UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                 FORM 10-KSB


(Mark One)
         X        Annual  report under  Section 13 or 15(d) of the  Securities
Exchange Act of 1934 for the fiscal year ended January 31, 1998
                                      OR
      ____  Transition  report  under  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.
                (Name of Small Business Issuer in Its Charter)

               Delaware                               98-0160284
    (State or Other Jurisdiction of       (IRS Employer Identification No.)
    Incorporation or Organization)

  1183 Finch Avenue West - Suite 508
       Toronto, Ontario M3J 2G2                        M3J 2G2
    (Address of Principal Executive                   (Zip Code)
               Offices)

      Registrant's telephone number, including area code: (416) 663-0668

       Securities Registered Pursuant to Section 12(b) of the Act: None

       Securities Registered Pursuant to Section 12(g) of the Act: None


         Title of Each Class:                Name of Each Exchange on which 
                                                       Registered:
  Common Stock, par value $0.0001 per                     None
                 share



      Check  whether  the  registrant:  (1) filed all  reports  required to be
filed by Section 13 or 15(d) of the  Securities  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  __


                                   Page 1 of 46
<PAGE>


      Check if there is no disclosure of  delinquent  filers  pursuant to Item
405 of  Regulation  S-B  contained  in this form,  and no  disclosure  will be
contained,  to the best of  registrant's  knowledge,  in  definitive  proxy or
information  statements  incorporated  by  reference  in Part III of this Form
10-KSB or any amendment to this Form 10-KSB [   ].

      The Company  generated  $6,128,827 of gross revenues for the fiscal year
ending January 31, 1998.

      As of June 26, 1998,  40,536,927 shares of the registrant' 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  22,  1998  was
$3,435,168.


                                   Page 2 of 46
<PAGE>


                                   PART I 


      The  information  set  forth in this  Report on Form  10-KSB  including,
without  limitation,  that  contained in Item 6,  Management's  Discussion and
Analysis and Plan of Operation,  contains "forward looking  statements" within
the  meaning of Section 27A of the  Securities  Act of 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.

ITEM 1.  Description of Business

Overview

      Treasury  International,  Inc.  ("Treasury" or the "Company") engages in
the  international   manufacturing,   sourcing  and  distribution  of  quality
consumer  and  industrial  products.  The  Company's  plan  is  to  become  an
international  manufacturing,  distribution  and  marketing  conglomerate.  To
expand  its  business,  the  Company  seeks  to  make  acquisitions  in  niche
industries of companies  having strong brand  recognition  and/or  significant
market share and/or marketing  capabilities,  with the intent of growing these
businesses into leaders in their respective markets.

      As of January 31, 1998, the Company  manufactures and markets customized
plastic containers  through its indirect  wholly-owned  subsidiary,  Mega Blow
Moulding  Limited  ("Mega  Blow").  As used in this report,  unless  otherwise
indicated,  references  to the Company  shall  include  Mega Blow and Megatran
Investments  Ltd.,  a  wholly-owned  subsidiary  of the Company  ("Megatran"),
which  holds  all  of  the  capital   stock  of  Mega  Blow.   Through   these
subsidiaries,  the Company  manufactures,  distributes  and exports a combined
total of more than 1,000  products.  The Company  has the  capacity to provide
private  labeling  services  for  unique  product   specifications;   tailored
packaging  services for all product lines;  complete  warehousing  facilities;
marketing services via a network of marketing and sales  representatives;  and
specialized  multi-lingual  sales  associates.  By  utilizing  its  customized
computer  information and production systems, the Company strives at all times
to ensure access to the broadest range of quality products.

History

      The  Company  was  incorporated  in the State of  Delaware on August 18,
1995.  Following its formation, the Company  acquired all of the issued and
outstanding shares of J.J.A.M.P.  Treasury  International Corp.  ("JJAMP"),  a
Canadian  corporation based in metropolitan  Toronto,  Ontario,  Canada. JJAMP


                                   Page 3 of 46
<PAGE>

was organized on September  29, 1993 and until August 17, 1995,  conducted its
business under the name  "Treasury  International." The  acquisition of JJAMP
was  accomplished  through the issuance of 8,023,812  shares of the  Company'
Common Stock to JJAMP's  stockholders.  JJAMP was dissolved on August 26, 1997
as part of the  Company's  efforts to simplify its  corporate  structure.  The
operations of JJAMP are now conducted through the Company.

      On  October  30,  1996,  the  Company  acquired  all of the  issued  and
outstanding   common  shares  of  Megatran,   a  Canadian   company  based  in
metropolitan  Toronto,  Ontario.  The purchase  price for the Megatran  shares
was $2,863,182,  of which $2,111,302 was paid in cash and the balance was paid
by delivery of debentures in the original principal amount of $751,880,  which
debentures are convertible into shares of the Company's Common Stock.

      On  February  25,  1997  the  Company  acquired  all of the  outstanding
capital stock of Silver,  a Florida  corporation  based in Miami. On September
19,  1997,  Treasury  International,  Inc.  (the  "Company")  entered  into an
Agreement (the  "Agreement")  with James Hal, Silver 925, Inc.  ("Silver") and
each  of  Moche   Bendayan,   Salomon   Bendayan   and  Edward   Kozial   (the
"Purchasers"),  pursuant to which the Company  resold to the Purchasers all of
the  outstanding  shares of Silver's  common stock (the "Silver  Shares").  In
consideration  for the  repurchase  of the Silver  Shares and in settlement of
all  obligations  of the Company and James Hal under the terms of that certain
Agreement  dated as of June 18, 1996, as amended as of February 25, 1997,  the
Company  issued  to the  Purchasers  an  aggregate  of  752,500  shares of the
Company's common stock.

      The Company's  principal executive offices are now located at 1183 Finch
Avenue West,  Toronto,  Ontario,  Canada M3J 2G2, and its telephone  number is
(416) 663-0668.


Corporate Summary and Growth Strategies

      The  Company  is  aggressively   pursuing  potential   acquisitions  and
strategic  alliances which management  believes would  significantly  increase
revenues,  profits  and  value for its  stockholders  in  accordance  with its
business  objectives.  The Company's  "Leveraged  Build-Out" strategy consists
of  growth  through  internal  expansion  of sales  and  profits  in  existing
operations through an aggressive  acquisitions  program.  Businesses  targeted
for acquisition must meet or exceed management'  stringent revenue and profit
objectives.  Management must also believe that the targeted  corporations have
outstanding  North  American and  International  prospects for rapid growth in
both top line  revenues and bottom line  profits.  Management  is committed to
expanding its global  presence by entering the emerging  markets  within Latin
America,  Eastern Europe and Africa.  In furtherance of this plan, the Company
anticipates  utilizing existing marketing channels of the acquired  companies.
Management'  objective is to obtain additional  distribution  capacity,  gain
market share for its existing  product  lines and  diversify  the products and
services the Company can offer to its expanding client base.


                                   Page 4 of 46
<PAGE>

      In  addition to internal  growth and  acquisitions,  the Company is also
active in the business of creating  and  maintaining  international  strategic
trading  links.  The  purpose of this plan is to obtain  alternate  production
sources and new channels of marketing and  distribution  for both consumer and
industrial  products in North America and, in  particular,  the United States.
The Company is also  continually  attempting to develop and implement  systems
to  popularize  its products  through the  promotion  of high quality  private
label branded products at competitive prices.


The Company's Markets in General

      The  Company  believes  it can  achieve  widespread  acceptance  for its
products in developing  countries  where mass  consumption  of goods is in its
infancy.  Management  believes  the  Company  can  take  advantage  of a  very
competitive   global  situation  by  delivering   highly   knowledgeable   and
experienced  cultural  liaisons that stand behind  internationally  recognized
products.  The Company  should then be able to maintain an upward  momentum in
world  markets  including the  aggressive  penetration  of important  emerging
markets on a global scale.

      These international  businesses involve complex and dynamic processes of
political and economic issues in addition to traditional  issues of market and
firm related  concerns.  For these  reasons,  Treasury has pursued  strategies
that include  complementary  networks of  culturally  experienced  individuals
with the principal  objectives  of growth and  development  through  leveraged
acquisitions.

