<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              --------------------


                                   FORM 10-KSB


                 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                    For the fiscal year ended July 31, 1999

                         Commission file number 0-23903

                         TRANSFORMATION PROCESSING INC.
                         ------------------------------
                 (Name of small business issuer in its charter)

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

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

 Issuer's Telephone Number, Including Area Code:                (416) 414-9450
 ----------------------------------------------                 --------------

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:  Common Shares,
                                                                $.025 par value


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


           Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained herein, and no disclosure will be
contained, to the best of the 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. /X/

           The issuer's net sales for its most recent fiscal year were $954,874.

           The aggregate market value of the 4,680,690 shares of voting stock
held by non-affiliates of the Registrant, as of April 14, 2000 when the closing
sale price was $5.50 per share, was $25,743,795 (assuming solely for purposes of
this calculation that all directors, officers and greater than 5% stockholders
of the Registrant are "affiliates").

           The number of shares outstanding of the issuer's common stock, par
value $.025 per share, as of April 14, 2000, was 4,810,367.
           Documents Incorporated by Reference:  Not Applicable.
           Exhibit Index is located on page 23
<PAGE>


<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

           In April 1996, Messrs. Paul G. Mighton, Gary G. McCann and Vladimir
Stepanoff (the "Founders") caused Transformation Processing Inc. ("TPI-Ontario")
to be incorporated under the laws of the Province of Ontario, Canada. The
purpose of TPI-Ontario was to provide computer related services using computer
software that incorporated software technology previously developed by Mr.
Stepanoff. In July 1996, Mr. Stepanoff assigned his rights to a copyright
covering that software technology to TPI-Ontario in exchange for a one-third
interest in TPI-Ontario. The Company then acquired the software marketing rights
and recorded them at the fair value of the shares of Common Stock and notes
issued to unrelated third parties, in order to obtain those rights from these
parties.

           On August 20, 1996 (the "Closing Date") the Founders, as holders of
all of the outstanding Common Stock of TPI-Ontario, entered into an agreement
with Samuel Hamann Graphix, Inc., a Nevada corporation ("SHG-Nevada"), whereby
the Founders exchanged their shares of TPI-Ontario for an aggregate of 9,442
shares of the Common Stock of SHG-Nevada. As a result of this transaction, which
was accounted for as a reverse acquisition (the "Reverse Acquisition"), TPI-
Ontario became a wholly owned subsidiary of SHG-Nevada and the Founders acquired
control of SHG-Nevada. On the date of the Reverse Acquisition, SHG-Nevada had
not conducted any business operations.

           SHG-Nevada was incorporated on August 7,1996 and had been formed for
the purpose of merging with and into Samuel Hamann Graphix, Inc.
("SHG-California"), a California corporation with publicly traded shares, with
SHG-Nevada as the surviving entity, in order to change the domicile of
SHG-California from California to Nevada (the "Merger"). On the Closing Date the
Founders were informed, and subsequent inquiry revealed, that although
SHG-California and SHG-Nevada had entered into an agreement and plan of merger,
dated August 14, 1996 (the "Merger Agreement"). The Merger Agreement stipulated
that the Merger would not be effective until approval of the Merger Agreement by
the parties and the filing of articles of merger with the Secretary of State of
the State of Nevada. While the Merger Agreement had apparently been approved by
both parties, the articles of merger had not been filed with the State of Nevada
nor had articles of merger been filed with the State of California, as
stipulated by California law. In order to effect the merger of TPI- Ontario into
SHG-Nevada, the Merger had to be completed by making the required filings. Those
filings were made in July 1997.


                                       -1-
<PAGE>

           In March 1997, SHG-Nevada amended its articles of incorporation to
change its name to Transformation Processing Inc. ("TPI" or the "Company"). In
February 1998, TPI merged its wholly-owned subsidiary, TPI-Ontario, into TPI
with TPI as the surviving entity. In June 1998, TPI finalized the merger with
SHG-California, merging it into TPI with TPI as the surviving entity.

           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.

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

           On February 18, 2000, the Company signed a letter of intent to
acquire the assets of eAutoclaims.com, Inc. ("eAuto"), a Delaware corporation,
headquartered in Palm Harbor, Florida. On April 24, 2000, the Company and
eAuto signed a Merger Agreement and Plan of Reorganization, pursuant to which
the Company will be acquired in a reverse merger by eAuto.

           This Form 10-KSB contains certain forward-looking statements that are
subject to significant risks and uncertainties. There are a number of important
factors that could cause actual results to differ materially from historical
results and results anticipated by the forward looking statements contained in
the following discussion. Such factors and risks include, but are not limited
to, the Company's ability to complete the acquisition of eAuto, eAuto's ability
to operate as a public company, its ability to use the Internet, intense
competition, price cutting and profit margins, dependence on key personnel, the
economic environment, the ability to develop, market, support and acquire new
computer-related services and products and the ability of the Company to manage
its growth.

           BUSINESS OF THE COMPANY

           The business described herein is the historical business of the
Company. If the Company completes its asset acquisition of eAutoclaims.com,
Inc., it is envisioned that these businesses will be spun off from the Company
and the Company will no longer participate in these types of businesses. See
eAUTOCLAIMS.COM ACQUISITION AND BUSINESS.

           CLIENT/SERVER MIGRATION SERVICES. The Company developed software for
the automatic migration of "legacy" computer application source code and data
used on past and current IBM "mid-range" computers (often referred to as
"minicomputers," as compared to desktop or microcomputers) to a format
compatible with a wide range of open "client/server" computing


                                       -2-
<PAGE>

systems from various manufacturers. A client/server system is a network
consisting of a "server" computer and one or more "client" computers in which
processing, data storage and accessibility to data bases are shared among the
individual computers comprising the network. The Company provided transformation
services, utilizing the Company's migration software, and support services to
end-users seeking to transform their closed proprietary systems to open
client/server systems.

           SERVICES OFFERED. The Company offered transformation services which
enabled companies to automatically migrate legacy application programs and data
to any open system environment, using technology which the Company believes to
be superior to that which is used in the emulation and conversion methods. The
Company's software disassembles existing application source code at the
operating system level, then automatically translates and reassembles the code
so as to be useable in an open system environment.

YEAR 2000 REMEDIATION SERVICES

           The Company offered Year 2000 remediation consulting and training
services to commercial and industrial end-users of mainframe and mid-range
computing systems. The Company targeted manufacturing companies and companies in
the financial, insurance and healthcare industries.

           SERVICES OFFERED. In March 1997, the Company decided to offer Year
2000 remediation services. The Company initially decided to offer "scan and
repair" services to companies requiring Year 2000 remediation services, as a
subcontractor to IT Vendors providing Year 2000 project management remediation
services. Such services were to be rendered commencing in September 1997 at a
scan and repair "factory" to be located at the Company's facility in
Mississauga, Ontario. The decision was also made not to develop a Year 2000
conversion toolset based on the Company's existing proprietary technology, but
to continuously search for, and seek to license, the best available Year 2000
software remediation tools. The Company observed that while there was no
shortage of Year 2000 software conversion tools, there was a significant demand
for the application of state-of-the-art project management methodologies that
permited Year 2000 conversion projects to be performed in the shortest possible
time, in some cases at a fixed cost, and with the least disruption to a
customer's continuing operations. Accordingly, the Company decided to offer a
full range of services, based largely on the project management methodology it
employed in providing client/server transformation services.



                                       -3-
<PAGE>

GROUPWARE SERVICES

           Groupware was a type of software designed to allow users on a
client/server network to use the same software and work on the same project at
the same time. Notes-Registered Trademark- ("Notes") was a groupware product of
Lotus Development Corporation, an IBM subsidiary ("Lotus"), that, among other
applications, allowed users to work on the same document and exchange electronic
mail. Notes permited the integration of information from desktop computer
applications, relational databases, legacy systems and the World Wide Web. Notes
contained an application development environment, a document database and
sophisticated messaging system which permited the development of custom
applications for improving business processes in areas such as product
development, customer service, sales and account management.

           BUSINESS STRATEGY. As described in eAUTOCLAIMS.COM ACQUISITION AND
BUSINESS, the Company has entered into an agreement to acquire eAutoclaims.com,
Inc. ("eAuto"). In the event that the merger is effected, it is envisioned that
the Company will no longer participate in such businesses.

BACKLOG

           Since the Company currently has no operations, it does not have a
backlog.

COMPETITION

           Since the Company currently has no operations, it does not have any
competition.

INTELLECTUAL PROPERTY

           In July 1996, TPI-Ontario acquired the intellectual property rights
for "IBM midrange migration tools" software from Vladimir Stepanoff, Vice
President-Technology and a director of the Company. All enhancements of such
software are wholly-owned by the Company.

           Prior to April 1, 1996, the Company's date of incorporation, Mr.
Stepanoff entered into an agreement with Raconix Corporation ("Raconix")
pursuant to which he granted certain rights in such technology. To obtain clear
title to such technology, as of the Closing Date, the Company issued 18,200
shares of Common Stock to Jaford Holdings Ltd. and 4,000 shares of Common Stock
and a promissory note in the principal amount of $72,500 to Innovations Ontario
Corp. (which companies had liens on such marketing rights) and 6,000 shares of
Common Stock and a promissory note in the principal amount of $116,000 to Ronald
Content as successor in interest to Raconix.

           The Company does not have any patents or registered copyrights to
protect its proprietary technology. In addition, none of the trade or service
marks utilized by the Company are registered with any United States or foreign
trademark registry. The Company employs various methods to


                                       -4-
<PAGE>

protect its technology and the associated documentation including
confidentiality agreements with its employees and license agreements with its
customers and strategic partners. Such methods may not afford adequate
protection and there can be no assurance that others will not independently
develop such technology or software incorporating technology that significantly
out performs the Company's software.

