<PAGE>

                United States Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB


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

  For the quarterly period ended OCTOBER 30, 1999
                                 ----------------

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

  For the transition period from __________________ to _______________________


                         Commission file number 0-23903
                                                -------


                         TRANSFORMATION PROCESSING INC.
        (Exact name of small business issuer as specified in its charter)

<TABLE>
<S>                                                                                     <C>
               Nevada                                                                       95-4583945
   (State or other jurisdiction of                                                       (I.R.S. Employer
    incorporation or organization)                                                      Identification No.)
</TABLE>

                    365 Bay Street, Toronto, Ontario M5H 2V2
                    (Address of principal executive offices)

                                 (416) 414-9450
                           (Issuer's telephone number)

                                 Not Applicable
                                 --------------
         (Former Name, Former Address and Former Fiscal Year, if changed
                               Since Last Report)

         Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. YES    NO X
            ---   ---

* The issuer became subject to the filing requirements on May 12, 1998.

         As of April 14, 2000, the issuer had 4,810,367 shares of Common Stock,
par value $.025 per share, issued and outstanding.

<PAGE>



ITEM 1. FINANCIAL INFORMATION


TRANSFORMATION PROCESSING INC.
(DEBTOR-IN-POSSESSION)

FINANCIAL STATEMENTS

OCTOBER 31, 1999



<PAGE>
                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                                OCTOBER 31, 1999
--------------------------------------------------------------------------------









FINANCIAL STATEMENTS:

   Balance Sheet                                                     F - 2
   Statement of Operations                                           F - 3
   Statement of Stockholders' Deficiency                             F - 4
   Statement of Cash Flows                                           F - 5
   Notes to Financial Statements                                 F - 6 - F-14




                                                                             F-2
<PAGE>
<TABLE>
<CAPTION>

                                                                                     TRANSFORMATION PROCESSING INC.
                                                                                             (DEBTOR-IN-POSSESSION)

                                                                                                      BALANCE SHEET
-------------------------------------------------------------------------------------------------------------------

OCTOBER 31, 1999
-------------------------------------------------------------------------------------------------------------------

ASSETS

<S>                                                                                                  <C>
Deferred Debt Cost, net                                                                              $      31,181

------------------------------------------------------------------------------------------------------------------
      TOTAL ASSETS                                                                                   $      31,181
==================================================================================================================

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
      Liabilities subject to compromise - accounts payable and accrued expenses                      $     895,166
        Current maturities of long-term debt                                                                10,160
------------------------------------------------------------------------------------------------------------------
      TOTAL CURRENT LIABILITIES                                                                            905,326

Long-term Debt, net of current maturities                                                                1,951,954

------------------------------------------------------------------------------------------------------------------
      TOTAL LIABILITIES                                                                                  2,857,280
------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies

Stockholders' Deficiency:
  Preferred stock - $.001 par value; authorized 5,000,000 shares, none issued                                    -
  Common stock - $.025 par value; authorized 50,000,000 shares, issued
   and outstanding 710,367 shares                                                                           17,759
  Additional paid-in capital                                                                             7,040,383
  Accumulated deficit                                                                                   (9,884,241)
-------------------------------------------------------------------------------------------------------------------

      STOCKHOLDERS' DEFICIENCY                                                                          (2,826,099)

------------------------------------------------------------------------------------------------------------------
      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                   $    31,181
==================================================================================================================
</TABLE>





                                      The accompanying notes should be read in
                                      conjunction with the financial statements

04/24/00

                                                                             F-3
<PAGE>

<TABLE>
<CAPTION>

                                                                                     TRANSFORMATION PROCESSING INC.
                                                                                             (DEBTOR-IN-POSSESSION)
                                                                                            STATEMENT OF OPERATIONS
-------------------------------------------------------------------------------------------------------------------

THREE MONTHS ENDED OCTOBER 31,                                                          1999                  1998
------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                   <C>
Revenue - consulting services                                                              $         $     191,069
------------------------------------------------------------------------------------------------------------------

Costs and expenses:
  Cost of consulting services                                                                               16,392
  Cost of transformation services                                                                          151,433
  Software development                                                                                     110,292
  General and administrative                                                         141,252               475,382
------------------------------------------------------------------------------------------------------------------
                                                                                     141,252               753,499
------------------------------------------------------------------------------------------------------------------

Loss from operations                                                                                      (562,430)

Interest income(expense) - net                                                             -              (164,735)

------------------------------------------------------------------------------------------------------------------
Net loss                                                                           $(141,252)            $(727,165)
==================================================================================================================

Basic net loss per common share                                                 $       (.20)            $   (1.09)
==================================================================================================================

Weighted-average number of common shares
 outstanding                                                                         710,367               665,109
==================================================================================================================
</TABLE>