      Management  still  believes  that  one of  Treasury's  major  long  term
opportunities  is in Latin  America.  Latin  America has a population  of over
450 million,  and has countries with large urban  populations,  well in excess
of those in Canada  and  Europe,  and  developing  economies.  With the recent
widespread  move  towards  democratization  of the region and  development  of
market oriented  economies,  experts predict  positive future prospects in the
region.  In fact, the value of contemporary  foreign direct  investment  (debt
and equity  investment)  in some Latin  American  countries  is almost  twelve
times  the size of  levels  before  the  South  American  debt  crisis  in the
1980's.  The debt  crisis  created a  situation  where  consumers  had  little
access to imported  products or services and little  ability to purchase  even
if such  products had been  available.  With the easing of this crisis,  these
markets are in need of goods and services.  Similar  situations are developing
in Eastern Europe and Africa which also present  potential  opportunities  for
the Company.  It is one of  Treasury's  major  objectives to expand its global
presence by meeting the needs in these  "emerging  markets" whose rapid growth
is fueling demand for industrial and consumer products.




                                   Page 5 of 46
<PAGE>

Customized Commercial Plastic Containers (Mega Blow Moulding Limited)

      Overview.  Since its  formation  in 1984,  Mega Blow has  operated  as a
specialized  custom molder of plastic  bottles and  containers  for use in the
pharmaceutical,   health  and  beauty,  household  cleaner  and  food  product
industries.  During fiscal 1998, Mega Blow's revenues were  approximately $6.2
million.  More than  one-half of Mega Blow's  revenues  are  generated  in the
United  States.  Mega  Blow  also has a strong  market  presence  in  Ontario,
Canada,  which  is the main  manufacturing  center  in  Canada.  Plastic  is a
disposable  material  which  is in  high  demand  in  today's  environmentally
friendly  and  industrializing  world.  Management  believes  that demand will
continue to grow significantly  well into the next century.  With an estimated
market in North America of over $15 billion for plastic  products,  management
believes that Mega Blow is well positioned for growth.

      Customers.   Mega  Blow  concentrates  on  manufacturing   products  for
customers  who  are the  end  user  or  manufacturer  agents.  Mega  Blow  has
fostered relationships with many major North American corporations,  including
Johnson & Johnson, G.K. Packaging,  Fenton Webber, Novo Pharm, Jones Packaging
and the Canadian  shampoo division of L'Oreal.  Management  believes that Mega
Blow has an excellent  reputation for quality and customer  service and prides
itself on its ability to  consistently  maintain a zero  percent  defect rate.
This has resulted in long-standing customer  relationships,  many in excess of
10 years.

      Facilities/Equipment.  Mega Blow operates  from a leased,  46,000 square
foot  manufacturing  facility  in  metropolitan  Toronto,  Canada.  Mega  Blow
operates  nine Bekum  blowing  machines.  The Bekum  machine is  considered by
industry  experts  to be the best  currently  available  and gives Mega Blow a
state-of-the-art  manufacturing  capacity.  The Bekum  machine can be operated
almost  indefinitely  when properly  maintained and updated.  All machines are
computerized  and  controlled  by special  tracking  devices which monitor all
aspects of machine  productivity.  Further,  Mega Blow's computerized  systems
give the  manufacturing  process numerous  diagnostic  features which maximize
productivity and quality control.  All  manufacturing  machines are constantly
serviced and maintained to the highest degree possible by a specially  trained
maintenance  staff, as well as by 24 hour on-call  maintenance  professionals.
Mega Blow seeks to maximize  productivity  and  utilization  of fixed overhead
costs by operating the plant 24 hours a day with four shifts.

      Personnel.  Mega Blow employs more than one hundred  regular  employees,
including  production,  management,  foremen  and office  staff.  Mega  Blow's
management is  experienced  in every facet of  operations,  including  machine
operation,   machine  repairs  and  maintenance,   completing   setups,   mold
maintenance,  purchasing,  distribution  and  marketing.  A  majority  of Mega
Blow's staff has been with the Company  since its  inception and been promoted
over time.

      Materials.  Mega  Blow's  major  raw  material  usage  consists  of  the
following  resins:  Pet G, H.D.P.E.  (High Density  Polyethylene) and L.D.P.E.
(Low  Density  Polyethylene).  Management  is not  aware of any  environmental
concerns  in  respect  of  Mega  Blow,  its  manufacturing  facilities  or its
products.  Mega Blow presently  uses the following six major  suppliers of the


                                   Page 6 of 46
<PAGE>

above resins:  Synergistics,  Bamberger,  Eastman,  Petromount, Nova Chemicals
and  Occidental.  Mega Blow has been dealing with each of its major  suppliers
for over ten years.  In the event that its existing  sources of supply  become
insufficient to meet its needs,  management believes that alternative supplies
would  be  available  at  competitive  prices  from  one  of its  other  major
suppliers or from outside alternative  suppliers not currently engaged by Mega
Blow.

      Growth  Strategy.  Treasury  intends  to  increase  Mega  Blow's  sales,
market share and profitability by employing three strategic initiatives:

   o  A strategic acquisition program in this very fragmented market;
   o  Streamlining existing manufacturing operations; and
   o  Making  high  return  capital   expenditures  to  increase  Mega  Blow's
       production output and efficiency.

Government Approvals and Licenses

      The Company has sought legal and  technical  expertise to ensure that it
and its  suppliers,  distributors  and  independent  associates  have  all the
necessary government approvals, licenses, permits and certificates.


Currency, Foreign Exchange and Banking

      As most of the Company's  operations  have been based primarily in North
America,  the Company  believes that the current exchange rate environment has
been favorable to it, and as such has not under-taken  active foreign exchange
hedging  activities.  Management  monitors  world  exchange  conditions  on  a
regular basis and should the current favorable environment change,  management
will implement a more active foreign currency hedging policy.


Research and Development Costs

      During  its last  three  fiscal  years,  the  Company  has  incurred  no
material  expenditures on account of research and  development,  as management
believes that the success of the Company and its business  operations  did not
require significant research and development efforts.



                                   Page 7 of 46
<PAGE>

Employees

      As of  July  14,  1998,  the  Company  had 3  full  time  officers  and,
including its  subsidiaries,  102 employees.  Many of these employees are able
to communicate  fluently in one or more of the following  languages:  English,
Spanish,  Portuguese,  French,  Italian,  Arabic and Hebrew. This multilingual
capacity  will  significantly  assist the Company in  penetrating  the world's
emerging foreign markets.  None of the Company's  employees are represented by
a labor  union  or are  subject  to a  collective  bargaining  agreement.  The
Company considers its relations with its employees to be good.

Investment Policies

      The Company  has no  limitations  on the amounts  which it may invest in
any one  investment  or type of  investment.  The  Company  has no holdings in
real estate,  real estate mortgages and similar  securities or publicly traded
securities.  As well,  the Company does not have any  investment in persons or
companies  primarily  devoted to such  investments and it is not the policy of
the Company to make  investments  for the  purpose of capital  gain or passive
income.  Presently,  all  available  monies  are  being  used  for  day-to-day
operations.


Patents and Trademarks

      Due to the nature of Treasury's  operations,  it does not currently hold
any existing or pending  patents or  trademarks  outside of the  Company's and
its subsidiaries' names.


International Operations

      Foreign business is conducted through subsidiaries,  representatives and
distributors,  and,  to  a  lesser  extent,  by  direct  sales.  International
revenues  accounted for  approximately  65% of consolidated  total revenues in
fiscal  1998,  and 52% of  consolidated  total  revenues in fiscal  1997.  The
majority of  Treasury's  international  revenues are derived  from Canada.  In
view of the  location  and  diversity  of its  international  activities,  the
Company does not believe that there are any special  risks beyond normal risks
of uncertainty attendant to doing business abroad.


ITEM 2.  Properties

      The Company leases 46,000 square feet of space in Mississauga,  Ontario,
Canada as  administrative  offices and  manufacturing  facilities  at a rental
rate of Can$4.75 per spare foot per year.  The current lease  period,  expires
on December 31, 1988, with an option to renew until December 31, 2003.


                                  Page 8 of 46
<PAGE>

ITEM 3.  Legal Proceedings

      The Company is not  currently  engaged in any legal  proceedings  and is
not aware of any pending or threatened  litigation  that could have a material
adverse effect on the Company's  business,  financial  condition or results of
operations.

ITEM 4.  Submission of Matters to a Vote of Security Holders.

      None.