EMPLOYEES

           The Company has 1 employee, who is part-time, Paul Mighton, the
Company's President.

eAUTOCLAIMS.COM, INC. ACQUISITION AND BUSINESS

           The Company has entered into an agreement to acquire eAutoclaims.com,
Inc. ("eAuto"). In the event that the merger is effected, it is envisioned that
the Company will no longer participate in the businesses described above. The
following is a description of the business of eAuto.

           eAuto was formed in December 1999. eAuto is a business to business
e-commerce company that utilizes the Internet to lower the overall costs of
automotive repair paid by insurance companies. eAuto is creating an online
digital automotive maintenance organization industry in the $60 billion market
segment of non-standard auto collision repair. eAuto intends to establish itself
as a Application Service Provider ("ASP") for the automobile insurance industry,
providing a back end infrastructure that links to thousands of collision repair
shops and/or support facilities in a Preferred Provider Network ("PPN"). eAuto
offers a cost effective Bricks to Clicks(C) solution for the processing and
ultimate repair of damaged vehicles filed as insured auto claims. eAuto
generates revenue from administrative fees and rebates earned by processing
collision work through its system.

           eAuto also participates in the corporate automobile fleet management
business. The fleet management business exists out of a desire of large
corporations to self insure their collision repair claims on their captive
automobile fleets. Large corporations have found that "middleman" insurance
companies charge premiums beyond the cost of self insurance. eAuto earns fees
and rebates on repairs done by affiliated collision shops. eAuto currently has
approximately 5,000 fleet vehicles under contract.

           COMPETITION:

           Competition comes from independent adjusters and fleet management
services. Although none of the competing companies offer the client a web based
product that is customized to appear as the clients own proprietary site. eAuto
is the only provider of this service who takes on the role of an Application
Service Provider.


                                       -5-

<PAGE>

           eAuto products perform in virtually all situations. eAuto believes
that the ability to lower paid claim costs with full capability on any form of
insurance claim is unique to eAuto's products. The ability to close the file
within a minimum number of working days is unique to this product, and research
indicates its performance is equivalent to anything else on the market today.
With the completion of the company's core web site, the company believes that
this turnaround time will be cut to a four-day average.

EMPLOYEES:

KEY EMPLOYEES:

ERIC SEIDEL, PRESIDENT/CEO

Prior to forming eAuto, Mr. Seidel served as co-founder of First American AMO
and developed the sales and marketing strategy for the company. Sold First
American AMO's service and developed the sales training program for all new
sales people.

Mr. Seidel's professional experience includes many different areas in the
Finance, Insurance and Sales Marketing industries. He serves as a Director of
the privately held International Training Corporation.

Mr. Seidel served as the National President of United States Junior Chamber of
Commerce, a 100,000+ member organization of young professionals aged 21-39.

JEFFREY D. DICKSON, DIRECTOR

Prior to joining eAuto, Mr. Dickson served as chief executive officer of First
American AMO.

Mr. Dickson's professional experience includes many different areas of the
Finance, Insurance, and Automotive Industries.

He has served as Executive Vice President of the American Bankers Insurance
Group, Miami, Florida; President of Insurance America; and President of Interloc
Corp. of Largo, Florida.

TERESA MCSHERRY, VICE PRESIDENT, SALES

Prior to joining eAuto, Miss McSherry has served as the Regional Vice President
for First American AMO in their Western Division for two years.

Miss McSherry was also responsible for all fleet sales. As Fleet Vice President,
Terri trained all sales people in the fleet market.

GAVER POWERS, VICE PRESIDENT, INFORMATION & TECHNOLOGY

Mr. Powers is overseeing and participating in the development of the new
applications used by eAuto.


                                       -6-
<PAGE>

Mr. Powers has spent 21 years working on the NASA Space Shuttle Fleet for
Rockwell International; Lockheed Martin and the United Space Alliance, with his
most recent experience being in the area of Program Management where he served
as the Vehicle Operations Chief / Assistant Operations Chief for the orbiter
Discovery.

CRYSTAL BUTTERWORTH, OPERATIONS MANAGER

Ms. Butterworth has over 15 years of experience in the Insurance Industry, most
recently with the Hartford Insurance Company. She has been in the supervisory
management capacity for most of her career. She has an Adjusting License and
also holds a Senior Claims Law Associate designation (SCLA).

           eAuto employs a total of 23 employees. eAuto believes that its
relations with its employees are good.

ITEM 2. DESCRIPTION OF PROPERTY

           The Company currently neither leases nor owns any properties.

ITEM 3: 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.

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           None.


                                       -7-
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

           The Company's Common Stock is traded on the OTCBB under the symbol
"TPII". The following table sets forth, the high and low bid prices of the
Common Stock for the periods shown as reported by the National Quotation Bureau.
The bid prices quoted on the OTCBB reflect inter-dealer prices without retail
mark-up, mark-down or commission and may not represent actual transactions.
Except for the prices reflected for the second quarter of Fiscal 2000, November
1, 1999 to January 31, 2000, all prices reflect the prices before the 1 for 25
reverse stock split effected October 1999.

<TABLE>
<CAPTION>
                                                                         HIGH BID              LOW BID
                                                                         --------              -------
           <S>                                                            <C>                   <C>
           FISCAL YEAR ENDED JULY 31, 1998
           First Quarter (August 1, 1997 to October 31, 1997)               0.75                0.30
           Second Quarter (November 1, 1997 to January 31, 1998)            0.75                0.38
           Third Quarter (February 1, 1998 to April 30, 1998)               2.19                0.28
           Fourth Quarter (May 1, 1998 to July 31, 1998)                    1.75                0.75

           FISCAL YEAR ENDED JULY 31, 1999
           First Quarter (August 1, 1998 to October 31, 1998)               0.78                0.63
           Second Quarter (November 1, 1998 to January 31, 1999)           11.25                5.50
           Third Quarter (February 1, 1999 to April 30, 1999)               7.75                2.25
           Fourth Quarter (May 1, 1999 to July 31, 1999)                    4.25                1.50

           FISCAL YEAR ENDED JULY 31, 2000
           First Quarter (August 1, 1999 to October 31, 1999)               4.12                0.22
           Second Quarter (November 1, 1999 to January 31, 2000)            3.06                1.50
</TABLE>

           On April 14, 2000, there were approximately 30 holders of record of
Common Stock.

           Since the Company's inception it has not paid any dividends on its
Common Stock and does not anticipate paying such dividends in the foreseeable
future.

             REVERSE STOCK SPLIT

           On October 6, 1999, the Board of Directors of the Company authorized
a 1 for 25 reverse stock split for the Company's common stock. The split was
effected October 15, 1999, upon the filing of the amendment to the certificate
of incorporation with the State of Nevada.


                                       -8-
<PAGE>

             RECENT SALE OF UNREGISTERED SECURITIES.

           The following discussion includes certain information as to
transactions which occurred prior to the current Management's assumption of
control of the Registrant on the Closing Date and is based on information which
Management believes to be reasonably accurate, but not all of which does it have
direct knowledge. Notwithstanding the above, TPI is responsible for the
information contained in this Form 10-KSB. All share amounts are adjusted to
take into account the 1 for 25 reverse stock split that occurred in October
1999.

           On August 20, 1996, the Closing Date, in satisfaction of gross
proceeds of $155,000 received by, and certain services rendered, to TPI-Ontario,
in the period April 11 to July 25, 1996, the Registrant issued 6,400 shares of
Common Stock to 15 investors (6,200 shares were issued for $25.00 per share and
200 shares were issued in exchange for consulting services and a technical
review of TPI-Ontario's conversion software). TPI-Ontario received such gross
proceeds pursuant to a private offering prior to the Closing Date. The 6,400
shares of Common Stock were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D promulgated under the Act.

           On the Closing Date, Samuel Hamann Graphix Inc. ("SHGI") issued
197,442 shares of Common Stock to Joter and 38,600 shares of Common Stock to
DTL, in exchange for common shares of TPI-Ontario, which common shares were
issued as of April 1, 1996. Joter and DTL, which are controlled by Messrs.
Mighton, McCann and Stepanoff, executive officers and directors of the
Registrant, acquired the common shares of TPI-Ontario in consideration for
certain rights in technology transferred to, and certain services rendered to,
TPI-Ontario prior to the Closing Date, which shares, for accounting purposes are
deemed to have been issued in exchange for nominal consideration as "founder's
shares". Such shares were issued to management in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended
(the "Act").

           Prior to the Closing Date, SHGI issued 29,619 shares of Common Stock,
which remain outstanding. The Registrant has no records concerning the
transactions in which such shares were issued or the consideration received by
the Company in respect of such issuances.

           Prior to the Closing Date (from August 9 through August 19, 1996),
SHGI issued, pursuant to a private offering, an aggregate of 58,600 shares of
Common Stock in consideration for gross proceeds of $14,654 received by SHGI
from investors. These transactions were not disclosed to current management of
the Registrant prior to or on the Closing Date. Present management is not aware
of the exemption relied on for the issuance of such shares; however, Samuel
Hamann Graphix Inc. filed a Form D dated August 16, 1996 claiming exemption
under Rule 504. Management believes that SHGI relied on Rule 504 of Regulation D
under the Act in issuing such securities.

           On the Closing Date, SHGI issued 75,520 shares of Common Stock to
certain consultants in consideration for certain services rendered in connection
with the reverse acquisition. Current management of the Registrant is uncertain
of the exemption relied on for the issuance of such shares,


                                       -9-
<PAGE>

but believes prior management relied on the exemption from registration provided
by Section 4(2) of the Act.

           On the Closing Date, SHGI issued 18,200 shares of Common Stock to
Jaford Holdings Ltd., 4,000 shares of Common Stock to Innovations Ontario Corp.
and 6,000 shares of Common Stock to Ronald Content, in consideration for the
release by such companies and individual of certain claims with respect to
marketing rights as to the technology previously transferred to the Registrant
by Vladimir Stepanoff, an executive officer and director of the Registrant.
Prior to the incorporation of TPI-Ontario, Mr. Stepanoff had granted marketing
rights with respect to such technology to Raconix, of which Mr. Content was the
sole shareholder. Ronald Content is a sophisticated investor, who was involved
in the operations of the Registrant and received the shares for investment. The
shares were issued in reliance on the exemption from registration provided by
Section 4(2) of the Act. See Item 1, "Description of Business -- Intellectual
Property."

           On November 25, 1996, the Registrant issued options to purchase 600
shares of Common Stock at an exercise price of $49.75 expiring on November 27,
1997, to a public relations firm, in consideration for certain services. The
options were issued in reliance on the exemption from registration provided by
Section 4(2) of the Act. The holder of the option, as the Registrant's public
relations firm, was fully familiar with the Registrant's operations and is a
sophisticated investor.