                                      The accompanying notes should be read in
                                      conjunction with the financial statements


04/24/00

                                                                             F-4
<PAGE>
<TABLE>
<CAPTION>

                                                                                     TRANSFORMATION PROCESSING INC.
                                                                                             (DEBTOR-IN-POSSESSION)

                                                                              STATEMENT OF STOCKHOLDERS' DEFICIENCY
-------------------------------------------------------------------------------------------------------------------

THREE MONTHS ENDED OCTOBER 31, 1999 AND 1998
-------------------------------------------------------------------------------------------------------------------

                                                                                ACCUMULATED      STOCK-      COMPRE-
                                                     ADDITIONAL                  OTHER COM-      HOLDERS'    HENSIVE
                               COMMON STOCK           PAID-IN      ACCUMULATED   PREHENSIVE       EQUITY     INCOME
                             SHARES     AMOUNT        CAPITAL       DEFICIT     INCOME (LOSS)  (DEFICIENCY)  (LOSS)
------------------------------------------------------------------------------------------------------------------

<S>                           <C>        <C>        <C>           <C>                <C>     <C>               <C>
Balance at July 31, 1999      710,367    17,759     7,040,383     (9,742,989)         0       (2,684,847)        0

Net loss                                      -                     (141,252)         0         (141,252)        0

------------------------------------------------------------------------------------------------------------------
Balance at October 31, 1999   710,367   $17,759    $7,040,383    $(9,884,241)       $ 0      $(2,874,638)       $0
==================================================================================================================
</TABLE>




                                      The accompanying notes should be read in
                                      conjunction with the financial statements

04/25/00

                                                                             F-5
<PAGE>
<TABLE>
<CAPTION>

                                                                                        TRANSFORMATION PROCESSING INC.
                                                                                                (DEBTOR-IN-POSSESSION)

                                                                                               STATEMENT OF CASH FLOWS
----------------------------------------------------------------------------------------------------------------------

Three months ended October 31,                                                          1999                    1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                      <C>
Cash flows from operating activities:
  Net loss                                                                          $(141,252)               $(727,165)
  Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation and amortization                                                                               11,464
    Issuance of options and warrants to purchase common
     stock  for services                                                                                        53,400
    Recognition of beneficial conversion feature                                                                75,000
    Amortization of discounts                                                                                   39,705
    Interest expense converted to stock                                                                         14,618
    Changes in operating assets and liabilities:
      Decrease in accounts receivable                                                  33,949                  272,847
      Increase in prepaid expenses and other current assets                                                    (11,879)
      Increase in deferred debt costs                                                    (711)
      Decrease in other assets                                                                                   3,312
      Increase (decrease) in accounts payable                                        (127,862)                  70,827
      Increase (decrease) accrued expenses and other current liabilities                  232                  (36,251)
----------------------------------------------------------------------------------------------------------------------
          NET CASH USED IN OPERATING ACTIVITIES                                      (187,105)                (234,122)
----------------------------------------------------------------------------------------------------------------------

Cash flows from investing activity - purchase of property and equipment                                        (19,533)
----------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Repayments of loan payable - bank                                                                            (13,920)
  Proceeds from (repayment of), net of note payable - stockholder                     235,644                  (36,676)
  Net proceeds from issuance of convertible debentures                                                         298,226

----------------------------------------------------------------------------------------------------------------------
          NET CASH PROVIDED BY FINANCING ACTIVITIES                                   235,644                  247,630
----------------------------------------------------------------------------------------------------------------------

Effect of exchange rate changes on cash                                               (48,539)                  28,774
----------------------------------------------------------------------------------------------------------------------

Net decrease in cash                                                                      - 0 -                (34,799)

Cash at beginning of period                                                               - 0 -                150,687

----------------------------------------------------------------------------------------------------------------------
Cash at end of period                                                              $      - 0 -          $     115,888
======================================================================================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

  Cash paid during the period for interest                                         $      - 0 -          $       1,738
======================================================================================================================

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITY:

  Conversion of long-term debt to common stock                                     $      - 0 -           $    439,618
======================================================================================================================
</TABLE>




                                      The accompanying notes should be read in
                                      conjunction with the financial statements

04/25/00

                                                                             F-5
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.   BASIS OF
     PRESENTATION:            On August 23, 1999, Transformation Processing Inc.
                              (debtor-in-possession) (the "Company") filed a
                              Notice of Intent to seek reorganization under the
                              Bankruptcy and Insolvency Act of Canada with the
                              Superior Court of Justice for the Province of
                              Ontario (the "Bankruptcy Act"). Under the
                              Bankruptcy Act, certain claims against the Company
                              in existence prior to the filing of the notice are
                              stayed while the Company continues business
                              operations as debtor-in-possession. These claims
                              are reflected in the July 31, 1999 balance sheet
                              as "liabilities subject to compromise." Additional
                              claims (liabilities subject to compromise) may
                              arise subsequent to the filing date resulting from
                              the rejection of executory contracts, including
                              leases, and from the determination by the court
                              (or agreed to by parties in interest) of allowed
                              claims for contingencies and other disputed
                              amounts. Upon filing under the Bankruptcy Act, the
                              Company's principal business activities ceased.