                                   PART II


ITEM 5.  Market For Common Equity and Related Stockholder Matters

     In December 1995,  the Company's  Common Stock  commenced  trading on the
NASDAQ "pink  sheets" under the symbol  "TREY." On April 12, 1996,  the Common
Stock of the Company was  approved  for trading on the  NASDAQ-OTC  Electronic
Bulletin  Board.  The  following  table  sets  forth the range of high and low
closing  representative  bid prices for the Company's  Common Stock from April
12, 1996  through  January 31, 1998 (as reported by NASDAQ),  which  represent
inter-dealer prices,  without retail mark-up,  mark-down or commission and may
not reflect actual transactions:

      Quarter Ended                             High Bid    Low Bid

      April 30, 1996                             $0.50         .25
      from April 12, 1996)
      July 31, 1996                               1.31        0.50
      October 31, 1996                            1.07        0.19
      January 31, 1997                            0.44        0.16
      April 30, 1997                             $0.31       $0.19
      July 31, 1997                               0.20        0.20
      October 31, 1997                            0.06        0.06
      January 31, 1998                            0.15        0.142

      As of July 8, 1998,  there were 125  holders of record of the  Company's
Common Stock.  The Company has not declared or paid any cash  dividends on its
Common  Stock  since  its  inception,  and its  Board of  Directors  currently
intends to retain all earnings  for use in the  business  for the  foreseeable
future.  Any future  payment  of  dividends  will  depend  upon the  Company's
results  of  operations,  financial  condition,  cash  requirements  and other
factors deemed relevant by the Company's Board of Directors.

The Company has  undertaken  the  following  unregistered  sales of its Common
Stock.  All of the following sales were exempt from  registration  pursuant to
Sections 3(b) and 4(2) of the  Securities Act and Regulation D or Regulation S
promulgated  by the Securities  Exchange  Commission  (the "SEC")  thereunder.
None of the following  unregistered  sales  involved  underwriters,  and there
were no underwriting discounts or commissions.


                                  Page 9 of 46
<PAGE>

--------------------------------------------------------------------------------
                     Title of       Person or Class of   Number of   Total Cash
       Date       Securities Sold  Persons to Whom Sold   Shares      Price or
                                                                   Consideration
--------------------------------------------------------------------------------
February 25, 1997   Common Stock    Salomon Bendayan       30,000       $30,000
February 25, 1997   Common Stock    Moshe Bendayan         30,000       $30,000
February 25, 1997   Common Stock    Edward Kozial          15,000       $15,000
--------------------------------------------------------------------------------
April 1, 1997       Common Stock    Salomon Bendayan       30,000       $30,000
April 1, 1997       Common Stock    Moshe Bendayan         30,000       $30,000
April 1, 1997       Common Stock    Edward Kozial          15,000       $15,000
--------------------------------------------------------------------------------
May 1, 1997         Common Stock    Salomon Bendayan       30,000       $30,000
May 1, 1997         Common Stock    Moshe Bendayan         30,000       $30,000
May 1, 1997         Common Stock    Edward Kozial          15,000       $15,000
--------------------------------------------------------------------------------
June 2, 1997        Common Stock    Salomon Bendayan       30,000       $30,000
June 2, 1997        Common Stock    Moshe Bendayan         30,000       $30,000
June 2, 1997        Common Stock    Edward Kozial          15,000       $15,000
--------------------------------------------------------------------------------
July 1, 1997        Common Stock    Salomon Bendayan       30,000       $30,000
July 1, 1997        Common Stock    Moshe Bendayan         30,000       $30,000
July 1, 1997        Common Stock    Edward Kozial          15,000       $15,000
--------------------------------------------------------------------------------
August 1, 1997      Common Stock    Salomon Bendayan       30,000          $600
August 1, 1997      Common Stock    Moshe Bendayan         30,000          $600
August 1, 1997      Common Stock    Edward Kozial          15,000          $300
--------------------------------------------------------------------------------
September 1, 1997   Common Stock    Salomon Bendayan       30,000          $600
September 1, 1997   Common Stock    Moshe Bendayan         30,000          $600
September 1, 1997   Common Stock    Edward Kozial          15,000          $300
--------------------------------------------------------------------------------
September 12, 1997  Common Stock    Shaya Heimlick         600,000       $6,000
October 7, 1997     Common Stock    Shaya Heimlick         400,000       $4,000
--------------------------------------------------------------------------------
November 24, 1997   Common Stock    Verne Chelin           400,000       $4,000
November 24, 1997   Common Stock    Louis Chelin           100,000       $1,000
November 24, 1997   Common Stock    Martin Maxwell         200,000       $2,000
November 24, 1997   Common Stock    David Bereskin         200,000       $2,000
--------------------------------------------------------------------------------
November 26, 1997   Common Stock    Eli Rabinowitz         700,000      $14,000
--------------------------------------------------------------------------------
January 26, 1998    Common Stock    David Fisher           300,000       $6,000
--------------------------------------------------------------------------------


ITEM 6.  Management's Discussion and Analysis or Plan of Operation

Overview

Treasury  is  an  international  manufacturing,   distribution  and  marketing
company with a subsidiary  producing  about 1,000 plastic  products mainly for


                                  Page 10 of 46
<PAGE>

North  American  markets.  Once  solely an  international  distributor  of 225
consumer products,  Treasury's  acquisition of Mega Blow almost tripled annual
sales to over $6.1  million for the fiscal  year ended  January 31, 1998 while
total  assets  decreased  by only 10.9  percent to about $3.5  million for the
1998 fiscal year.

During the next 24 to 36 months,  Treasury  plans to  continue  its  expansion
goals by way of its  Leveraged  Build-Out  strategy.  To  increase  its market
share,  the Company  plans to acquire key  competitors,  or  companies  having
important synergies with existing company  operations.  Present operations are
also  planned  to be  streamlined  in order to reduce  costs  while  improving
product quality and  productivity.  Furthermore,  Treasury plans to expand its
global  presence  by  entering  the  rapidly   industrializing   and  emerging
markets,  including the key  economies in Latin  America,  Eastern  Europe and
Africa.

The following  discussion  should be read in conjunction with the Consolidated
Financial Statements of the Company included with this annual report.

Fiscal 1998 Compared to Fiscal 1997

Net sales  increased  during the fiscal  year ended  January  31, 1998 to over
$6.1  million,  up  approximately  189% from $2.1  million in the fiscal  year
ended  January 31, 1997.  The increase in net sales  reflects the inclusion of
Mega Blow's  results of operations  from the twelve month period.  The Company
experienced  a net loss of  $1,437,986  for its fiscal year ended  January 31,
1998,  an increase of  approximately  40% when  compared to the  Company's net
loss of  $1,032,084  in the fiscal  year ended  January  31,  1997.  Among the


                                  Page 11 of 46
<PAGE>

significant   items  impacting  the  1998  results  were  increased   expenses
resulting  from the  disposition  of Silver  925,  Inc.  as well as  extensive
marketing and consulting arrangements undertaken by the company.

The  cost  of  sales  for  fiscal  1998  represented  76%  of  net  sales,  or
$4,628,960,  a 166% increase  compared to 82% of net sales, or $1,743,380,  in
fiscal 1997. The increase is attributable to  significantly  greater net sales
from Mega Blow's operations.

Operating,  general and  administrative  expenses  increased in fiscal 1998 to
$1,846,345,  or  approximately  30%  of  sales,  compared  to  $1,151,128,  or
approximately  54% of sales,  in fiscal 1997. The increase is  attributable to
significantly  higher sales and expenses  related to the disposition of Silver
925, Inc.


Fiscal 1997 Compared to Fiscal 1996

      Net sales  increased  during  fiscal  year 1997 to  approximately  $2.12
million,  up  approximately  91% from $1.1  million in fiscal  year 1996.  The
increase in net sales also  reflects the  inclusion of Mega Blow for the three
months ended  January 31, 1997 (67%).  The Company  experienced  a net loss of
$1,032,084  for its  fiscal  year ended  January  31,  1997,  an  increase  of
approximately  99.8% when  compared to the  Company's  net loss of $516,656 in
the  fiscal  year  ended  January  31,  1996.  Among  the  significant   items
impacting  1997 results were increased  expenses  resulting from the Mega Blow
and  Silver  acquisitions  as  well  as  extensive  marketing  and  consulting
arrangements undertaken by the Company.


                                  Page 12 of 46
<PAGE>

      The cost of sales for  fiscal  1997  represented  82% of net  sales,  or
$1,743,380,  a 161%  increase  compared to 60% of net sales,  or $667,083,  in
fiscal 1996.  The increase is  attributable  to the write down of obsolete and
slow moving  inventories,  higher prices of raw materials,  increased sales of
lower margin  products and, to a lesser  extent,  pricing  incentives to major
customers.