           On August 23, 1996, Registrant issued 20,000 units to Mayfair
Advisory Group Limited in consideration for gross proceeds of $500,000. Each
unit consisted of 1/25th share of Common Stock and a Common Stock purchase
warrant (the "Warrants"). When issued, the Warrants had a per share exercise
price of $25.00, were exercisable for a period of two years, commencing 30 days
after the closing of the offering, and were redeemable on 20 days prior written
notice at a redemption price of $.125 per Warrant. Pursuant to an amendment to
the terms of the Warrants dated August 26, 1998, the Warrants will not be
exercisable until a registration statement has become effective covering the
Common Stock issuable upon the exercise thereof; the term of such Warrants has
been extended through six months following the effective date of such
registration statement, and the exercise price has been reduced to $20.00 per
share of Common Stock, subject to certain adjustments in the event the market
for the Company's Common Stock is less than $20.00 at the time of the exercise,
but in no event shall the exercise price be reduced below $12.50 per share. The
Common Stock and the Warrants were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D under the Act.

           On January 27, 1997, Registrant issued 8,333 shares of Common Stock
to Olive Investments, in consideration for gross proceeds of $150,000. These
shares were issued in reliance on the exemption from registration provided by
Rule 504 of Regulation D under the Act.

           On March 6, 1997, Registrant issued 20,041 shares of Common Stock to
Thomson Kernaghan & Co., Ltd. ("Thomson Kernaghan") in consideration for gross
proceeds of $375,000. These shares were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D under the Act.


                                      -10-
<PAGE>

           On June 27, 1997, Registrant issued 4,000 units to Pinetree Capital
Corp. ("Pinetree") in consideration for gross proceeds of $70,000. The units
were issued to Pinetree pursuant to a Subscription Agreement by and between TPI
and Pinetree (the "Subscription Agreement") by which Pinetree subscribed for a
minimum of 28,000 units and a maximum of 40,000 units. The Subscription
Agreement was later amended to lower the minimum to 4,000 Units. Pinetree
purchased the foregoing securities for its own account. Each unit consisted of
one share of Common Stock and a common stock purchase warrant expiring two years
from the date of issuance, and exercisable at $25.00 per share during the first
year and $37.50 per share during the second year. These securities were issued
in reliance on the exemption from registration provided by Rule 506 of
Regulation D under the Act.

           On August 1, 1997, Registrant sold to Thomson Kernaghan an 8%
convertible subordinated debenture due July 31, 1998 in the principal amount of
$108,750 the "Debenture" for a gross purchase price of $108,750. The Debenture
was converted, on August 28, 1997, into 7,920 shares of Common Stock at the
conversion rate of $13.75 per share. The Debenture was issued in reliance on the
exemption from registration provided by Rule 504 of Regulation D, under the Act
and the shares of Common Stock issued on conversion of the Debenture were issued
in reliance on the exemption from registration provided by Section 3(a)(9) of
the Act.

           On September 4, 1997, Registrant issued 23,560 shares of Common Stock
to Thomson Kernaghan in consideration for gross proceeds of $125,000 ($5.25 a
share). These shares were issued in reliance on the exemption from registration
provided by Rule 504 of Regulation D under the Act.

           On September 26, 1997, Registrant issued 16,000 shares of Common
Stock to Thomson Kernaghan in consideration for gross proceeds of $200,000
($12.50 a share). These shares were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D under the Act.

           On October 23, 1997, Registrant issued 16,000 shares of Common Stock
to Thomson Kernaghan in consideration for gross proceeds of $200,000 ($12.50 a
share). These shares were issued in reliance on the exemption from registration
provided by Rule 504 of Regulation D under the Act.

           On October 31, 1997, Registrant issued 4,000 shares of Common Stock
to Thomson Kernaghan in consideration for gross proceeds of $50,000 ($12.50 a
share). These shares were issued in reliance on the exemption from registration
provided by Rule 504 of Regulation D under the Act.

           On December 10, 1997, Registrant issued 39,911 shares of Common Stock
to Thomson Kernaghan in consideration for gross proceeds of $220,000 ($5.50 a
share). These shares were


                                      -11-
<PAGE>

issued in reliance on the exemption from registration provided by Rule 504 of
Regulation D under the Act.

           On January 26, 1998, Registrant issued 17,778 shares of Common Stock
to Thomson Kernaghan in consideration for gross proceeds of $100,000 ($5.50 a
share). These shares were issued in reliance on the exemption from registration
provided by Rule 504 of Regulation D under the Act.

           On April 14, 1998, the Registrant sold 6% Convertible Debentures, due
April, 2000, in the aggregate principal amount of $1,000,000 and issued warrants
to purchase 12,049 shares of Common Stock for gross proceeds of $1,000,000 (of
which $550,000 had a conversion rate of 70% of the 5-day average closing bid
price and $450,000 had a conversion rate of 80% of the 5-day average closing
asked price) as follows: Canadian Advantage LP ($275,000); Dominion Capital Fund
($275,000); Fetu Holdings ($250,000); and Livingstone Asset Management
($200,000). Each of the above claim the status as accredited investors as
organizations described in section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities purchased, with total
assets in excess of $5,000,000. Each purchased its debentures and warrants for
investment. Canadian Advantage LP ("Canadian") was issued warrants to purchase
660 shares of Common Stock at $37.50 per share through April 14, 2000 and
warrants to purchase 2,654 shares of Common Stock at $11.40 per share through
April 14, 2000; Dominion Capital Fund ("Dominion") was issued a like number of
identical warrants; Fetu Holdings ("Fetu") was issued like warrants to purchase
600 shares at $37.50 and 2,412 shares at $11.40, and Livingstone Asset
Management ("Livingstone") was issued like warrants to purchase 480 shares at
$37.50 and 1,930 shares at $11.40. From May 14, 1998 through October 26, 1998,
the aggregate principal amount of $1,000,000 plus interest was converted into
77,409 shares of Common Stock as follows: Dominion and Canadian each converted
$275,000 plus interest of Debentures into 21,287 shares of Common Stock, Fetu
converted $250,000 plus interest into 19,352 shares of Common Stock and
Livingstone converted $200,000 plus interest into 15,482 shares of Common Stock.

           On May 21, 1998, the Registrant sold to Canadian 6% convertible
debentures due May 21, 2000 in the aggregate principal amount of $500,000.
Warrants to purchase 2,008 shares of Common Stock exercisable at the price of
$49.75 through May 21, 2000, were also issued to Canadian. The debentures and
warrants were issued in reliance upon the exemption from registration provided
by Section 4(2) of the Securities Act and Rule 506 of Regulation D. On October
27, 1998 and October 29, 1998 an aggregate of $150,000 of debentures plus
interest was converted into 29,887 shares of Common Stock.

           On July 10, 1998 the Registrant sold to each of Canadian and
Advantage (Bermuda) Fund 6% convertible debentures due July 9, 2000 in the
amount of $250,000 for an aggregate of $500,000. Warrants to purchase 1,366
shares of Common Stock exercisable at the price of $36.60 through July 9, 2000,
were also issued to each of Canadian and Advantage (Bermuda) Fund. The
debentures and


                                      -12-
<PAGE>

warrants were issued in reliance upon the exemption from registration provided
by Section 4(2) of the Act and Rule 506 of Regulation D.

           On September 22, 1998 the Registrant sold to Fetu Holdings 6%
convertible debentures due September 22, 2000 in the aggregate principal amount
of $200,000. Warrants to purchase 3,509 shares of common stock exercisable at
the price of $11.40 through September 22, 2000, were also issued. The debentures
and warrants were issued in reliance upon the exemption from registration
provided by Section 4(2) of the Act and Rule 506 of Regulation D.

           On October 6, 1998, the Registrant sold 6% convertible debentures,
due October 6, 2000, in the aggregate principal amount of $100,000 and issued
warrants to purchase 2,222 shares of common stock for gross proceeds of $100,000
to: Canadian Advantage LP ($25,000); Dominion Capital Fund ($25,000); Fetu
Holdings ($25,000); and Advantage (Bermuda) Fund ($25,000). Each of the above
were also issued warrants to purchase 556 shares of common stock at $9.00 per
share through October 6, 2000. The debentures and warrants were issued in
reliance upon the exemption from registration provided by Section 4(2) of the
Act and Rule 506 of Regulation D.

           On November 18, 1998, the Registrant sold 6% convertible debentures,
due November 18, 2000, in the aggregate principal amount of $200,000 and issued
warrants to purchase 4,040 shares of common stock for gross proceeds of $200,000
to: Canadian Advantage LP ($50,000); Dominion Capital Fund ($50,000); Fetu
Holdings ($50,000); and Advantage (Bermuda) Fund ($50,000). Each of the above
were also issued warrants to purchase 1,010 shares of common stock at $9.90 per
share through November 18, 2000. The debentures and warrants were issued in
reliance upon the exemption from registration provided by Section 4(2) of the
Act and Rule 506 of Regulation D.

           On December 3, 1998, the Registrant sold 6% Convertible Debentures,
due December 2, 2000, in the aggregate principal amount of $250,000 and issued
warrants to purchase 3,390 shares of Common Stock for gross proceeds of $250,000
to: Advantage (Bermuda) Fund ($75,000); Canadian Advantage LP ($75,000); and
Dominion Capital Fund ($100,000). The above were also issued warrants in the
amounts of 1,017, 1,017 and 1,356, respectively, to purchase shares of Common
Stock at $14.75 per share through December 3, 2000. The debentures and warrants
were issued in reliance upon the exemption from registration provided by Section
4(2) of the Act and Rule 506 of Regulation D.

           On January 13, 1999 the Registrant sold to Advantage (Bermuda) Fund
6% Convertible Debentures due January 14, 2001 in the aggregate principal amount
of $125,000. Warrants to purchase 3,125 shares of Common Stock exercisable at
the price of $8.00 through January 14, 2001, were also issued. The debentures
and warrants were issued in reliance upon the exemption from registration
provided by Section 4(2) of the Act and Rule 506 of Regulation D.