                              On November 25, 1999, the Company's proposal in
                              bankruptcy was approved by the court. The proposal
                              was made only to the preferred and unsecured
                              creditors. The proposal basically stipulates that
                              a pool of funds, up to $300,000, will be available
                              for distribution to the unsecured creditors, after
                              deducting payments to preferred creditors,
                              consisting of crown claims, employee claims and
                              landlord's claim. Out of the remaining funds, the
                              unsecured creditors will be paid in full on the
                              first $2,000 of their claims, $0.50 per $1.00 of
                              their claim between $2,001 and $5,000, and up to
                              $0.10 per $1.00 of their claim thereafter. These
                              amounts are in Canadian dollars.

                              The Company anticipates successfully complying
                              with the proposal and intends to file for a court
                              order affirming the compliance in May or June
                              2000.

                              The accompanying financial statements have been
                              prepared assuming that the Company will continue
                              as a going concern. Continuation of the Company as
                              a going concern and realization of its assets and
                              liquidation of its liabilities are dependent upon,
                              among other things, the formulation of a confirmed
                              plan of reorganization, which may result in
                              significant adjustments and reclassifications in
                              the amounts reflected as assets, liabilities and
                              stockholders' deficiency in the accompanying
                              financial statements, and the ability to maintain
                              adequate financing along with the achievement of
                              profitable operations.


2.    PRINCIPAL               The Company was an information technology company
      BUSINESS                that developed and marketed software and services
      ACTIVITY AND            that enabled companies worldwide to automatically
      SIGNIFICANT             migrate their application programs and data from
      ACCOUNTING              legacy systems to open systems and client/server
      POLICIES:               environments. The Company expanded its operations
                              from providing legacy code migration services to
                              three lines of business; client/server migration,
                              year 2000 and groupware services. For the periods
                              ended October 31, 1999 and 1998, all operations of
                              the Company were conducted in Canada. At October
                              31, 1999, all of the Company's assets are located
                              in Canada. On August 23, 1999, with the Company's
                              bankruptcy filing, the Company's principal
                              business activities ceased.

                              The Company was considered to be in the
                              development stage through July 31, 1998 because it
                              had been devoting substantially all of its efforts
                              toward establishing its business.

04/25/00

                                                                            F-14
<PAGE>


                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                              Revenue from fixed-price contracts was recognized
                              ratably over the period of performance in
                              accordance with the American Institute of
                              Certified Public Accountants' Statement of
                              Position 91-1, SOFTWARE REVENUE RECOGNITION.
                              Revenue from customer training, technical support
                              and other services was recognized as the service
                              was performed. The Company provided technical
                              support at no charge for the first 90 days and,
                              under certain circumstances, at no charge if
                              certain other fees were current. Revenue from the
                              sale of deployment product licenses was recognized
                              after installation of the product.

                              Property and equipment was recorded at cost.
                              Depreciation was provided for by the straight-line
                              method over the estimated useful lives of the
                              related assets.

                              The preparation of financial statements in
                              conformity with generally accepted accounting
                              principles requires the use of estimates by
                              management affecting reported amounts of assets
                              and liabilities and revenue and expenses and the
                              disclosure of contingent assets and liabilities.
                              Actual results could differ from these estimates.

                              Basic loss per share is based on the
                              weighted-average number of shares of common stock
                              outstanding during the periods. Fully diluted per
                              share amounts are not presented because the effect
                              would be antidilutive. The prior-year loss per
                              share was unaffected by the adoption of Statement
                              of Financial Accounting Standards ("SFAS") No.
                              128, EARNINGS PER SHARE.

                              Management does not believe that any recently
                              issued, but not yet effective, accounting
                              standards if currently adopted would have a
                              material effect on the accompanying financial
                              statements.

                              The Company's functional currency is the Canadian
                              dollar. Balance sheet accounts are translated into
                              U.S. dollars using current exchange rates in
                              effect at the balance sheet date and revenue and
                              expense accounts are translated using an average
                              exchange rate for the period. The gains and losses
                              resulting from translation are included in
                              stockholders' deficiency.