      Operating,  general and administrative expenses increased in fiscal 1997
to  $1,151,128,  or  approximately  54% of sales,  compared  to  $957,607,  or
approximately  86% of sales,  in fiscal 1996. The increase is  attributable to
the write-off of uncollectible  accounts  receivable,  expenses related to the
October 30, 1996 acquisition of Megatran,  expenses related to the acquisition
of Silver which was consummated  subsequent to year end,  consulting  services
rendered  (see  note  15  of  the  Financial  Statements)  and  marketing  and
promotion activities.


Liquidity and Capital Resources

The  primary  sources of  liquidity  for the Company  are funds  generated  by
operations  and  borrowings  under the Company's  loan  agreement.  Additional
information  on the  loan  agreement  is  described  in  notes  6 and 7 to the
Company's financial statements.

In October,  1996, the Company sold 0% convertible debentures in the aggregate
principal  amount of  $1,000,000  due October  29, 1997 and October 30,  1999,
respectively.  In  the  same  month,  the  Company  also  sold  an  8%  senior
subordinated  convertible  debenture in the  principal  amount of $500,000 due
October  29,  1997.  As of June  29,  1998,  the  holder  of the 8%  debenture
elected to convert  $180,000 of debentures into shares of the Company's common
stock.  The sales of the  debentures  were made pursuant to an exemption  from
registration  provided by Regulation S promulgated under the Securities Act of
1933.

     As of January 31,  1998,  current  assets  totaled  $1,026,462  compared to
$1,348,995 at January 31, 1997. The decrease is  attributable to more timely and
improved cash  collections  efforts on accounts  receivable which decreased from
$812,357  at fiscal year end 1997  compared to $608,659 in fiscal year 1998.  At
fiscal year end 1998, the Company had no cash or short-term  deposits.  The cash
and  short-term  deposits  were  utilized for working  capital  purposes.  As of
January 31, 1998, current  liabilities totaled $2,496,876 compared to $2,561,147
as of January 31, 1997. The decrease is  attributable  to a lower level of trade
payables  from  $1,018,928  in fiscal  1997 to $997,188 in fiscal year end 1998,
reflecting the significant  improvement in business growth and development which
translated into higher sales.

As of January 31, 1998,  the Company had  outstanding  $781,409 in term loans,
which  loans  are  secured  by a  first  priority  lien on the  assets  of its
subsidiary.  The term loans are due on October  30,  2002.  The  Company  also

                                  Page 13 of 46
<PAGE>

has outstanding  $1,361,880 principal amount of convertible  debentures due as
follows:  $860,627  in 1999,  $250,627 in 2000 and  $250,626 in 2001.  All the
debentures are  convertible  into shares of the Company's  common stock at the
option of the holder. In the event the holders convert these  debentures,  the
Company's obligation to repay the $1,361,880 indebtedness would by eliminated.

The Company believes its subsidiaries will generate  sufficient  positive cash
flow from  operations to meet its operating  requirements  for the next twelve
months.  However,  there can be no assurance  that the Company will be able to
repay the  debentures  that mature in 1999 if they are not  converted.  If the
funds available under the Company's  financing  agreements,  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  extension of its current lending  facilities,
project-specific  financings and  additional  public or private debt or equity
financings.


Recent Developments

      On June 30, 1998,  the Company  entered into a Debenture  Conversion and
Support  Agreement (the "Conversion  Agreement") with certain persons who have
agreed to  acquire  the  Company's  0%  convertible  debentures  and 8% senior
subordinated  convertible  debentures (the "Holders").  Under the terms of the
Conversion  Agreement,  the Holders  have  agreed,  upon  consummation  of the
purchase by the Holders of the  debentures,  to convert  the  debentures  into
33,670,000  shares of the Company's common stock and the debentures would then
be canceled.


ITEM 7.  Financial Statements

      The financial  statements of the Company,  including the notes  thereto,
together  with the report of  Bromberg  &  Associates,  independent  certified
public accountants thereon, are presented beginning at page F-I.


ITEM 8.  Changes In and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

      None.


                                   PART III


ITEM  9.  Directors,   Executive  Officers,  Promoters  and  Control  Persons;
Compliance with Section 16(a) of the Exchange Act



                                  Page 14 of 46
<PAGE>

      The following  table  provides  information  concerning  each  executive
officer and  director of the  Company.  All  directors  hold office  until the
next  annual  meeting of  Stockholders  or until  their  successors  have been
elected and qualified.

      NAME                                   AGE       TITLE

      Mr. James Hal (a.k.a.James Halioua)    36      Chairman of the Board
                                                     Chief Executive Officer
                                                     President and Director

      Mr. Howard Halpern                     38      Chief Financial Officer
                                                     Executive Vice President

      Mr. Mark Halioua                       44      Director

      Mr. Robert Abourmad                    47      Director


      Mr. Hal has been Chairman of the Board,  Chief  Executive  Officer and a
Director of the Company  since its  inception in August 1995.  Mr. Hal was the
President  and  Chief  Financial  Officer  of  JJAMP  from  its  inception  in
September 1993 through  acquisition  by the Company in August 1995.  From 1983
to 1993, Mr. Hal was the President of Tropi-Golf Inc. of Concord,  Canada.  He
was previously a Director for Gaming Lottery Corp., a company  trading both on
the NASDAQ and on the Toronto  Stock  Exchange,  and Le Print  Express,  Inc.,
which trades on the Canadian Dealer Network (CDN).

      Mr. Halpern,  a certified  public  accountant,  has been Chief Financial
Officer and  Executive  Vice  President of the Company since January 15, 1997.
From 1989 until July 1992, he was the  Controller of Merisel  Canada,  Inc., a
computer  wholesaler  with  approximately  $208,000,000 of annual sales and 70
employees.  Since July 1992 he has  practiced as a sole  proprietor  Chartered
Accountant  in Canada,  providing  tax,  financial and  management  consulting
services.

      Mr.  Abourmad has been a Director of the Company  since August 18, 1995.
From 1995 to present he has been the President of Payless  Locksmith,  Inc. of
Toronto, Canada.

      Mr. Mark  Halioua has been a Director  of the Company  since  August 18,
1995.  Since  August  1988,  he has been the  President  of National  Printing
Group  in  Markham,   Canada,  a  printing  company.  He  possesses  no  other
directorships.

      Mr. James Hal and Mr. Mark Halioua are brothers.

      Section  16(a) of the Exchange Act requires the  Company's  officers and
directors,  and persons who own more than ten percent of a registered class of

                                  Page 15 of 46
<PAGE>

the Company's equity  securities,  to file reports of ownership and changes in
ownership  with the SEC.  Officers,  directors  and  greater  than ten percent
shareholders  are  required by SEC  regulation  to furnish  the  Company  with
copies of all Section 16(a) reports they file.

      Based solely on a review of the copies of such reports  furnished to the
Company  during or with respect to the fiscal year ended  January 31, 1998, or
written  representations  that no Forms 5 were required,  the Company believes
that during the fiscal year ended  January 31, 1998,  all Section 16(a) filing
requirements  applicable  to its  officers,  directors  and  greater  than ten
percent  beneficial  owners  were  complied  with,  except  that  each  of the
officers  and  directors  of the Company  named  above have not filed  initial
statements of beneficial  ownership and James Hal has not filed two reports on
Form 4  regarding  grants of  options  and  Howard  Halpern  has not filed one
report on Form 4 regarding grants of options.

ITEM 10.  Executive Compensation
Summary Compensation Table

     The  following  table  sets  forth  the  compensation  for  each  of  the
Company's  fiscal  years  since  inception  for the (i)  the  Company's  Chief
Executive  officer during the fiscal year ended January 31, 1998 and (ii) each
other executive  officer of the Company whose  compensation  during the fiscal
year ended January 31, 1998 exceeded $100,000.