           On January 13, 1999 the Registrant sold to Dominion Capital Fund 6%
Convertible Debentures due January 13, 2001 in the aggregate principal amount of
$125,000. Warrants to purchase 3,125 shares of Common Stock exercisable at the
price of $8.00 through January 14, 2001,


                                      -13-
<PAGE>

were also issued. The debentures and warrants were issued in reliance upon the
exemption from registration provided by Section 4(2) of the Act and Rule 506 of
Regulation D.

           Canadian Advantage Limited Partnership rescinded, and TPI accepted,
the conversion of an aggregate of $57,500 plus interest of debentures and
returned 8,069 shares of common stock. The debentures were converted in error
and were in excess of 4.9% of TPI's outstanding common stock, which violated the
terms of the debentures. Such transaction was effected in April 1999.

           The Debentures, the warrants and the Common Stock issued on
conversion of the Debentures were issued in reliance upon the exemption set
forth in Sections 4(2) of the Act and Rule 506 thereunder. Such securities were
purchased for investment and not with a view to the public distribution thereof.
The Common Stock issued upon conversion of the Debentures were further issued in
reliance on Section 3(a)(9) of the Act. In both the issuance of the Debentures
and the Common Stock the certificates representing such securities bear a legend
preventing resale in the absence of registration with the Commission or an
exemption therefrom..

           On October 6, 1999, the Board of Directors of the Company authorized
a 1 for 25 reverse stock split for the Company's common stock. The split was
effected October 15, 1999, upon the filing of the amendment to the certificate
of incorporation with the State of Nevada.

           In connection with the merger and plan of reorganization with eAuto,
it is anticipated that the outstanding Debentures and warrants will be converted
into 4,100,000 shares of common stock of the Company.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

           The following discussion and analysis should be read in conjunction
with the Company's audited financial statements as of July 31, 1999 and July 31,
1998 and the notes thereto, all of which financial statements are included
elsewhere in this Form 10-KSB.

RESULTS OF OPERATIONS

           Results of Operations for the period April 1, 1996 (date of
incorporation) to July 31, 1996 were not material. Accordingly, the Company has
reported results of operations for the 16-month period from April 1, 1996 to
July 31, 1997 (the "1997 Fiscal Period"). Operations actually commenced in
October of 1996 when the Company moved into a permanent facility.

NET LOSSES

           For the year ended July 31, 1999 (the "Fiscal 1999"), the Company
incurred a net loss of $2,657,900. For the 1998 Fiscal Period the Company
incurred a net loss of $4,300,553. Explanations of these results are set forth
below. The Company expects to continue to incur


                                                                 -14-
<PAGE>

operating losses until such time, if ever, as it generates substantial revenues
from the performance of its service offerings.

REVENUE

           For Fiscal 1999 and the 1998 Fiscal Period the Company's revenue were
$954,874 and $877,198, respectively. During Fiscal 1999, the Company saw
continuing gains in the Groupware business and recording of its first Year 2000
revenue. Conversion Services, the Company's core business, accounted for
$238,398, or 25%, of gross revenue during Fiscal 1999, as compared to $96,492,
or 11%, for the 1998 Fiscal Period.

           During the autumn of 1996, the Company positioned itself to market
transformation services utilizing the Company's client/server migration
software, targeting the IBM mid-range computer market. In this connection, the
Company planned to enhance its client/server migration software in the 1997
Fiscal Period. Such plan received less attention during such period as the
Company directed its attention to the opportunity presented by the demand for
the Year 2000 remediation services. Because of the scope of the Year 2000
problem and the significant dollar volumes which were expected to be expended by
users of information technology to remediate the problem, the Company shifted
its marketing and sales efforts to promoting Year 2000 remediation services. The
Company has negotiated relationships with a vendor of Year 2000 software
conversion tools and a company providing computer hardware assessment services
to support these efforts. By April 1997, the Company was offering Year 2000
remediation services. During Fiscal 1998, approximately $385,967, or 44%, of the
Company's revenues were derived from Year 2000 services.

EXPENSES

           For Fiscal 1999 and the 1998 Fiscal Period, cost of consulting
services accounted for $836,202 and $1,314,356, respectively.

           Cost of software transformation services accounted for $182,854 and
$1,107,208 of total expenses for Fiscal 1999 and the 1998 Fiscal Period,
respectively.

           Software development costs accounted for $0 and $35,197 during Fiscal
1999 and the 1998 Fiscal Period, respectively. Software development costs
decreased during Fiscal 1999 due to the Company's shift in focus to the selling
and reselling of completed products.

           General and administrative expense accounted for $2,031,598 of total
expenses for Fiscal 1999 compared to $1,871,105 for the 1998 Fiscal Period.
General and administrative expenses consisted primarily of salaries and
benefits, consulting fees, travel, investor and public relations, office and
equipment rents, professional services, office and telephone expenses. During
Fiscal 1999, the Company incurred significant costs related to the registration
of its Common Stock under Section 12 of the Securities Exchange Act of 1934, as
amended.


                                      -15-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

           The Company has funded its activities during fiscal 1999 and 1998
primarily from the net proceeds of private placements of its securities and, to
a lesser extent, from cash flow from operations and the proceeds of two bank
loans. These loans were personally secured by certain shareholders and were
repaid by those shareholders subsequent to the Fiscal 1999 year end.

           At July 31, 1999, the Company had total current assets of $33,949,
total liabilities of $2,749,266 and no available cash. During Fiscal 1998, the
Company issued convertible debentures with two private placement investors
sponsored by Thomson Kernaghan a registered broker dealer. The convertible debt
will require the issuance of common stock at date of conversion, not cash
resources of the Company.

           On October 23, 1997, TPI made an offering of 16,000 shares of Common
Stock for $200,000 ($12.50 a share); on October 31, 1997, an offering of 4,000
Shares of Common Stock for $50,000 ($12.50 a share); on December 10, 1997, an
offering of 39,911 shares of Common Stock for $220,000 ($5.50 a share) and on
January 26, 1998, an offering of 17,778 shares of Common Stock for $100,000
($5.50 a share). The offerings were made in Canada pursuant to the claim of
exemption under Rule 504 under the Securities Act. The closing market for TPI
Common Stock on April 14, 2000 was $5.50. The potential contingent liability for
such sales is $570,000, however, to the extent that the sale price of the common
Stock remains in excess of the offering prices set forth above, there is no
ascertainable liability to the Company.

           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.

INFLATION

           The Company believes that the impact of inflation and changing prices
on its operations since commencement of operations has been negligible.


SEASONALITY

           The Company does not deem its revenues to be seasonal.


                                      -16-
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

           The financial statements provided pursuant to this Item 7 begin on
page F-1 of this Report, following Part III hereof.

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

           The names, ages and respective positions of the Executive Officers
and Directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME                       Age     Position
----                       ---     --------
<S>                         <C>    <C>
Paul G. Mighton             45     Chairman of the Board of Directors and Chief
                                   Executive Officer
Douglas Woolridge(1)        39     President and Chief Operating Officer
Gary G. McCann(2)           46     Executive President, Secretary and
                                   Director
Vladimir Stepanoff(3)       56     Vice President - Technology and
                                   Director
John G. McGee(4)            47     Vice President - Finance, Chief
                                   Financial Officer and Director
Warren Strutt (5)           31     Chief Financial Officer and Director
</TABLE>

---------------------------
(1) Resigned in October 1998 as the Company's President and Chief Operating
    Officer.
(2) Resigned in May 1999.
(3) Resigned in July 1999.
(4) Resigned in October 1998 as the Company's Vice President-Finance and
    Chief Financial Officer and Director.
(5) Resigned in July 1999.


DIRECTORS AND EXECUTIVE OFFICERS

           PAUL G. MIGHTON served as Chairman of the Board of Directors and
Chief Executive Officer of TPI-Ontario from its date of incorporation in April
1996 until TPI-Ontario was merged into the Company in February 1998 and has
served in the same positions with the Company since


                                      -17-
<PAGE>

August 1996. From February 1995 to June 1996, Mr. Mighton served as Executive
Vice President and Chief Operating Officer of Agensys Canada Limited ("ACL"), an
information technology ("IT") company. From April 1993 to February 1995, he
served as a Vice President of Co-Operators Data Services Canada Ltd., a provider
of IT services, in its Systems Services Division. From 1991 to April 1993, Mr.
Mighton was National Director of the Healthcare Systems Division of Information
Systems Management Corporation, a Canadian company and a provider of data
processing services to health care organizations.

           DOUGLAS WOOLRIDGE served as President and Chief Operating Officer of
the Company from September 1997 to October 1998. From July 1994 to July 1997, he
served as Chief Information Officer for The R-M Trust Company, a Canadian
financial services provider. From August 1992 to June 1994, Mr. Woolridge served
as the director of IE Consulting Inc., an independent management consulting firm
("IE"). From August 1989 to August 1992, he served as a consulting manager for
the IT consulting practice of IE.

           GARY G. MCCANN served as Executive Vice President of the Company
since September 1997, as Chief Financial Officer since October 1998 and as a
director since August 1996. From August 1996 to September 1997, he served as
President and Chief Operating Officer of the Company. From February 1996 to
August 1996, Mr. McCann was involved in the founding and organization of TPI-
Ontario. From July 1995 to February 1996, he served as President and a director
of the Canadian company Mantis Information Technology Ltd., a privately held
provider of IT consulting and support services. From December, 1994 to April
1996, Mr. McCann Served as Vice President, Technology and Business Development
of ACL. From July 1991 to December 1994, Mr. McCann served as a general manager
of Sykes Enterprises Inc. of Canada, the Toronto-based subsidiary of a United
States company engaged in providing computing systems integration services
("SEIC") and from July 1992 to December 1994, he also served as a Vice President
of Sykes Enterprises, Inc., the parent of SEIC. Mr. McCann holds a Bachelor of
Commerce degree in finance and accounting from the University of Windsor,
Ontario, Canada.