                              Due to the nature of the Company, the
                              convertibility feature, interest rates and
                              repayment terms, the estimated fair value of the
                              Company's long-term debt approximates its carrying
                              amount.



04/25/00
                                                                            F-14
<PAGE>
<TABLE>
<CAPTION>

                                                                                        TRANSFORMATION PROCESSING INC.
                                                                                                (DEBTOR-IN-POSSESSION)

                                                                                         NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                                                       <C>
3.    ACCOUNTS                Accounts payable and accrued expenses consist of the following:
      PAYABLE AND
      ACCRUED                 Accrued professional fees                                                   $     10,000
      EXPENSES:               Accrued damages on convertible debentures                                        350,000
                              Other (all amounts are less than 5% of current liabilities)                      535,166
----------------------------------------------------------------------------------------------------------------------
                                                                                                              $895,166
======================================================================================================================

 4. LONG-TERM                 Long-term debt consists of the following:
    DEBT:                     Installment loans                                                           $     10,160
                              Loan from Shareholder                                                            235,644
                              6% convertible debentures                                                      1,716,310
----------------------------------------------------------------------------------------------------------------------
                                                                                                             1,962,114
                              Less current portion                                                              10,160
----------------------------------------------------------------------------------------------------------------------
                                      LONG-TERM PORTION                                                     $1,951,954
======================================================================================================================
</TABLE>

                              The effect of foreign translation adjustments on
                              the Company's long-term debt is included in
                              cumulative foreign currency translation
                              adjustments in stockholders' deficiency in the
                              accompanying financial statements.

                              The Company is obligated under an installment loan
                              with a bank payable in monthly installments
                              aggregating $4,505 plus interest through December
                              31, 1999. The loan bears interest at the bank's
                              prime rate (8.75 at October 31, 1999) plus 2.5%.
                              The loan is collateralized by substantially all of
                              the Company's assets.

                              In September 1999, the Company received $235,644
                              from a stockholder for working capital purposes.
                              This loan is non-interest bearing and has no
                              specific maturity date.

                              On April 14, 1998, the Company issued two $500,000
                              6% convertible debentures totaling $1,000,000 for
                              cash, due April 14, 2000. Of the $1,000,000
                              convertible debentures, $550,000 are convertible
                              into common stock at 70% of the five-day average
                              bid price immediately preceding the date of
                              conversion and $450,000 of the debentures are
                              convertible into common stock at 80% of the
                              five-day average closing ask price immediately
                              preceding the date of conversion. In May 1998,
                              $300,000 of 6% convertible debentures were
                              converted into 266,092 shares of common stock and
                              in July 1998, $400,000 of 6% convertible
                              debentures were converted into 642,031 shares of
                              common stock. In August 1998, $37,500 of 6%
                              convertible debentures were converted into 81,674
                              shares of common stock; in September 1998, $57,500
                              of 6% convertible debentures were converted into
                              156,760 shares of common stock, and in October
                              1998, $84,000 of 6% convertible debentures were
                              converted into 439,072 shares of common stock. In
                              connection with the issuance of debentures, the
                              Company issued warrants to purchase 301,228 shares
                              of common stock. The fair value of $251,000
                              allocated to the warrants is being amortized over
                              the term of the debentures. The unamortized
                              portion is shown as a reduction in the carrying
                              value of the debentures as of October 31, 1999.

04/25/00
                                                                            F-14
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                              On May 21, 1998, the Company issued two $250,000
                              6% convertible debentures totaling $500,000 for
                              cash, due May 21, 2000. These debentures are
                              convertible into common stock at 80% of the
                              five-day average ask price immediately preceding
                              the date of conversion. In September of 1998,
                              $67,500 of 6% convertible debentures were
                              converted into 167,388 shares of common stock. In
                              connection with the issuance of debentures, the
                              Company issued warrants to purchase 50,200 shares
                              of common stock. The fair value of $52,500
                              allocated to the warrants is being amortized over
                              the term of the debentures. For the periods ended
                              October 31, 1999 and 1998, amortization of $0 and
                              $0, respectively, has been charged to operations
                              and included in interest expense in the
                              accompanying statement of operations. The
                              unamortized portion is shown as a reduction in the
                              carrying value of the debentures as of October 31,
                              1999.

                              On July 10, 1998, the Company issued two $250,000
                              6% convertible debentures totaling $500,000 for
                              cash, due July 10, 2000. These debentures are
                              convertible into common stock at 80% of the
                              five-day average ask price immediately preceding
                              the date of conversion. In October of 1998,
                              $146,000 of 6% convertible debentures were
                              converted into 727,657 shares of common stock. In
                              connection with the issuance of debentures, the
                              Company issued warrants to purchase 68,306 shares
                              of common stock. The fair value of $58,500
                              allocated to the warrants is being amortized over
                              the term of the debentures. For the periods ended
                              October 31, 1999 and 1998, amortization of $0 and
                              $0, respectively, has been charged to operations
                              and included in interest expense in the
                              accompanying statement of operations. The
                              unamortized portion is shown as a reduction in the
                              carrying value of the debentures as of October 31,
                              1999.