ANNUAL COMPENSATION                       LONG TERM COMPENSATION

Name     Fiscal Annual  Annual  Other    Restricted  Securities  LTIP     All
         Year   Salary  Bonus   Annual   Stock       underlying  payouts Other
                                Compen-  Awards      options             Compen-
                                sation               and SARs            sation
--------------------------------------------------------------------------------
James Hal  1998 $70,325  NONE    NONE     NONE       200,000     NONE     NONE
H. Halpern 1998 $68,175  NONE    NONE     NONE       200,000     NONE     NONE

Stock Option Grants Table

      The following  table provides  information  with regard to stock options
granted to the  person named in the foregoing compensation table:

Name of    Number of          % Total Options/  
Grantee    Securities         SARs Granted to   
           Underlying         Employees in      Exercise of  
           Options/SARs       Fiscal Year       Base Price      Expiration Date
           Granted
--------------------------------------------------------------------------------
James Hal   200,000            41.66 %             $0.05
H. Halpern  200,000            41.66%              $0.05




                                  Page 16 of 46
<PAGE>

Directors' Compensation

     The  Company's  policy is not to pay  compensation  to directors  who are
also  employees of the Company for their service as  directors.  Additionally,
non-employee  directors  do  not  presently  receive  compensation  for  their
service as directors.  The Company will, however,  reimburse directors a fixed
amount for  out-of-pocket  expenses  incurred for  attendance at meetings.  In
the fiscal year ended January 31, 1998,  options to purchase  40,000 shares of
the  Company's  Common  Stock were  granted to Robert  Abourmad and options to
purchase  40,000  shares of the  Company's  Common  Stock were granted to Mark
Halioua.


ITEM 11.  Security Ownership of Certain Beneficial Owners and Management.

     The  following  table  sets  forth   information   with  respect  to  the
beneficial  ownership  of the  outstanding  Common  Stock of the Company as of
July  22,  1996 by (i) each  director  of the  Company,  (ii)  each  executive
officer of the Company and each executive  officer of the Company named in the
Summary  Compensation  Table above,  (iii) each person known by the Company to
own more than 5% of the  Company's  Common  Stock and (iv) all  directors  and
officers as a group:  [THE SILVER  SHAREHOLDERS DO NOT OWN MORE THAN 5% OF THE
COMMON STOCK]

  Name and Address        Beneficial Ownership of Common     Current Percent of
                          Stock                              Class (1)
  ------------------------------------------------------------------------------
  James Hal                         10,000,006                     24.69
  1183 Finch Avenue West
  North York, Ontario,
  Canada  M3J 2G2

  Howard Halpern                     6,000,000                     14.80%
  160 Theodore Place
  Thornhill, Ontario
  Canada L4J 8E3

  Halpern Family Trust               4,000,006                     9.871%
  650 Briar Hill Avenue
  Suite 301
  Toronto, Ontario
  Canada M5N 1N3

  Mark Halioua (2)                    20,700                         *
  147 Beverly Glen Blvd.
  Thornhill, Ontario
  Canada L4J 4Y2

                                  Page 17 of 46
<PAGE>

  Robert Abourmad                     20,300                         *
  87 Bayhampton Crescent
  Thornhill, Ontario
  Canada L4J 4Y2

  All directors,                    23,041,012                     76.8%
  executive officers and
  5% owners, as a group:

__________________________________________

* Less than one percent.

(1)   Computed  on the  basis of  40,536,927  shares of Common Stock  and, with
      respect  to  those  persons   holding  options  to  purchase Common Stock
      exerciseable  within 60 days,  the  number of shares of Common Stock that
      are issuable upon the exercise thereof.

(2)   Includes  options to purchase 20,000 shares of Common Stock exerciseable
      within 60 days and 300 shares of Common Stock owned by his wife.

(3)   Includes  options to purchase 20,000 shares of Common Stock exerciseable
      within 60 days.

ITEM 12.  Exhibits, List and Reports on Form 8-K

      (a)  Index to Financial Statements
           Report of Independent Auditors
           Financial Statements
           Financial Data Schedule

Exhibits

3.1   Certificate of Incorporation of the Company, as amended*

3.2   By-Laws of the Company.*

4.1   Form of Junior 0%  Convertible  Subordinated  Debenture  due October 30,
      1999.**

4.2   Form of Series A Senior Convertible  Subordinated  Debenture due October
      29, 1997**

4.3   Form of Series A Senior Convertible  Subordinated  Debenture due October
      29, 1997**

10.1  Treasury International, Inc. 1995 Stock Option Plan.*

10.2  Share Purchase and Exchange  Agreement dated August 18, 1995 between the
      shareholders  of  J.J.A.M.P.  Treasury  International  Corp.,  J.J.A.M.P
      Treasury International Corp., and Treasury International, Inc.*


                                  Page 18 of 46
<PAGE>

10.3  Agreement  dated October 30, 1996 by and among  Treasury  International,
      Inc., William Sarantos,  Toula Sarantos,  Martin Maxwell,  Louis Chelin,
      Verne Chelin,  David Bereskin,  In Trust, Joseph Myers, Eleanor Maxwell,
      Berta Lenenfeld, Douglas Ferguson and Megatran Investments Ltd.***

10.4  Agreement  dated as of June 18, 1996, as amended,  by and among Treasury
      International,  Inc., Silver 925, Inc., Moche Bendayan, Solomon Bendayan
      and Edward Kozial.****

10.5  Agreement  dated  as of  September  19,  1997,  by  and  among  Treasury
      International,  Inc.,  James Hal,  Silver  925,  Inc.,  Moche  Bendayan,
      Salomon Bendayan and Edward Kozial.*****

10.6  Debenture Conversion and Support Agreement dated June 30, 1998

21*   Subsidiaries of the Company

23.1  Consent of Bromberg & Associate

27.0  Financial Data Schedule
__________________________________________________

   *  Incorporated by reference from, the Company's  Registration Statement on
      Form  10-SB,  as amended,  originally  filed with the SEC on October 21,
      1996.

  **  Incorporated by reference from, the Company's  Quarterly  Report on Form
      10-QSB, as filed with the SEC on December 20, 1996.

 ***  Incorporated  herein by reference from, the Company's  Current Report on
      Form 8-K, as filed with the SEC on November 21, 1996.

****  Incorporated  herein by reference from, the Company's  Current Report on
      Form 8-K, as filed with the SEC on March 17, 1997.

***** Incorporated  herein by reference from, the Company's  Current Report on
      Form 8-K, as filed with the SEC on October 30, 1997


        (b) During the three month period ended January 31, 1997,  the Company
            filed the following reports on Form 8-K:

                                  Page 19 of 46
<PAGE>


                                  SIGNATURES


      In accordance  with Section 13 or 15(d) of the Exchange Act of 1934, the
registrant  caused this report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                          TREASURY INTERNATIONAL, INC.

                                          By:   /s/                     

                                          James Hal
                                          President and Chief Executive
                                          Officer


                                          By:   /s/                     

                                          Howard Halpern
                                          Chief Financial Officer

      Pursuant to the  requirements  of the Exchange Act, this Report has been
signed  below  by the  following  persons  on  behalf  of the  Company  in the
capacities and on the date indicated.

Signature                Title                              Date

/s/                      President and Chief Executive      July 20, 1998
James Hal                Officer and Director

/s/                      Chief Financial Officer            July 20, 1998
Howard Halpern

/s/                      Director                           July 20, 1998
Mark Halioua

/s/                      Director                           July 20, 1998
Robert Abourmad


                                  Page 20 of 46
<PAGE>


                         TREASURY INTERNATIONAL, INC.

                      CONSOLIDATED FINANCIAL STATEMENTS

                               JANUARY 31, 1998





                                  Page 21 of 46
<PAGE>

                                    INDEX

 
                                                                      Page

      Auditor's report...............................................   1

      Consolidated balance sheet.....................................   2

      Consolidated statement of deficit..............................   3

      Consolidated statement of operations...........................   4

      Consolidated statement of changes in
      shareholders' equity...........................................   5

      Consolidated statement of cash flows...........................   6

      Notes to consolidated financial statements.....................   7





                                  Page 22 of 46
<PAGE>


                               AUDITORS' REPORT



Board of Directors and Shareholders
Treasury International, Inc.


We have audited the  consolidated  balance  sheets of Treasury  International,
Inc. as at January  31,  1998 and 1997,  and the  consolidated  statements  of
operations  deficit,  shareholders'  deficiency  and cash  flows for the years
then ended.  These  consolidated  financial  statements are the responsibility
of the corporation's  management.  Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.

We  conducted  our  audits in  accordance  with  generally  accepted  auditing
standards.  Those  standards  require  that we plan  and  perform  an audit to
obtain  reasonable  assurance  whether the consolidated  financial  statements
are free of material  misstatement.  An audit  includes  examining,  on a test
basis,  evidence  supporting the amounts and  disclosures in the  consolidated
financial  statements.   An  audit  also  includes  assessing  the  accounting
principles  used and  significant  estimates  made by  management,  as well as
evaluating  the overall  consolidated  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion,  these  consolidated  financial  statements present fairly, in
all  material  respects,  the  financial  position  of the  corporation  as at
January  31,  1997 and 1996 and the  results  of its  operations  and its cash
flows  for  the  years  then  ended  in  conformity  with  generally  accepted
accounting principles.