           VLADIMIR STEPANOFF served as Vice President-Technology and a director
of the Company since August 1996 and held the same positions with TPI-Ontario
from April 1996 until it was merged into the Company in February 1998. From
April 1994 to August 1996, he served as President and director of Cyberplan
Inc., a Canadian-based company engaged in the development and licensing of
automatic transformation software. Mr. Stepanoff was the founder of Cyberplan,
Inc., which was the successor to Cyberplan Enrg., a firm of which Mr. Stepanoff
was the sole proprietor from 1984 to April 1994. Cyberplan Enrg. developed the
transformation software which Cyberplan Inc. continued to develop and license.
Mr. Stepanoff has a Bachelor of Science Degree (with Honors) in mathematics and
physics from the University of British Columbia.

           JOHN G. MCGEE served as Vice President-Finance and Chief Financial
Officer of the Company from October 1996 until his resignation in October 1998
and a director from July 1, 1998 until his resignation in October 1998. From May
1991 to October 1996, he served as President and


                                      -18-
<PAGE>

Chief Executive officer and was the principal stockholder of Equitable Lease
Corporation, an Ontario, Canada equipment leasing company.

           WARREN STRUTT served as Chief Financial Officer of the Company from
April 1999 until July 1999. From November 1998 until April 1999, he served as
Director of Finance for the Company. From January 1997 until November 1998, Mr.
Strutt served in the position of Controller for Alliance Cables Inc., a Canadian
distributor in the wireless communications industry. From May 1995 until January
1997, Mr. Strutt served as Accounting Manager for BGS Bearings and Equipment
Limited, a Canadian distributor in the motion control industry. From May 1992
until May 1995, he served as Senior Financial Accountant for Maritz Canada Inc.,
a Canadian subsidiary of Maritz Inc., a company in the service industry
providing performance improvement solutions for Fortune 500 companies. Mr.
Strutt holds a Certified Management Accountant degree issued in September 1995.
He graduated from Sheridan College of Applied Arts and Technology in June 1989
with a diploma in Business Administration - Accounting Major.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

           Pursuant to Section 16 of the Exchange Act, the Company's Directors
and executive officers and beneficial owners of more than 10% of the Company's
common stock, par value $0.025 ("Common Stock"), are required to file certain
reports, within specified time periods, indicating their holdings of and
transactions in the Common Stock and derivative securities. Based solely on a
review of such reports provided to the Company and written representations from
such persons regarding the necessity to file such reports, the Company is not
aware of any failures to file reports or report transactions in a timely manner
during the Company's fiscal year ended July 31, 1999.


ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

           The following table sets forth the annual and long-term compensation
for the Company's Chief Executive Officer from August 7, 1996 (the date in which
TPI-Ontario merged into Samuel Hamann Graphix, Inc.) through the completion of
the fiscal year ended July 31, 1999. No other officer received reportable
remuneration.

<TABLE>
<CAPTION>
                                                                                             LONG TERM COMPENSATION
                                                                            --------------------------------------------------------

                                             Annual Compensation                    Awards                       Payouts
                                      ------------------------------------  ---------------------------  ---------------------------
                                                                                                         Long-Term
                                                                Other       Restricted    Securities     Incentive         All
Name of Individual            Fiscal                           Annual          Stock      Underlying        Plan          Other
and Principal Position         Year   Salary($)  Bonus($)  Compensation($)   Awards($)  Options/SARS(#)  Payouts($)  Compensation($)
---------------------------  -------  ---------  --------  ---------------  ----------  ---------------  ----------  --------------
<S>                            <C>     <C>           <C>           <C>            <C>           <C>           <C>       <C>
PAUL G. MIGHTON                1999    $112,200     -0-           -0-            -0-           -0-           -0-        $   --
CHAIRMAN OF THE BOARD          1998    $110,000     -0-           -0-            -0-           -0-           -0-        $   --
AND CHIEF EXECUTIVE OFFICER    1997    $ 79,264     -0-           -0-            -0-           -0-           -0-        $   --
</TABLE>


                                      -19-
<PAGE>

           The cost to the Company of personal benefits, including premiums for
life insurance and any other perquisites, to such executive does not exceed 10%
of such executive's annual salary and bonus.

COMPENSATION OF DIRECTORS

           No compensation is paid by the Company to any of its directors for
services in such capacity. Currently, all of the Company's directors are
executive officers of the Company.

EMPLOYMENT CONTRACTS

           On January 1, 1997, the Company entered into employment agreements
with each of Messrs. Paul G. Mighton, Gary G. McCann, Vladimir Stepanoff and
John G. McGee, the Company's executive officers. Such agreements do not provide
for a fixed period of employment and provide that an employee's employment may
be terminated at any time, without notice, for "cause" (as defined in each
agreement), or at any time, upon at least 30 days prior notice, the Company or
the employee may terminate such employment, and, without notice upon payment of
six months base salary and certain other amounts to the employee, the Company
may terminate such employee's employment. The agreements provide for
participation in employee benefit programs, vacation and reimbursement of
expenses, including for use of the employee's vehicle. Each of the agreements
contains provisions prohibiting the employee from competing with the Company for
a period of six months following termination of employment and from disclosing
confidential information of the Company while employed by the Company and
thereafter.

           Mr. Mighton's employment agreement provides that he will be paid an
annual salary of approximately $110,000; Mr. McCann's employment agreement
provided that he would be paid in annual salary of approximately $95,000; Mr.
Stepanoff's employment agreement provided that he would be paid an annual salary
of approximately $66,000; and Mr. McGee's employment agreement (prior to his
resignation) provided that he would be paid an annual salary of approximately
$88,000.

           Douglas Woolridge, the Company's President and Chief Operating
Officer (prior to his resignation), entered into an agreement with the Company
pursuant to which he received an annual salary of approximately $62,000.


                                      -20-
<PAGE>

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                               Number of              Percent of Total
                              Securities                Options/SARs
                              Underlying                  Granted                  Exercise
Name of                      Options/SARs               to Employees               or Base            Expiration
Individual                      Granted                In Fiscal Year           Price($/Share)           Date
------------------       ---------------------     ---------------------      ------------------    --------------
<S>                             <C>                        <C>                     <C>                  <C>
NONE
</TABLE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                                     Number of Securities                Value of Unexercised
                                                                    Underlying Unexercised                   In-The-Money
                             Shares                                      Options/SARs                        Options/SARs
Name of                   Acquired on           Value               at Fiscal Year End (#)              at Fiscal Year End ($)
Individual                Exercise (#)       Realized ($)         Exercisable/Unexercisable            Exercisable/Unexercisable
------------------      ---------------    ---------------     --------------------------------    --------------------------------
<S>                        <C>                <C>                      <C>                                <C>
NONE
</TABLE>

1998 STOCK OPTION PLAN

           The Company has established the 1998 Stock Option Plan (the "1998
Plan"). The 1998 Plan is intended to provide the employees and directors of the
Company with an added incentive to continue their services to the Company and to
induce them to exert their maximum efforts toward the Company's success. The
1998 Plan provides for the grant of options to directors and employees
(including officers) of the Company to purchase up to an aggregate of twenty
percent (20%) of the number of shares of Common Stock in the capital of the
Company issued and outstanding from time to time less any shares of Common Stock
reserved, set aside and made available pursuant to the terms of the Company's
employee share purchase plan (the "Share Purchase Plan") and pursuant to any
options for services rendered to the Company. The number of shares of Common
Stock subject to options granted to any one person under the Plan, the Share
Purchase Plan and options for services rendered to the Company may not at any
time exceed five percent (5%) of the outstanding shares of Common Stock. The
1998 Plan is currently administered by the Board of Directors. The Board
determines, among other things, the persons to be granted options under the 1998
Plan, the number of shares subject to each option and the option price.

           The 1998 Plan allows the Company to grant Non-Qualified Stock Options
("NQSOs") not intended to qualify under Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code"). The exercise price of NQSO's may not be
less than the fair market value of the Common Stock on the date of grant.
Options may not have a term exceeding ten years. Options are not transferable,
except upon the death of the optionee.


                                      -21-
<PAGE>

           Since the 1998 Plan's adoption, NQSO's to purchase 112,000 shares of
Common Stock were granted and 108,000 were canceled as of July 31, 1998, leaving
4,000 post reverse stock split shares remaining.

           On March 16, 1998, Paul G. Mighton was granted options to purchase
36,000 shares of Common Stock exercisable at $7.50 per share terminating on
March 15, 2008. All the options were canceled as of July 31, 1998.

           On March 16, 1998, Gary McCann was granted options to purchase 36,000
shares of Common Stock exercisable at $7.50 per share terminating on March 15,
2008. All the options were canceled as of July 31, 1998.

           On March 16, 1998, John McGee was granted options to purchase 36,000
shares of Common Stock exercisable at $7.50 per share terminating on March 15,
2008. All the options were canceled as of July 31, 1998.

           On January 22, 1999, Warren Strutt was granted options to purchase
2,000 shares of Common Stock exercisable at $6.75 per share terminating November
29, 2009.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

           The following table sets forth, as of April 14, 2000, certain
information concerning those persons known to the Company, based on information
obtained from such persons, with respect to the beneficial ownership (as such
term is defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
shares of Common Stock, $.025 par value, of the Company by (i) each person known
by the Company to be the owner of more than 5% of the outstanding shares of
Common Stock, (ii) each director and executive officer of the Company and its
subsidiaries, (iii) each executive officer named in the Summary Compensation
Table and (iv) all directors and officers as a group:

<TABLE>
<CAPTION>
Name and Address of                 Amount and Nature of
Beneficial Owner(1)                 Beneficial Ownership         Percentage of Class (2)
-------------------                 --------------------         -----------------------
<S>                                        <C>                             <C>
Vladimir Stepanoff                         34,000 (2)                      *
Paul G. Mighton                            16,500 (2)                      *
Gary G. McCann                             42,000 (2)                      *
John G. McGee                              35,177 (2)                      *
Douglas Woolridge                                -0-                       0
All Directors and Officers as             129,677 (2)                     2.6%
a Group (5 persons)
</TABLE>

* denotes less than 1%.


                                      -22-
<PAGE>

(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of Common
Stock beneficially owned by them. Each such person is deemed to be the
beneficial owner of shares of Common Stock held by such person (but not held by
any other person) on April 14, 2000, and any shares of Common Stock which such
person has the right to acquire pursuant to securities exercisable or
exchangeable for, or convertible into, Common Stock, within 60 days from such
date. The address of each beneficial owner is in care of the Company, 365 Bay
Street, Toronto, Ontario, Canada.