                              On September 22, 1998, the Company issued a
                              200,000 6% convertible debenture for cash, due
                              September 22, 2000. This debenture is convertible
                              into common stock at 80% of the five-day average
                              ask price immediately preceding the date of
                              conversion. In connection with the issuance of the
                              debenture, the Company issued warrants to purchase
                              87,720 shares of common stock. The fair value of
                              $28,249 allocated to warrants is being amortized
                              over the term of the debenture. For the period
                              ended October 31, 1999, amortization of $0 has
                              been charged to operations and included in
                              interest expense in the accompanying statement of
                              operations. The unamortized portion is shown as a
                              reduction in the carrying value of the debentures
                              as of October 31, 1999.

                              On October 6, 1998, the Company issued a $100,000
                              6% convertible debenture for cash, due October 6,
                              2000. This debenture is convertible into common
                              stock at 80% of the five-day average ask price
                              immediately preceding the date of conversion. In
                              connection with the issuance of the debenture, the
                              Company issued warrants to purchase 55,556 shares
                              of common stock. The fair value of $15,094
                              allocated to warrants is being amortized over the
                              term of the debentures. For the period ended
                              October 31, 1999 amortization of $0 has been
                              charged to operations and included in interest
                              expense in the accompanying statement of
                              operations. The unamortized portion is shown as a
                              reduction in the carrying value of the debentures
                              as of October 31, 1999.

                              On November 18, 1998, the Company issued a
                              $200,000 6% convertible debenture for cash, due
                              November 18, 2000. This debenture is convertible
                              into common stock at 80% of the five-day average
                              ask price immediately preceding the date of
                              conversion. In connection with the issuance of the
                              debenture, the

04/25/00
                                                                            F-14
<PAGE>


                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                              Company issued warrants to purchase 101,012 shares
                              of common stock. The fair value of $27,827
                              allocated to warrants is being amortized over the
                              term of the debenture. For the three month period
                              ended October 31, 1999 amortization of $0 has been
                              charged to operations and included in interest
                              expense in the accompanying statement of
                              operations. The unamortized portion is shown as a
                              reduction in the carrying value of the debentures
                              as of October 31, 1999.

                              On December 4, 1998, the Company issued a $250,000
                              6% convertible debenture for cash, due December 4,
                              2000. This debenture is convertible into common
                              stock at 80% of the five-day average ask price
                              immediately preceding the date of conversion. In
                              connection with the issuance of the debenture, the
                              Company issued warrants to purchase 84,746 shares
                              of common stock. The fair value of $35,621
                              allocated to warrants is being amortized over the
                              term of the debenture. For the three month period
                              ended October 31, 1999, amortization of $0 has
                              been charged to operations and included in
                              interest expense in the accompanying statement of
                              operations. The unamortized portion is shown as a
                              reduction in the carrying value of the debentures
                              as of October 31, 1999.

                              On January 14, 1999, the Company issued a $250,000
                              6% convertible debenture for cash, due January 14,
                              2001. This debenture is convertible into common
                              stock at 80% of the five-day average ask price
                              immediately preceding the date of conversion. In
                              connection with the issuance of the debenture, the
                              Company issued warrants to purchase 156,250 shares
                              of common stock. The fair value of $34,946
                              allocated to warrants is being amortized over the
                              term of the debentures. For the three month period
                              ended October 31, 1999, amortization of $0, has
                              been charged to operations and included in
                              interest expense in the accompanying statement of
                              operations. The unamortized portion is shown as a
                              reduction in the carrying value of the debentures
                              as of October 31, 1999.

                              On the date of issuance of each convertible
                              debenture, the Company allocated a portion of the
                              proceeds to the beneficial conversion feature of
                              the debenture which represented the intrinsic
                              value of that feature. That amount is calculated
                              as the difference between the conversion price and
                              the fair value of the common stock into which the
                              debentures are convertible, multiplied by the
                              number of shares into which the debentures are
                              convertible. The amount attributable to the
                              beneficial conversion feature, for the three month
                              periods ended October 31, 1999 and 1998,
                              aggregating $0 and $75,000, respectively, is
                              included in interest expense in the accompanying
                              statement of operations as the debentures became
                              convertible into common stock on issuance.

