62,459) as 
compared to a net loss of ($20,966) during the comparable quarter of 1997.


<PAGE>   18


     At September 30, 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 June 1, 1998, begun commercial operations through its collection of lease 
payments from Michael's for continued lease of the Seahawk artifacts and 
display items.  The Company intends to continue this arrangement with 
Michael's following its recent abandonment of the prior acquisition plan 
pending its current efforts toward developing, entering into and closing some, 
as yet undetermined other form of transaction with Michael's.  While there can 
be no present assurance that the Company will not again encounter one or more 
insurmountable obstacle to successful completion of such a transaction, the 
Company believes that it will be able to do so.  Completion of that 
transaction, at this point, however, continues to be primarily dependent on 
the Company's ability to raise additional debt or equity financing.  The many 
uncertainties surrounding completion and implementation of a financing effort 
however may preclude its successful implementation.  In that event, the 
Company will be adversely affected.


<PAGE>   19

                                PART II

Item 1.  LEGAL PROCEEDINGS

         Not applicable.

Item 2.  CHANGES IN SECURITIES

         Not applicable.

Item 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY- HOLDERS

         Not applicable.

Item 5.  OTHER INFORMATION

         Not applicable.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

The Registrant filed no Current Reports on Form 8-K during this reporting 
period.

On October 30, 1998, however, the Registrant filed a Current Report on Form 
8-K reporting its abandonment of the prior plan to acquire all of the capital 
stock of Michael's Treasure Jewelry, Inc. as unworkable.  See Item 2. - 
"Liquidity".



<PAGE>   20

                               SIGNATURES


     Pursuant to the requirements 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.

                                                                          
                                       TREASURES & EXHIBITS INTERNATIONAL, INC.


Date: November 11, 1998

                                       BY:/s/Larry Schwartz
                                          Larry Schwartz, President