(2) Based on 4,810,367 shares of Common Stock outstanding at the close of
business on April 14, 2000. The Company and its transfer agent have not been
able to reconcile the amount of outstanding shares. The transfer agent believes
that there are 31,103 more shares of common stock outstanding.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

           In consideration for the transfer to the Company of the ownership
interest in certain technology and certain services provided to the Company, the
Company issued 197,442 and 38,600 shares of Common Stock to Joter and DTL(1),
respectively, which hold such shares as nominees for the benefit of the
following executive officers and directors of the Company: Paul Mighton, Gary G.
McCann, Vladimir Stepanoff and John McGee. See "Security Ownership of Certain
Beneficial Owners and Management."

           From August 1, 1996 through July 11, 1997, the Company made advances
to Messrs. Paul G. Mighton, Gary G. McCann and Vladimir Stepanoff, executive
officers, directors and principal stockholders of the Company aggregating
$115,227. On July 31, 1997, Messrs. Mighton, McCann and Stepanoff executed
demand promissory notes payable to the Company in the respective principal
amounts of $61,452; $37,829 and $15,946, representing the aggregate amounts
borrowed by such persons from the Company. The notes bear interest at the annual
rate of 4%. The advances made to Messrs. Mighton and McCann were subsequently
written off by the Company and were accounted for as an expense.

           The Company has paid for the account of Mantis Information Technology
Ltd ("Mantis"), a corporation of which Gary G. McCann is the sole stockholder,
certain obligations for consulting services incurred by Mantis and has rendered
invoices to Mantis in the aggregate amount of approximately $12,000 for funds
advanced. As of the date hereof, such invoices remain outstanding. This amount
was never repaid and was written off.

           Messrs. Mighton, McCann, Stepanoff and McGee have personally
guaranteed the payment to a bank of certain purchase money equipment loans made
to the Company by such bank. The outstanding principal balance of the loans is
currently approximately $9,928. The loans bear interest at 2.5% over the bank's
prime rate in effect from time to time (currently 7.5% per annum). See
"Management's Discussion and Analysis or Plan of Operations -- Liquidity and
Capital Resources."


                                      -23-
<PAGE>

(1) Such shares were issued in exchange for shares of TPI-Ontario on August 20,
1996.

           The officers of the Company have executed employment agreement with
the Company. See "Executive Compensation--Employment Contracts."

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

           (a)     Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO.          Description
-----------          -----------
<S>                  <C>
3.1                  Articles of Incorporation of Samuel Hamann Graphix, Inc. (Nevada) as amended.(1)
3.2                  Articles of Merger between Samuel Hamann Graphix, Inc. (Nevada) and Samuel
                     Hamann Graphix, Inc. (California).(1)
3.3                  By-laws of Transformation Processing Inc. (Nevada).(1)
3.4                  Articles of Merger between of TPI (Ontario) and TPI (Nevada).(1)
5.1                  Opinion of Snow Becker Krauss P.C.(1)
10.1                 Employment Agreement between TPI and Gary McCann dated January 1,1997.(1)
10.2                 Employment Agreement between TPI and John McGee dated January 1, 1997.(1)
10.3                 Employment Agreement between TPI and Paul G. Mighton dated January 1,1997.(1)
10.4                 Employment Agreement between TPI and Vladimir Stepanoff dated January 1,
                     1997.(1)
10.5                 Letter Agreement dated September 29, 1997 as amended January 6, 1998 between
                     Douglas Woolridge and TPI.(1)
10.6                 Real Estate Lease Agreement dated October 1, 1996 between TPI and Royal Trust
                     Corporation of Canada, and Landlord's release of Security Interest.(1)
10.7                 Form of Software Conversion Agreement.(1)
10.8                 Form of Professional Services Agreement.(1)
10.9                 Form of Deployment Products License Agreement.(1)
10.10                Form of Software License Agreement.(1)
10.11                Business Development Agreement between Lotus Development Corporation and
                     TPI.(1)
10.12                Bill of Sale and Assignment of Copyright, dated July 17, 1996 between CyberPlan
                     Enrg. and TPI as amended as of March 10, 1998.(1)
10.13                Referral Program Agreement dated November 18, 1997 between Y2K Plus and
                     TPI.(1)
10.14                Referral Program Agreement dated November 12, 1997 between MCW Business
                     Systems Ltd. and TPI.(1)
10.15                Teaming Agreement dated April 21, 1997 between SHL Systemhouse Inc. and
                     TPI.(1)
10.16                Software License Agreement, Value Added Reseller Agreement and addendum dated April
                     23, 1997 between IntellAgent Control Corporation and TPI.(1)
</TABLE>


                                      -24-
<PAGE>

<TABLE>
<S>                  <C>
10.17                Professional Services Subcontract Agreement dated May 15, 1997 between GE IT
                     Solutions/Universal Data Consultants and TPI.(1)
10.18                Settlement Agreement and Release, among Ronald A. Content, Raconix
                     Corporation, Raconix Europe Limited and TPI each dated June 16, 1997.(1)
10.19                Demand Promissory Notes dated July 31, 1997, payable to TPI made by Gary G.
                     McCann, Paul Mighton and Vladimir Stepanoff.(1)
10.20                Customer Agreements and Small Business Loan Registrations, between the Bank of Nova
                     Scotia and TPI pertaining to purchase money bank loans.(1)
10.21                Guarantees of Bank loans, dated January 30, 1997 and November 27, 1997 by Gary
                     G. McCann, Paul Mighton, Vladimir Stepanoff and John McGee in favor of the Bank
                     of Nova Scotia..(1)
10.22                Program Product License Agreement, dated October 21, 1997, between Allegient
                     Legacy Solutions, Inc. and TPI.(1)
10.23                The Company's 1998 Stock Option Plan.(2)
10.24                Real Estate Sublease Agreement dated June 29, 1998, between TPI and Origin
                     Technology In Business Inc.(2)
*10.25               Merger Agreement and Plan of Reorganization by and among Transformation
                     Processing, Inc. and eAutoclaims.com, Inc., dated April    , 2000
21.1                 Subsidiaries of the Registrant.(2)
</TABLE>

(1)  Incorporated by reference from the Form 10-SB filed by the company on
     March 12, 1998 and amended on August 31, 1998 and October 22, 1998.

Incorporated by reference from the Form 10-KSB of the Company for the
     fiscal year ended July 31, 1998.

*    denotes filed herewith

     (b)   Reports on Form 8-K.

     No Reports on Form 8-K were filed during the last quarter of the fiscal
     year ended July 31, 1999.


                                      -25-

<PAGE>
                                   SIGNATURES

           Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: March     , 2000                      TRANSFORMATION PROCESSING INC.

     By: /s/Paul Mighton                         By:  /s/ Paul G. Mighton
        -----------------------------                --------------------------
          Paul Mighton                           Paul G. Mighton,
          Chief Financial Officer and                    Chief Executive Officer
          Accounting Officer


           In accordance with the Exchange Act, this Report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated:

<TABLE>
<CAPTION>
      Signature                                     Title                            Date
      ---------                                     -----                            ----
<S>                                  <C>                                         <C>
       /s/ Paul G. Mighton           Chairman of the Board of Directors          March __, 1999
------------------------------------   and Chief Executive Officer
Paul G. Mighton                        (Principal Executive Officer)
</TABLE>


                                      -26-


<PAGE>



TRANSFORMATION PROCESSING INC.
(DEBTOR-IN-POSSESSION)

FINANCIAL STATEMENTS

JULY 31, 1999



<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)

                                                   INDEX TO FINANCIAL STATEMENTS
================================================================================




<TABLE>
<S>                                                                <C>
INDEPENDENT AUDITOR'S REPORT                                           F-2

FINANCIAL STATEMENTS:

   Balance Sheet                                                       F-3
   Statement of Operations                                             F-4
   Statement of Stockholders' Deficiency                               F-5
   Statement of Cash Flows                                             F-6
   Notes to Financial Statements                                    F-7 - F-16
</TABLE>


                                                                             F-1
<PAGE>

INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
Transformation Processing Inc.
 (debtor-in-possession)

We have audited the accompanying balance sheet of Transformation Processing Inc.
(debtor-in-possession) as of July 31, 1999, and the related statements of
operations, stockholders' deficiency, and cash flows for each of the two years
in the period ended July 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these 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 the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Transformation Processing Inc.
(debtor-in-possession) as of July 31, 1999, and the results of its operations
and its cash flows for each of the two years in the period ended July 31, 1999,
in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, Transformation Processing Inc. filed a petition for
reorganization under Section 69 of the Bankruptcy and Insolvency Act of Canada.
The Company has continued as Debtor-in-Possession under Section 69 and is
subject to the jurisdiction of the Superior Court of Justice for the Province of
Ontario. Continuation of the Company as a going concern and realization of its
assets and the 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 of the Company to maintain adequate financing. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.