                              Each debenture provides the holder with certain
                              registration rights that require the Company to
                              register the common shares underlying each
                              convertible debenture within 90 days following the
                              closing date of the issuance. As of October 31,
                              1999, the Company was not in compliance with this
                              requirement. If the common shares are not
                              registered, the Company shall pay the debenture
                              holders damages in the amount of 2% of the amount
                              of outstanding debentures every 30 days. The
                              amount of damages accrued and charged to
                              operations at July 31, 1999 was estimated to be
                              $350,000 and is included in accounts payable and
                              accrued expenses in the accompanying balance
                              sheet.

                              The fair value of each warrant is estimated on the
                              date of issuance using the Black-Scholes
                              option-pricing model with the following
                              weighted-average

04/25/00
                                                                            F-14
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                              assumptions used for the three-month period ended
                              October 31, 1999: expected volatility of 1.93%;
                              risk-free interest rate of 5.6%; and expected
                              lives of two years.

 5.    COMMITMENTS            The Company was obligated under a noncancelable
       AND                    operating lease for office space expiring in
       CONTINGENCIES:         October 2000. Approximate minimum future payments
                              under these leases were payable as follows:

                              Year ending July 31,

                                       2000                          $145,600
                                       2001                            36,400

--------------------------------------------------------------------------------
                                                                     $182,000
================================================================================

                              In conjunction with the Company's filing for
                              bankruptcy, it has abandoned this lease.
                              Accordingly, the Company has charged operations
                              for the future minimum payments and the liability
                              is included in accounts payable and accrued
                              expenses in the accompanying balance sheet.

                              The leases are subject to escalation for the
                              Company's proportionate share of increases in real
                              estate taxes and other operating expenses.

                              The Company entered into an agreement with an
                              entity whereby the entity will provide the Company
                              with public and investor relations services. Under
                              the terms of the agreement, the Company will issue
                              150,000 shares of common stock of the Company as
                              compensation for services. At October 31, 1999,
                              those services had not yet been provided.


6.    STOCKHOLDERS'           The Company is authorized to issue 5,000,000
      DEFICIENCY:             shares of preferred stock with rights and
                              preferences to be determined by the Company's
                              board of directors. As of October 31, 1999, no
                              shares of preferred stock have been issued.


                              On August 20, 1996, the Company issued 2,205,869
                              shares of common stock to the stockholders of
                              Samuel Hamann Graphix, Inc. in a transaction
                              accounted for as a reverse acquisition. As part of
                              the reverse acquisition the Company issued
                              1,888,000 shares of common stock to certain
                              consultants for services. These shares have been
                              valued at the fair value at the date of issuance
                              ($.81 per common share). Accordingly, the Company
                              recorded a charge to operations at the time of
                              issuance of $1,536,341. Certain share issuances
                              prior to the reverse acquisition were made by
                              Samuel Hamann Graphix, Inc. and the details of
                              consideration for the issuances were not known by
                              the Company. The Company has addressed the
                              situation by conducting an audit of issued and
                              outstanding shares of common stock. The Company is
                              auditing records received from prior management
                              reflecting shares issued, transferred or sold,
                              apparently without fair consideration to the
                              Company.

                              The Company issued stop transfer instructions as
                              of November 18, 1997 concerning approximately
                              1,844,000 shares of common stock and had
                              outstanding stop transfer instructions as of
                              October 31, 1998 concerning

04/25/00
                                                                            F-14
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                              approximately 1,055,000 shares of common stock.
                              These shares are part of the 1,888,000 shares of
                              common stock issued to the consultants discussed
                              in the preceding paragraph. The stop order
                              transfers remain in effect until the holders of
                              the shares of common stock are able to satisfy the
                              Company's concerns and/or demonstrate that the
                              current holders are holders in due course at which
                              time the stop orders are lifted on an individual
                              basis.


 7.    STOCK OPTIONS          The Company has outstanding warrants permitting
       AND STOCK              the holders to purchase shares of its common stock
       WARRANTS:              at prices ranging from $.46 to $1.99 per share.
                              The warrants have varying expiration dates to
                              January 14, 2001. Warrants to purchase 1,405,048
                              common shares were outstanding at July 31, 1999.
                              During the year ended July 31, 1998, warrants to
                              purchase 100,000 shares of common stock, which
                              were to expire, were extended. The extended
                              warrants provide for exercise prices ranging from
                              $.50 to $.80 per share. During the year ended July
                              31, 1999, warrants to purchase 485,314 common
                              shares were issued at prices ranging from $.32 to
                              $.59 per share.

                              During the year ended July 31, 1999, the Company
                              adopted an incentive stock option plan under which
                              options to purchase shares of common stock may be
                              granted to certain key employees. The exercise
                              price is based on the fair market value of such
                              shares as determined by the board of directors at
                              the date of the grant of such options.