                                          CHARTERED ACCOUNTANTS



TORONTO, CANADA
June 5, 1998




                                  Page 23 of 56
<PAGE>




                         TREASURY INTERNATIONAL, INC.
                          CONSOLIDATED BALANCE SHEET
                            AS AT JANUARY 31, 1998

                                    ASSETS

          CURRENT                                     1998        1997

                Accounts Receivable               $  608,659  $  812,357
                Inventories (Notes 2 and 4)          345,783     385,915
                Sundry assets                         72,020     144,541
            Income taxes receivable                 --------       6,182
                                                   _________  __________
                                                   1,026,462   1,348,995

          GOODWILL                                 1,835,918   1,835,918

          CAPITAL ASSETS (Notes 2 and 5)             620,279     723,299

                                                  $3,482,659  $3,908,212


                                 LIABILITIES
CURRENT

  Bank indebtedness (Note 6)                      $  492,012  $  394,407
      Accounts payable and accrued liabilities       997,188   1,018,928
      Current portion of long-term debt            1,007,676   1,147,812

                                                   2,496,876   2,561,147

DEFERRED INCOME TAXES                                 52,957      54,161

LONG-TERM DEBT (Note 7)                            1,117,392   1,304,461
                                                  __________  __________

                                                  $3,667,225  $3,919,769





                                  Page 24 of 46
<PAGE>

                           SHAREHOLDERS' DEFICIENCY

SHARE CAPITAL
      Authorized
            50,000,000 common shares at $.0001

      Issued
            24,610,495 common shares                  2,461        1,494 

      Contributed surplus (Note 12)               2,788,140    1,543,861 

DEFICIT                                          (2,975,167)  (1,556,912)

                                                   (184,566)     (11,557)
                                                 $ 3,482,659 $ 3,908,212 

APPROVED ON BEHALF OF THE BOARD



James Hal, Director                      Robert Abourmad, Director



                                  Page 25 of 46
<PAGE>


                         TREASURY INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENT OF DEFICIT
                         YEAR ENDED JANUARY 31, 1998






                                               1998         1997

Balance, beginning of year                 $(1,556,912) $  (524,828)

Net loss for the year                       (1,437,986)  (1,032,084)

Adjustments to prior year taxes                 19,731   -----------
                                           ___________  ____________

Balance, end of year                       $(2,975,167) $(1,556,912)




                                  Page 26 of 46
<PAGE>

                         TREASURY INTERNATIONAL, INC.
                     CONSOLIDATED STATEMENT OF OPERATIONS
                         YEAR ENDED JANUARY 31, 1998




                                                    1998        1997

REVENUE                                           $6,128,827 $2,123,631

COST OF GOODS SOLD                                 4,628,960  1,743,380
                                                  
GROSS PROFIT                                       1,499,867    380,251
                                                  

EXPENSES

      Warehouse and factory                          568,465    139,660
      General and administrative                   1,122,540    956,086
      Selling and deliver                            155,340     55,382

                                                   1,846,345  1,151,128
LOSS FROM OPERATIONS before
  undernoted items                                 (346,478)  (770,877)
      Management fees                                51,203    193,316 
      Financial                                     128,191     31,390 
      Amortization                                  137,654     39,941 

                                                    317,048    264,647 
LOSS BEFORE INCOME TAXES                           (663,526) (1,035,524)

Provision for income taxes (recovery)            -------------  (1,542)
Deferred income taxes (recovery)                     (1,204)    (1,898)

                                                     (1,204)    (3,440)

NET LOSS FROM CONTINUED
  OPERATIONS                                       (662,322) (1,032,084)


                                  Page 27 of 46
<PAGE>

NET LOSS FROM DISCONTINUED
OPERATION                                          (282,260)            -


NET LOSS ON DISPOSAL OF
DISCONTINUED OPERATIONS                            (493,404)             
                                                                        -

NET LOSS                                         $(1,437,986)$(1,032,084)
Loss per common share                                $(0.08)      $(0.08)

Weighted average number of
common shares outstanding                        17,955,714    13,221,096



                                  Page 28 of 46
<PAGE>

                         TREASURY INTERNATIONAL, INC.
          CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                         YEAR ENDED JANUARY 31, 1998
 


                                          COMMON     PAID-IN         CAPITAL 
                                          SHARES   CONTRIBUTED        SURPLUS


Balance-January 31, 1997              14,942,566           $1,494  $1,543,861

Issued 555,000 common shares
for consulting and public
relations services                       555,000               56     554,944

Issued 150,000 common shares
toward the purchase price
of Silver 925, Inc.                      150,000               15     149,985

Balance-April 30, 1997                15,647,566            1,565   2,248,790

Issued 500,000 common shares
for consulting and public
relations services                       500,000               50     111,196
 
Issued 225,000 common
shares toward the purchase
price of Silver 925, Inc.                225,000               22     224,978
 
Issued 507,614 common
shares toward reduction
of debentures payable                    507,614               51      49,949

Balance-July 31, 1997                 16,880,180            1,688   2,634,913

Issued 1,150,000 common
shares for consulting and
public relations services              1,150,000               15      13,585


                                  Page 29 of 46
<PAGE>

Issued 750,000 common
shares toward reduction
of debentures payable                    750,000          75      29,225


Balance-October 31, 1997              18,780,180       1,878   2,677,723

Issued 2,830,315 common
shares toward reduction
of debentures payable                  2,830,315         283      59,717

Issued 3,000,000 common
shares for consulting and
public relations services              3,000,000         300       5,700

Balance-January 31, 1998              24,610,495      $2,461  $2,788,140





                                  Page 30 of 46
<PAGE>

                         TREASURY INTERNATIONAL, INC.
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                         YEAR ENDED JANUARY 31, 1998

                                              1998         1997
Cash flows from operating activities

Net loss                              $(1,437,986) $(1,032,084)

Adjustments to reconcile net
loss to net cash used in
operating activities


Adjustments to prior year income taxes     19,731            -
Increase(decrease)in deferred              (1,204)      54,161
income taxes
Amortization                              137,654       39,941

Decrease   (increase)   in  accounts      203,698     (632,053)
receivable

Increase(decrease)in income taxes           6,182       (6,182)
receivable
Increase(decrease)in inventories           40,132     (268,077)
Decrease (increase) in sundry assets       72,521     (142,689)
Increase (decrease) in accounts
payable                                   (21,740)     969,611 

Net cash used in operating               (981,012)  (1,017,372)
activities


Cash flows from financing activities

Long-term debt                           (327,205)   2,452,273
Proceeds on issue of common shares      1,245,246      466,267

Cash provided by financing                918,041     2,918,540
activities

Cash flows from investing activities

Goodwill                                         -  (1,835,918)


Purchase of capital assets                    (34,634)               (752,268)

Cash used for investing activities            (34,634)             (2,588,186)

Decrease in cash and short-term               (97,605)               (687,018)
deposits

Cash and short-term deposits,
(bank  indebtedness)   beginning  of         (394,407)                292,611
year

(Bank indebtedness),end of year             $(492,012)              $(394,407)


                                  Page 31 of 46
<PAGE>


                         TREASURY INTERNATIONAL, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AS AT JANUARY 31, 1998
 
1.    Nature of business

      Treasury International, Inc. is a holding company which, through its
      wholly-owned  subsidiaries,  Megatran  Investments  Ltd.  and Mega  Blow
      Moulding  Limited,  distributes  a variety of  consumer  and  industrial
      products.  The company 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  its   wholly-owned   subsidiaries,   Megatran
            Investments Ltd. and Mega Blow Moulding Limited.

      (b)   Inventories

            Raw materials are valued at the lower of cost (first-in, first-out
            method) and net  realizable  value.  Finished  goods are valued at
            the  lower  of cost  and net  realizable  value  with  cost  being
            determined by the retail method.

      (c)   Capital assets

            Capital   assets   are   recorded   at   cost   less   accumulated
            amortization.  Amortization is provided as follows:

                  Leasehold improvements  - straight line over term of lease
                  Machinery and equipment - 20% diminishing balance
                  Office equipment        - 20% diminishing balance


      (d)   Revenue recognition

            Revenue is  generally  recognized  as  customers  are invoiced for
            products shipped by the company.