/s/ Goldstein Golub Kessler LLP

GOLDSTEIN GOLUB KESSLER LLP
New York, New York

December 3, 1999, except for Note 10, as
 to which the date is February 18, 2000


                                                                             F-2
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                                   BALANCE SHEET
================================================================================

<TABLE>
<CAPTION>
JULY 31, 1999
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                        <C>
ASSETS

Current Asset - accounts receivable                                                                        $    33,949
-----------------------------------------------------------------------------------------------------------------------------------
      TOTAL CURRENT ASSET                                                                                       33,949

Deferred Debt Cost, net                                                                                         30,470
-----------------------------------------------------------------------------------------------------------------------------------
      TOTAL ASSETS                                                                                         $    64,419
===================================================================================================================================

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
  Liabilities subject to compromise - accounts payable and accrued expenses                                $ 1,023,029
  Current maturities of long-term debt                                                                           9,927
-----------------------------------------------------------------------------------------------------------------------------------
      TOTAL CURRENT LIABILITIES                                                                              1,032,956

Long-term Debt, net of current maturities                                                                    1,716,310
-----------------------------------------------------------------------------------------------------------------------------------
      TOTAL LIABILITIES                                                                                      2,749,266
-----------------------------------------------------------------------------------------------------------------------------------

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                                                                                       (9,742,989)
-----------------------------------------------------------------------------------------------------------------------------------
      STOCKHOLDERS' DEFICIENCY                                                                              (2,684,847)
-----------------------------------------------------------------------------------------------------------------------------------
      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                       $    64,419
===================================================================================================================================
</TABLE>

                         The accompanying notes and independent auditor's report
                     should be read in conjunction with the financial statements


                                                                             F-3
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                         STATEMENT OF OPERATIONS
================================================================================

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,                                                                     1999                      1998
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                       <C>
Revenue - consulting services                                                    $   954,874               $   877,198
-----------------------------------------------------------------------------------------------------------------------------------

Costs and expenses:
  Cost of consulting services                                                        836,202                 1,314,356
  Cost of software transformation services                                           182,854                 1,107,208
  Software development                                                                 --                       35,197
  General and administrative                                                       2,031,598                 1,871,105
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                   3,050,654                 4,327,866
-----------------------------------------------------------------------------------------------------------------------------------

Loss from operations                                                              (2,095,780)               (3,450,668)

Interest expense, net of interest income of $1,208 and $9,749,
 respectively                                                                       (562,120)                 (849,885)

-----------------------------------------------------------------------------------------------------------------------------------
Net loss                                                                         $(2,657,900)              $(4,300,553)
===================================================================================================================================
Basic net loss per common share                                                  $     (3.81)              $     (7.39)
===================================================================================================================================
Weighted-average number of common shares
 outstanding                                                                         697,697                   581,693
===================================================================================================================================
</TABLE>

                         The accompanying notes and independent auditor's report
                     should be read in conjunction with the financial statements


                                                                             F-4
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                           STATEMENT OF STOCKHOLDERS' DEFICIENCY
================================================================================

<TABLE>
<CAPTION>
YEARS ENDED JULY 31, 1999 AND 1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                    ACCUMULATED
                                                                                    OTHER COM-     STOCK-           COMPRE-
                                                       ADDITIONAL                   PREHENSIVE    HOLDERS'          HENSIVE
                                    COMMON STOCK        PAID-IN     ACCUMULATED       INCOME       EQUITY           INCOME
                                  SHARES   AMOUNT       CAPITAL       DEFICIT         (LOSS)    (DEFICIENCY)        (LOSS)
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>       <C>       <C>          <C>              <C>         <C>            <C>
Balance at August 1, 1997         486,771   $12,169   $3,358,020   $(2,784,536)     $ 22,855    $   608,508           --

Issuance of common stock
 for cash                         124,369     3,110    1,003,336          --            --        1,006,446           --

Issuance of common stock
 upon conversion of
 convertible debentures            36,325       908      706,387          --            --          707,295           --

Recognition of beneficial
 conversion feature of
 convertible debt                    --        --        650,026          --            --          650,026           --

Warrants to purchase
 common stock issued
 with convertible debentures         --        --        527,000          --            --          527,000           --

Cumulative foreign currency
 translation adjustment              --        --           --            --         (56,706)       (56,706)   $   (56,706)

Options to purchase common
 stock issued for services           --        --         21,950          --            --           21,950           --

Net loss                             --        --           --      (4,300,553)         --       (4,300,553)    (4,300,553)
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive loss                   --        --           --            --            --             --       (4,357,259)
------------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1998          647,465    16,187    6,266,719    (7,085,089)      (33,851)      (836,034)

Issuance of common stock
 upon conversion of convertible
 debentures                        62,902     1,572      390,928          --            --          392,500           --

Recognition of beneficial
 conversion feature of
 convertible debentures              --        --        240,999          --            --          240,999           --

Warrants to purchase common
 stock issued with convertible
 debentures                          --        --        141,737          --            --          141,737           --

Cumulative foreign currency
 translation adjustments             --        --           --            --          33,851         33,851         33,851

Net loss                             --        --           --      (2,657,900)         --       (2,657,900)    (2,657,900)
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive loss                   --        --           --            --            --             --       (2,624,049)
------------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1999          710,367   $17,759   $7,040,383   $(9,742,989)     $  - 0 -    $(2,684,847)          --
====================================================================================================================================
</TABLE>

                         The accompanying notes and independent auditor's report
                     should be read in conjunction with the financial statements


                                                                             F-5
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                         STATEMENT OF CASH FLOWS
================================================================================

<TABLE>
<CAPTION>
Year ended July 31,                                                                                   1999                     1998
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                                 <C>                 <C>
Cash flows from operating activities:
  Net loss                                                                                          $(2,657,900)        $(4,300,553)
  Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation and amortization                                                                       145,258             617,451
    Issuance of options and warrants to purchase common
     stock for services                                                                                    --               181,317
    Recognition of beneficial conversion feature                                                        239,427             631,281
    Provision for doubtful accounts                                                                     (34,946)             34,325
    Write-off of amounts due from/to related parties                                                    (11,208)             96,020
    Write-off of fixed assets                                                                           192,166                --
    Amortization of discounts                                                                           176,683             187,793
    Interest expense converted to stock                                                                    --                 7,085
    Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable                                                        419,933            (462,787)
      (Increase) decrease in prepaid expenses and other current assets                                    4,715              (4,639)
      Increase in deferred debt costs                                                                      --               (60,263)
      (Increase) decrease in other assets                                                                30,379             (26,411)
      Increase in time deposits                                                                            --                22,600
      Increase in accounts payable and accrued expenses                                                 441,937             506,281
------------------------------------------------------------------------------------------------------------------------------------
        NET CASH USED IN OPERATING ACTIVITIES                                                        (1,053,556)         (2,570,500)
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activity - purchase of property and equipment                                 (60,471)           (122,601)
------------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Proceeds from loan payable - bank                                                                        --                50,160
  Repayments of loan payable - bank                                                                     (38,134)            (49,312)
  Repayment of note payable - stockholder                                                                  --               (83,300)
  Net proceeds from issuance of common stock                                                               --               987,484
  Net proceeds from issuance of convertible debentures                                                1,001,572           1,903,688
------------------------------------------------------------------------------------------------------------------------------------
        NET CASH PROVIDED BY FINANCING ACTIVITIES                                                       963,438           2,808,720
------------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                                                                     (98)             18,637
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                                                        (150,687)            134,256

Cash at beginning of year                                                                               150,687              16,431
------------------------------------------------------------------------------------------------------------------------------------
Cash at end of year                                                                                 $     - 0 -         $   150,687
====================================================================================================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year for interest                                                            $     - 0 -         $    58,264
====================================================================================================================================

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITY:

  Conversion of long-term debt to common stock                                                      $   392,500         $   707,295
====================================================================================================================================
  Beneficial conversion feature                                                                     $   240,999         $   650,026
====================================================================================================================================
  Issuance of warrants to purchase common stock                                                     $   141,737         $   527,000
====================================================================================================================================
</TABLE>

                         The accompanying notes and independent auditor's report
                     should be read in conjunction with the financial statements


                                                                             F-6
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<S>                           <C>
  1.  BASIS OF                On August 23, 1999, Transformation Processing Inc. (debtor-in-possession)
      PRESENTATION:           (the "Company") filed a Notice of Intent to seek reorganization under the
                              Bankruptcy and Insolvency Act of Canada (the "Bankruptcy Act") with the
                              Superior Court of Justice for the Province of Ontario. 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 compliance with the proposal
                              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.


  2.  PRINCIPAL BUSINESS      The Company operated as an information technology company that developed
      ACTIVITY AND            and marketed software and services that enabled companies worldwide to
      SIGNIFICANT ACCOUNTING  automatically migrate their application programs and data from legacy
      POLICIES:               systems to open systems and client/server 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 July 31, 1999 and 1998, all operations of
                              the Company were conducted in Canada. At July 31, 1999, all of the
                              Company's assets are located in Canada.

                              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.
</TABLE>

<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<S>                           <C>
                              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 cost of software marketing rights of approximately $780,000 (which
                              included approximately $207,000 of notes payable plus approximately
                              $573,000 in common stock issued) was being amortized by the straight-line
                              method over four years. At each balance sheet date, the Company evaluated
                              the period of amortization of intangible assets. The factors used in
                              evaluating the period of amortization included: (i) current operating
                              results; (ii) projected future operating results; and (iii) any other
                              material factors that affected the continuity of the business. The Company
                              elected to write off the unamortized balance of the intangible asset
                              (software marketing rights) because future cash flows generated from this
                              asset could not be determined at that time. The impairment loss of
                              approximately $372,000 is included in the cost of transformation services
                              in the accompanying statement of operations for the year ended July 31,
                              1998.

                              Costs associated with the issuance of the 6% convertible debentures are
                              being amortized on the straight-line method over the term of the
                              debentures. Upon conversion, debt issue costs will be charged to
                              operations. For the years ended July 31, 1999 and 1998, debt issue costs
                              of $70,046 and $61,396, respectively, have been charged to operations and
                              included in interest expense in the accompanying statement of operations.

                              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.

                              On October 6, 1999, the Company's board of directors authorized a
                              1-for-25 reverse stock split to stockholders of
                              record as of October 15, 1999. All references to number of shares
                              and per share amounts in the accompanying financial statements
                              have been retroactively restated to reflect this split.

                              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.
</TABLE>


                                                                            F-8
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<S>                           <C>
                              For the year ended July 31, 1999, the Company adopted SFAS No. 130,
                              REPORTING COMPREHENSIVE INCOME. SFAS No. 130 establishes new rules for the
                              reporting and display of comprehensive income and its components; however,
                              the adoption of this statement had no impact on the Company's net loss or
                              stockholders' deficiency. SFAS No. 130 requires foreign currency
                              translation adjustments to be included in other comprehensive loss. Prior
                              to the adoption of SFAS No. 130, these items were reported separately in
                              stockholders' deficiency. Prior year financial statements have been
                              reclassified to conform to the requirements of SFAS No. 130.