                              In January 1999, the Company issued options to an
                              employee to purchase 50,000 shares of common stock
                              at an exercise price of $.27 per share, and are
                              exercisable for a ten-year period beginning
                              November 30, 1999.


                                                                            F-14
<PAGE>

<TABLE>
<CAPTION>

                                                                                        TRANSFORMATION PROCESSING INC.
                                                                                                (DEBTOR-IN-POSSESSION)

                                                                                         NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------------------------------------------------

                              A summary of the status of the Company's options
                              as of October 31, 1999 and 1998 is presented
                              below:

                              October 31,                                       1999                      1998
                              -------------------------------------------------------------------------------------

                                                                                    Weighted-               Weighted-
                                                                                     Average                Average
                                                                       Number of    Exercise   Number of    Exercise
                                                                        Shares        Price     Shares       Price
                              -------------------------------------------------------------------------------------
<S>                                                                      <C>       <C>         <C>          <C>
                              Outstanding at beginning of year           100,000   $.50
                              Granted                                     50,000    .27         100,000     $.50

                              ------------------------------------------------------------------------------------
                                     OUTSTANDING AT END OF YEAR          150,000   $.42         100,000     $.50
                              ====================================================================================

                              Options exercisable at year-end            100,000   $.50         100,000     $.50
                              ====================================================================================

                              Weighted-average fair value of
                               options granted during the year                     $.27                     $.44
                              ====================================================================================
</TABLE>


                              The following table summarizes information about
                              fixed stock options outstanding at October 31,
                              1999:
<TABLE>
<CAPTION>

                                                          OPTIONS OUTSTANDING                   OPTIONS EXERCISABLE
                                              -------------------------------------------    ----------------------
                                                               Weighted-
                                                                Average        Weighted-                   Weighted-
                                                               Remaining        Average                     Average
                               Exercise          Number       Contractual      Exercise        Number      Exercise
                                 Price         Outstanding       Life            Price       Exercisable     Price
                               ------------------------------------------------------------------------------------
<S>                           <C>                <C>              <C>         <C>               <C>            <C>
                              $.50               100,000          8.8         $.50              100,000        $.50
                              $.27                50,000         10.0          .27                  -          -
                              =====================================================================================
</TABLE>


04/25/00
                                                                            F-14
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

 8.    INCOME TAXES:          The Company recorded a deferred income tax asset
                              for the tax effect of net operating loss
                              carryforwards and the temporary difference between
                              the carrying amount and tax bases of certain
                              intangible assets, aggregating approximately
                              $3,500,000. In recognition of the uncertainty
                              regarding the ultimate amount of income tax
                              benefits to be derived, the Company has recorded a
                              valuation allowance of $3,500,000 at July 31,
                              1999.

                              The Company has a net operating loss carryforward
                              of approximately $6,700,000 available to offset
                              taxable income through the year 2014.


 9.    ADDITIONAL             The Company's records and the records of its
       INFORMATION:           transfer agent differ with respect to the number
                              of outstanding shares of the Company's common
                              stock. According to the transfer agent, the number
                              of shares of common stock outstanding is
                              approximately 31,000 shares greater than the
                              710,367 indicated by the Company's records. The
                              Company believes that its records are correct and
                              is in the process of resolving this difference.
                              The number of shares outstanding reflected in the
                              Company's financial statements does not include
                              these shares or any adjustment which might be
                              necessary to resolve this difference.


                              On February 18, 2000, the Company signed a letter
                              of intent to acquire the assets of
                              eAutoclaims.com, Inc. The letter of intent, which
                              is conditioned upon the negotiation and entering
                              of a definitive agreement, envisions that the
                              Company will spin off its existing business prior
                              to the acquisition.


                                                                            F-14
<PAGE>

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

The following discussion and analysis should be read in conjunction with the
Company's first quarter ended unaudited financial statements and notes thereto
dated October 31, 1999 and 1998.
FINANCIAL CONDITION

The following is a discussion of the material changes in financial condition
from July 31, 1999 to October 31, 1999.

Current assets at October 31, 1999 were $0 as compared to $33,949 at July 31,
1999. The basis for this decrease in current assets is as follows. Accounts
receivable totaled $0 at October 31, 1999 as compared to $33,949 at July 31. The
decrease was the result of the Company's aggressive collection of outstanding
receivables as of the year end and a discontinuation of revenue generation in
the quarter.

The Company recorded material changes to Accounts payable and accrued expenses.
Accounts payable at October 31, 1999 was $895,166 as compared to $1,023,028 at
July 31, 1999. The decrease is due to the Company's repayment of certain
Accounts payable and accrued expenses.

Deficit accumulated through October 31, 1999 totaled $(9,884,241) as compared to
$(7,812,254) at October 31, 1998. The discussion of losses incurred for the
periods are outlined in the Results of Operations below.