      (e)   Loss per share

            Loss per share is calculated  based on the weighted average number
            of shares outstanding during the period of 17,955,714.



                                  Page 32 of 46
<PAGE>

      (f)   General

            These financial statements have been prepared in accordance with
            U.S. generally accepted accounting principles (GAAP), as they
            relate to these financial statements.





                                  Page 33 of 46
<PAGE>


                         TREASURY INTERNATIONAL, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AS AT JANUARY 31, 1998
 



3.    Business combination

      On  October  30,  1996,  the  Company  acquired  100% of the  issued and
      outstanding  common shares of Megatran  Investments Ltd., parent company
      of Mega Blow Moulding Limited.

4.    Inventories
                                     January 31,       January 31,
       Inventories consist of:              1998              1997

       Raw materials                    $144,183          $151,241
       Packaging                          20,135            24,345
       Finished goods                    181,465           210,329

                                        $345,783          $385,915

5.    Capital assets
 
                          January 31,             January 31,
                             1998                    1997

                                 Accumulated        Net        Net
                           Cost amortization book value book value


Leasehold                $4,221        1,665     $2,556     $2,893
improvements
Machinery and         2,473,153    1,897,665    575,488    668,585
equipment
Office equipment        103,314       61,079     42,235     51,821
                     $2,580,688    1,960,409  $ 620,279  $ 723,299



                                  Page 34 of 46
<PAGE>

6.    Bank indebtedness

      The bank  indebtedness  consists of two operating  demand loans totaling
      $483,680  which are secured by a registered  general  assignment of book
      debts and general security agreements of Mega Blow Moulding Limited.


                                  Page 35 of 46
<PAGE>


                         TREASURY INTERNATIONAL, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AS AT JANUARY 31, 1998
 


7.    Long term debt

      The  long-term  debt  consists  of two term  loans and three  debentures
      payable.  The term loans are secured by a  registered  general  security
      agreement  having first charge over all assets  excluding  real property
      of Mega Blow  Moulding  Limited.  The term loans bear  interest at rates
      varying  from  6.47%  to  bank  prime  plus  1.75%.  One  of  the  three
      debentures  in the amount of  $500,000  is subject to 8%  interest.  The
      remaining two are interest-free debentures.

      The term loans and debentures are payable as follows:


              Term loans  Debentures       Total

1999            $147,049    $860,627  $1,007,676
2000             157,213     250,627     407,840
2001             165,443     250,626     416,069
2002             174,339           -     174,339
2003 and         137,365           -     137,365
following       ________    ________   _________

                 781,409   1,361,880   2,143,289
Less current     147,049     860,627   1,007,676
portion         ________   _________   _________
                $634,360    $501,253  $1,135,613
 
8.    Income taxes

      As of January 31, 1998, the Company had a net operating loss carryover
      of approximately $2,259,500 expiring in various years through 2013.

9.    General and administrative expenses

      General and administrative  expenses for the year ended January 31, 1998
      include fees paid by the Company for consulting and public  relations in
      the amount of $808,397.



                                  Page 36 of 46
<PAGE>

10.   Discontinued operations

      On July 31, 1997, the Company  disposed of its  subsidiary,  Silver 925,
      Inc.   The  results  of  Silver  925,   Inc.   have  been   reported  as
      discontinued operations in these financial statements.

11.   Contingent Liabilities

      The Company has been named as a defendant  in three  lawsuits in respect
      of  disputed  accounts  payable.  After  reviewing  the  merits of these
      lawsuits  with  counsel,  it is  managements  opinion that the ultimate
      cost of settlement  will be no more than $67,000 and therefore  will not
      materially affect the company's financial position.

12.   Contributed surplus

      Contributed  surplus  represents  the  premium  paid on the  issuance of
      common shares.



                                  Page 37 of 46
<PAGE>

                                  EXHIBIT 21


Megatran Investments Ltd.

Mega Blow Moulding Limited



                                  Page 38 of 46
<PAGE>

                  DEBENTURE CONVERSION AND SUPPORT AGREEMENT


      DEBENTURE  CONVERSION AND SUPPORT AGREEMENT,  dated June 30, 1998 by and
between TREASURY  INTERNATIONAL,  INC., a Delaware  corporation  ("Treasury"),
JAMES HAL ("Hal"),  HOWARD HALPERN ("Halpern") and THE UNDERSIGNED  PURCHASERS
OF CERTAIN  DEBENTURES OF TREASURY  (the  "Purchasers"),  and DALE DONNER,  as
agent for the Purchasers ("Donner").


                                   RECITALS

      WHEREAS,  pursuant to a certain Debenture  Purchase  Agreement dated the
date hereof,  the  Purchasers  have agreed to acquire  certain  Debentures  of
Treasury  (the  "Debentures")  in the aggregate  principal  amount of Canadian
$1,000,000 and US$570,000 (the "Debenture Purchase").

      WHEREAS,  in  connection  with the  Debenture  Purchase,  Treasury,  the
Purchasers  and Donner have agreed to enter into this  Agreement  with respect
to the conversion of the Debentures and the  relationship  of the parties from
and after the  consummation of the purchase of the Debentures  pursuant to the
terms of the  Debenture  Purchase,  all  upon the  terms  and  subject  to the
conditions of this Agreement.

      NOW,  THEREFORE,  in  consideration  of the  foregoing  and  the  mutual
covenants,  representations,  warranties and agreements hereinafter set forth,
the parties hereto agree as follows:


                                  ARTICLE I.

                           CONVERSION OF DEBENTURES

      1.1.  Conversion of Debentures.

            (a)   Upon  the  terms  and  subject  to the  conditions  of  this
Agreement,  simultaneous  with the  Closing  of the  Debenture  Purchase,  the
Purchasers  agree  that the  Debentures  shall be  converted  into  33,670,000
shares (the "Conversion  Shares") of Treasury's Common Stock, par value $.0001
per share,  and the Debentures  shall be forthwith  canceled.  The Conversions
shares shall be  allocated  among the  Purchasers  as provided on Schedule 1.1
hereto.

            (b)   Purchasers  acknowledge that the Conversion  Shares have not
been registered  under the Securities Act of 1933, as amended (the "Act"),  or
under the securities  laws of certain states.  Accordingly,  until October 31,
1998, the second  anniversary of the original issuance of the Debentures,  the
Conversion Shares cannot be resold,  pledged,  assigned or otherwise  disposed
of  except  in  compliance  with  Rule 144  promulgated  under  the  Act.  The


                                  Page 39 of 46
<PAGE>

Purchasers  further  acknowledge  that Treasury is not currently in compliance
with  the  current   public   information   requirements   of  Rule  144  and,
accordingly,   until  such  compliance   requirements   are  met,  the  resale
provisions of Rule 144 are not presently  available.  In addition,  even if an
exemption under Rule 144 were  available,  Rule 144 permits only routine sales
of securities in limited  amounts in accordance  with the terms and conditions
of such Rule 144 until such second anniversary.

            (c)   Purchasers  understand  that,  until  October 31, 1998,  the
following  legend  or a  substantially  similar  legend  may be  placed on the
Conversion  Shares  (and a stop  transfer  order  may be placed  with  respect
thereto):

            "THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE
            NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933
            AND CANNOT BE OFFERED OR SOLD  EXCEPT  PURSUANT  TO AN
            EFFECTIVE  REGISTRATION STATEMENT UNDER SUCH ACT OR AN
            EXEMPTION FROM  REGISTRATION  UNDER SUCH ACT WHICH, IN
            THE OPINION OF COUNSEL FOR THE HOLDER,  WHICH  COUNSEL
            AND OPINION  ARE  REASONABLY  SATISFACTORY  TO COUNSEL
            FOR THIS CORPORATION, IS AVAILABLE."

            (d)   Purchasers   acknowledge   and  agree   that  they  are  not
"affiliates" of Treasury.


                                 ARTICLE II.

                             FINANCIAL ASSISTANCE

      2.1   Financial Assistance.

      The Purchasers shall make additional  capital  contributions to Treasury
from time to time. Such additional  capital  contributions  shall be deemed to
be additional  paid-in capital and the Purchasers shall not be entitled to any
additional   compensation   with  respect   thereto.   The  Purchasers   shall
immediately  make additional  capital  contributions in order to eliminate the
current balance of outstanding accounts payable of Treasury.


                                  Page 40 of 46
<PAGE>

                                 ARTICLE III.