                              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.
</TABLE>

<TABLE>
<S>                           <C>                                                                           <C>
  3.  ACCOUNTS                Accounts payable and accrued expenses consist of the following:
      PAYABLE AND
      ACCRUED                 Accrued professional fees                                                     $   91,020
      EXPENSES:               Accrued wages                                                                     29,088
                              Accrued vacation wages                                                            24,968
                              Accrued rent on abandoned property                                               185,892
                              Accrued damages on convertible debentures                                        350,000
                              Other (all amounts are less than 5% of current liabilities)                      342,061
                              -----------------------------------------------------------------------------------------------------
                                                                                                            $1,023,029
                              =====================================================================================================


   4. LONG-TERM
      DEBT:                   Long-term debt consists of the following:

                              Installment loans                                                             $    9,927
                              6% convertible debentures                                                      1,716,310
                              -----------------------------------------------------------------------------------------------------
                                                                                                             1,726,237
                              Less current portion                                                               9,927
                              -----------------------------------------------------------------------------------------------------
                                      LONG-TERM PORTION                                                     $1,716,310
                              =====================================================================================================
</TABLE>

<TABLE>
<S>                           <C>
                              In connection with the Company's bankruptcy filing, long-term debt is not
                              subject to compromise.

                              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 July 31,
                              1999) plus 2.5%. The loan is collateralized by substantially all of the
                              Company's assets.

                              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,
</TABLE>


                                                                            F-10
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<S>                           <C>
                              $300,000 of 6% convertible debentures were converted into 10,644 shares of
                              common stock and in July 1998, $400,000 of 6% convertible debentures were
                              converted into 25,681 shares of common stock. In August 1998, $37,500 of
                              6% convertible debentures were converted into 3,267 shares of common
                              stock; in September 1998, $57,500 of 6% convertible debentures were
                              converted into 6,270 shares of common stock, and in October 1998, $84,000
                              of 6% convertible debentures were converted into 17,563 shares of common
                              stock. In connection with the issuance of debentures, the Company issued
                              warrants to purchase 12,049 shares of common stock. The fair value of
                              $251,000 allocated to the warrants is being amortized over the term of the
                              debentures. For the years ended July 31, 1999 and 1998, amortization of
                              $60,115 and $181,927, 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 July 31, 1999.

                              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 6,696 shares of
                              common stock. In connection with the issuance of debentures, the Company
                              issued warrants to purchase 2,008 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 years ended July 31, 1999 and 1998, amortization
                              of $29,863 and $5,311, 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 July 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 29,106 shares of common
                              stock. In connection with the issuance of debentures, the Company issued
                              warrants to purchase 2,732 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 years ended July 31, 1999 and 1998, amortization of
                              $37,655 and $1,183, 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 July 31, 1999.

                              On September 23, 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 3,509 shares of common
                              stock. The fair value of $28,249 allocated to the warrants is being
                              amortized over the term of the debenture. For the year ended July 31,
                              1999, amortization of $12,327 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 July 31, 1999.
</TABLE>


                                                                            F-10
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<S>                           <C>
                              On October 9, 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 2,222 shares of common stock. The fair
                              value of $15,094 allocated to the warrants is being amortized over the
                              term of the debentures. For the year ended July 31, 1999 amortization of
                              $5,960 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 July 31,
                              1999.

                              On November 19, 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 Company issued warrants to purchase 4,040 shares of common
                              stock. The fair value of $27,827 allocated to the warrants is being
                              amortized over the term of the debenture. For the year ended July 31, 1999
                              amortization of $9,830 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 July 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 3,390 shares of common
                              stock. The fair value of $35,621 allocated to the warrants is being
                              amortized over the term of the debenture. For the year ended July 31,
                              1999, amortization of $11,104 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 July 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 6,250 shares of common
                              stock. The fair value of $34,946 allocated to the warrants is being
                              amortized over the term of the debentures. For the year ended July 31,
                              1999, amortization of $9,440, 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 July 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 years ended July 31, 1999 and 1998, aggregating $240,999
                              and $650,026, respectively, is included in interest expense
</TABLE>


                                                                            F-11
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<S>                           <C>
                              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 July 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
                              assumptions used for the year ended July 31, 1999: expected volatility of
                              1.93%; risk-free interest rate of 5.6%; and expected lives of two years.

                              Aggregate maturities of long-term debt are as follows:
</TABLE>
<TABLE>
<CAPTION>
                              Year ending July 31,

                              <S>                                                              <C>
                                       1999                                                    $    9,927
                                       2000                                                     1,716,310

                              ---------------------------------------------------------------------------
                                                                                               $1,726,237
                              ===========================================================================
</TABLE>

<TABLE>
<S>                           <C>
   5.  COMMITMENTS AND        In conjunction with the Company's filing for bankruptcy (see Note 1), it
       CONTINGENCIES:         has abandoned its operating lease. Accordingly, the Company has charged
                              operations for the future minimum payments and the liability of
                              approximately $185,000 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. Rent
                              expense for the years ended July 31, 1999 and 1998 amounted to $204,586
                              and $33,378, respectively.

                              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 6,000 shares of
                              common stock of the Company as compensation for services. At July 31,
                              1999, those services had not yet been provided.


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

                              On August 20, 1996, the Company issued 88,235 shares of common stock to
                              the stockholders of Samuel Hamann Graphix, Inc. in a transaction accounted
                              for as
</TABLE>


                                                                            F-12
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<S>                           <C>
                              a reverse acquisition. As part of the reverse acquisition the Company
                              issued 75,520 shares of common stock to certain consultants for services.
                              These shares have been valued at the fair value at the date of issuance
                              ($20.25 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 73,760 shares of common stock and had outstanding
                              stop transfer instructions as of October 31, 1998 concerning approximately
                              42,200 shares of common stock. These shares are part of the 75,520 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.

                              On October 23, 1997, the Company made an offering of 16,000 shares of
                              common stock for $200,000; on October 31, 1997, an offering of 4,000
                              shares of common stock for $50,000; on December 10, 1997, an offering of
                              39,911 shares of common stock for $225,000; and on January 26, 1998, an
                              offering of 17,778 shares of common stock for $99,629. These offerings
                              were made pursuant to the claim of exemption under rule 504 under the
                              Securities Act of 1934. These offerings appear to exceed the limitation of
                              rule 504 of a maximum of $1,000,000 in any one-year period. The Company
                              intends to file a registration statement offering rescission to the
                              purchasers of these offerings.

                              At January 26, 1999, the stockholder that purchased these shares no longer
                              had the right to rescind that purchase.


   7.  STOCK OPTIONS AND      The Company has outstanding warrants permitting the holders to purchase
       STOCK WARRANTS:        16,789 shares of its common stock at prices ranging from $11.50 to $49.75
                              per share. These warrants were issued during the year ended July 31, 1998.
                              The warrants have varying expiration dates to January 14, 2001. Warrants
                              to purchase 56,202 common shares were outstanding at July 31, 1999. During
                              the year ended July 31, 1998, warrants to purchase 20,000 shares of common
                              stock, which were to expire, were extended. The extended warrants provide
                              for exercise prices ranging from $12.50 to $20.00 per share. The warrants
                              were determined to have a fair market value of approximately $165,000,
                              which was charged to operations during the year ended July 31, 1998.
                              During the year ended July 31, 1999, warrants to purchase 19,413 common
                              shares were issued at prices ranging from $8.00 to $14.75 per share.

                              During the year ended July 31, 1998, 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
</TABLE>


                                                                            F-13
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<S>                           <C>
                              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
                              2,000 shares of common stock at an exercise price of $6.75 per share.
                              These options are exercisable for a ten-year period beginning November 30,
                              1999.

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

</TABLE>
<TABLE>
<CAPTION>
                              July 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           4,000       $12.50           --           --
                              Granted                                    2,000         6.75         4,000       $12.50
                              ------------------------------------------------------------------------------------------------------
                                     OUTSTANDING AT END OF YEAR          6,000       $10.58         4,000       $12.50
                              ======================================================================================================

                              Options exercisable at year-end            4,000       $12.50         4,000       $12.50
                              ======================================================================================================

                              Weighted-average fair value of
                               options granted during the year             --        $ 6.75           --        $11.00
                              ======================================================================================================
</TABLE>

<TABLE>
<S>                           <C>
                              The following table summarizes information about fixed stock options
                              outstanding at July 31, 1999:
</TABLE>

<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>
                              $12.50             4,000            8.8          $12.50           4,000           $12.50
                              $ 6.75             2,000           10.0            6.75             --              --
                              ======================================================================================================
</TABLE>


                                                                           F-14
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS

<TABLE>
===================================================================================================================================
<S>                           <C>
                              The Company has elected to apply Accounting Principles Board Opinion No.
                              25 and related interpretations in accounting for its stock options and has
                              adopted the disclosure-only provisions of SFAS No. 123. Had the Company
                              elected to recognize compensation cost based on the fair value of the
                              options granted at the grant date as prescribed by SFAS No. 123, the
                              Company's net loss and loss per common share for the years ended July 31,
                              1999 and 1998 would have been as follows:
</TABLE>
<TABLE>
<CAPTION>
                              Year ended July 31,                                 1999                        1998
                              ------------------------------------------------------------------------------------------------------

                              <S>                                            <C>                           <C>
                              Net loss - as reported                         $(2,657,900)                  $(4,300,553)
                              ======================================================================================================

                              Net loss - pro forma                           $(2,671,376)                  $(4,321,869)
                              ======================================================================================================

                              Loss per share - as reported                   $     (3.81)                  $     (7.39)
                              ======================================================================================================

                              Loss per share - pro forma                     $     (3.83)                  $     (7.43)
                              ======================================================================================================
</TABLE>

<TABLE>
<S>                           <C>
                              The fair value of each option grant is estimated on the date of grant
                              using the Black-Scholes option-pricing model with the following
                              weighted-average assumptions used for the year ended July 31, 1999:
                              expected volatility of 1.93%; risk-free interest rate of 5.7%; expected
                              lives of 10 years; and no payment of dividends expected.


   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 transfer agent differ with
       INFORMATION:           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.
</TABLE>


                                                                            F-15
<PAGE>

                                                  TRANSFORMATION PROCESSING INC.
                                                          (DEBTOR-IN-POSSESSION)


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<S>                           <C>
 10.  SUBSEQUENT              On February 18, 2000, the Company signed a letter of intent to be acquired
      EVENTS:                 by eAutoclaims.com, Inc. in a transaction to be accounted for as a reverse
                              acquisition. The definitive terms, price and conditions of the proposed
                              acquisition have yet to be determined.
</TABLE>


                                                                           F-16