RESULTS OF OPERATIONS

The following is a discussion of the material change in results of operations
for the three-month periods ending October 31, 1999 and 1998.

NET LOSSES

For the quarters ended October 31, 1999 and 1998, the Company incurred net
losses of $141,252 and $727,165, respectively. Explanations of these results are
set forth below. The Company expects to continue to incur operating losses until
such time that the Company is acquired or operations are ceased.

REVENUE

For the quarter ended October 31, 1999 the Company recorded revenue of $0 as
compared to $191,069 for the quarter ended October 31, 1998. During the period
ended October 31, 1999, the Company had no revenue as it had ceased operations
in August 1999. Conversion Services, the Company's core business accounted for
$0 of gross revenue for the three-month period ended October 31, 1999, as
compared to $39,558 for the same period in 1998. GroupWare accounted for $0 of
gross revenue for the three-month period ended October 31, 1999, as compared to
$83,390 for the same period in 1998. Year 2000 accounted for $0 of gross revenue
for the three-month period ended October 31, 1999 as compared to $90,276 for the
same period in 1998.


EXPENSES

For the quarters ended October 31, 1999 and 1998, cost of consulting services
accounted for $0 and $16,392, respectively. During the period ended October 31,
1999, the Company had no cost of consulting services as it had ceased operations
in August 1999. Cost of software transformation services accounted for $0 of
total expenses for the quarter ended October 31, 1999. Comparatively, the
Company spent $151,433 for the quarter ended October 31, 1998.

Software development accounted for $0 of total expenses for the quarter ended
October 31, 1999. Comparatively, the Company spent $110,292 for the quarter in
1998.


<PAGE>

General and administrative expense accounted for $141,252 of expenses for the
quarter ended October 31, 1999. Comparatively, the Company spent $475,382 for
the quarter in 1998. The Company's general and administrative expenses consisted
primarily of salaries, rent, consulting fees, advertising and legal costs
associated with running a publicly traded company.

General and administrative

General and administrative costs consist of management and administrative staff,
professional services, office and occupancy costs. Significant costs are
attributed to the Company becoming a public company. This status will increase
audit and legal costs significantly. In relation to the Company becoming a
public company, the cost of corporate relations will also increase as quarterly
reports and other investor information is required.

Liquidity and Capital Resources

The Company has funded its activities through October 31, 1999 primarily from
the net proceeds of private placement of its securities and, to a lesser extent,
from cash flow from operations.

At October 31, 1999, the Company had an accumulated deficit of ($9,884,241),
current assets of $0 and current liabilities of $905,326. The Company did not
incur any additional long-term debt. The company has funded its activities to
October 31, 1999 primarily through private placements of securities and the
issuance of convertible debentures. A significant portion of the total
liabilities consists of convertible debt previously issued by the Company to
raise capital. The Company will continue to raise capital through these vehicles
to fund operating activities and other capital requirements. Failure to obtain
such equity capital could have a material adverse impact on the Company. There
can be no assurance that equity capital will be available to the Company on
acceptable terms or at all.

The Company has no current arrangements with respect to, or sources of,
additional financing, and it is not contemplated that its existing stockholders
will provide any portion of the Company's future financing requirements. There
can be no assurance that any additional financing will be available to the
Company on acceptable terms, or at all. The inability of the Company to obtain
financing when needed will have a material adverse effect on the Company.

<PAGE>

PART II- OTHER INFORMATION

ITEM 1   LEGAL PROCEEDINGS

         On August 23, 1999 the Company filed a Notice of Intent to seek
Reorganization under the Bankruptcy and Insolvency Act of Canada with the
Superior Court of Justice for the Province of Ontario. On November 25, 1999,
Transformation Processing Inc.'s Proposal in bankruptcy was approved by the
court. The Proposal was made only to the preferred and unsecured creditors. The
Proposal basically stipulates that a pool of funds up to $300,000 will be
available for distribution to the unsecured creditors, after deducting payments
to preferred creditors, consisting of crown claims, employee claims and
landlord's claim. Out of the remaining funds, the unsecured creditors will be
paid in full on the first $2,000 of their claims, CD$0.50 per CD$1.00 of their
claim between CD$2,001 and CD$5,000, and up to CD$0.10 per CD$1.00 of their
claim thereafter.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

[a]      Financial Data Schedule

[b]      Reports on Form 8-K.

         Incorporated by reference Report on Form 8-K dated August 25, 1999.


         In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                                  TRANSFORMATION PROCESSING INC.



Date     APRIL 25, 2000                           /S/ Paul Mighton
    -----------------------                       ------------------------------
                                                  Paul Mighton, President


                                       2