                    BOARD REPRESENTATION; OBSERVER RIGHTS


      ..1.  Board Representation

      After the first  anniversary  of the Closing,  for so long as Purchasers
owns  not  less  than  5% of the  issued  and  outstanding  capital  stock  of
Treasury,  at the election of Purchasers,  Treasury shall use its best efforts
to cause and maintain the election of a person  designated  by  Purchasers  to
the Board of Directors of Treasury.


      ..2.  Observer Rights

      For so long as  Purchasers  owns  not  less  than 5% of the  issued  and
outstanding  capital  stock of  Treasury,  Treasury  shall invite the Agent to
attend  all  meetings  of the  Board  of  Directors  in a  nonvoting  observer
capacity  and, in this  regard,  shall give the Agent  copies of all  notices,
minutes,  consents  and other  materials  that it provides  to its  directors;
provided,  however, that the Agent shall agree to hold in confidence and trust
and to act in a fiduciary  manner with respect to all information so provided;
and  provided,  further,  that  Treasury  reserves  the right to withhold  any
information  and to exclude such  representatives  from any meeting or portion
thereof if access to such  information  or  attendance  at such meeting  could
adversely  affect  the  attorney-client  privilege  between  Treasury  and its
counsel.


                                 ARTICLE IV.

                                  COVENANTS


      ..1.  Covenants of Treasury

      Until the first  anniversary  of the date of this  Agreement  and for so
long as  Purchasers  owns  not  less  than 5% of the  issued  and  outstanding
capital  stock of  Treasury,  Treasury  shall  not  take any of the  following
actions without the approval of the Agent:

            (a)   sell,  lease,  transfer or  otherwise  dispose of any assets
valued at an aggregate amount exceeding U.S. $100,000 during any fiscal year;

            (b)   create any  subsidiaries or acquire  securities of any other
entity;

            (c)   merge or consolidate with any other entity;

            (d)   engage  directly or  indirectly  with another  entity in any
business  activity not related to Treasury's  present  business or acquire any
assets unrelated to or unnecessary for such business;



                                  Page 41 of 46
<PAGE>

            (e)   engage   directly  or   indirectly   in  any  business  with
affiliates or other third parties on other than an arm's length basis;

            (f)   change its fiscal year or independent auditors;

            (g)   incur  indebtedness or capital  expenditures  each in excess
of U.S. $50,000;

            (h)   intentionally  vary in a  material  manner  from the  annual
operating  budget and  business  plan  approved by the Board of  Directors  of
Treasury; and

            (i)   issue any  additional  securities  of Treasury  exchangeable
for or  convertible  into shares of Common Stock of Treasury other than shares
issuable  upon the exercise of options  granted to the  optionees  and options
granted and to be granted under the Plan to the extent permitted hereby.

      4.2.  Covenants Regarding Options.

            In connection with the issuance of 6,000,000  restricted shares of
Treasury's  Common Stock issued to each Hal and Halpern on June 24, 1998, each
of Hal and Halpern agree to cancel all outstanding  options granted to each of
them,  except for  options to  purchase  250,000  shares  which  shall  remain
outstanding.  On each of the first day of February  commencing  on February 1,
1999,  Hal and Halpern  shall each be entitled to receive  options to purchase
250,000 shares of Treaury's  Common Stock in connection with their services as
employees  of  Treasury.  Until  the  third  anniversary  of the  date of this
Agreement,  except as otherwise  provided  below,  no other  options  shall be
granted to Hal or Halpern.

            In  addition,  each  director of  Treasury  shall  receive  30,000
options  per year  commencing  on  February  1,  1999 and on the  first day of
February thereafter on which such person is then serving as a director.

      4.3.  Compensation.

            (a)   Until the first  anniversary  of the date of this  Agreement
or for so  long  as  Purchasers  owns  not  less  than  5% of the  issued  and
outstanding  capital stock of Treasury,  Treasury shall pay to each of Hal and
Halpern  remuneration  of $5,000  per  month.  Hal and  Halpern  shall also be
reimbursed  for all  reasonable  and  necessary  expenses  incurred by them in
connection with their duties to Treasury.

            (b)   For a period  of one year  after the date  hereof,  Treasury
shall pay to the Agent an administration fee of $5,000 per month.


                                  Page 42 of 46
<PAGE>

                                  ARTICLE V.

                                MISCELLANEOUS


      ..1.  Entire Agreement; Assignment

      This  Agreement,  together with all Exhibits and Schedules,  constitutes
the entire  agreement  among the parties  with  respect to the subject  matter
hereof and supersedes  all other prior  agreements  and  understandings,  both
written and oral,  among the  parties or between  any of them with  respect to
the  subject  matter  hereof.   All  references  to  Sections,   Exhibits  and
Schedules  shall be deemed  references to such parts of this Agreement  unless
the  text  requires  otherwise.  This  Agreement  shall  not  be  assigned  by
operation of law or otherwise,  provided that Purchasers may assign its rights
and  obligations  to  any  wholly-owned,  direct  or  indirect  subsidiary  of
Purchasers  provided such assignee  agrees to assume all of the obligations of
Purchasers  hereunder;  provided,  further,  that  no  such  assignment  shall
relieve the assignor of its  obligations  hereunder if such  assignee does not
perform such obligations.


      ..2.  Validity; Severability

      The  invalidity or  unenforceability  of any provision of this Agreement
shall not affect the  validity or  enforceability  of any other  provision  of
this  Agreement,  which  shall  remain in full  force and effect  unless  such
enforceability causes this Agreement to fail in its essential purpose.


      ..3.  Notices

      All  notices,   requests,   claims,  demands  and  other  communications
hereunder  shall  be in  writing  and  shall  be  given or made as of the date
delivered or mailed if delivered in person,  by telecopy,  cable,  telegram or
telex,  or by registered or certified  mail (postage  prepaid,  return receipt
requested) to the respective parties as follows:

      if to Purchasers:
                                                
                                                
                                                
                        Telecopy No.:           
                        Attention:              

      with a copy to:
                                                
                                                
                                                
                        Telecopy No.:           
                        Attention:              


                                  Page 43 of 46
<PAGE>

      if to Treasury:
                        1183 Finch Avenue West, Suite 508
                        North York, Ontario
                        Canada M3J 2G2
                        Telecopy No.:  (416) 663-5509
                        Attention:  Mr. James Hal, President

      with a copy to:

                        Piper & Marbury L.L.P.
                        1251 Avenue of the Americas
                        New York, New York 10020
                        Telecopy No.: (212) 835-6001
                        Attention:  Paul J. Pollock, Esq.

or to such  other  address  as the  person to whom  notices  is given may have
previously furnished to the others in writing in the manner set forth above.


      ..4.  Governing Law

      This  Agreement  shall be governed by and construed in  accordance  with
the laws of the State of New York  (without  giving  effect to  principles  of
conflicts of law).


      ..5.  Descriptive Headings

      The  descriptive   headings  herein  are  inserted  for  convenience  of
reference  only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.


      ..6.  Parties in Interest

      This Agreement  shall be binding upon and inure solely to the benefit of
each party hereto, its successors and assigns.


      ..7.  Counterparts

      This  Agreement  may be  executed in two or more  counterparts,  each of
which shall be deemed to be an  original,  but all of which  shall  constitute
one and the same agreement.

      5.8.  Nature and Survival of Representations, Warranties,
            Agreements and Covenants.

      All  representations  and warranties  contained  herein shall  terminate
upon,  and shall not  survive,  the  Closing.  All  agreements  and  covenants
contained herein shall survive  indefinitely until, by their respective terms,
they are no longer operative.



                                  Page 44 of 46
<PAGE>

      IN WITNESS WHEREOF,  each of the parties has caused this Agreement to be
executed on its behalf by its officers  thereunto  duly  authorized  as of the
day and year first above written.


                                    TREASURY INTERNATIONAL, INC.


                                    By: /s/                                  
                                       James Hal
                                       President


                                       /s/                              
                                       James Hal
 

                                       /s/
                                       Howard Halpern


                                       /s/
                                       Dale Donner, as agent


                                    THE UNDERSIGNED PURCHASERS


                                    /s/
                                    Dale Donner


                                    /s/


                                    /s/
 

                                  Page 45 of 46
<PAGE>


                        Consent of Independent Accountants


The Board of Directors
Treasury International, Inc.:


     We consent to the use of our report included herein and to the reference
to our firm in the 10-KSB.

                                        
                                        /s/
                                        Bromberg & Associate


                                  Page 46 of 46