December 22, 1998
TRANSFORMATION PROCESSING INC (TPII)
Quarterly Report (SEC form 10QSB)
Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis should be read in conjunction with
the Company's first quarter ended unaudited financial statements and
notes thereto dated October 31, 1998 and 1997 and cumulative results
from April 1, 1996 (date of incorporation), to October 31, 1998.
FINANCIAL CONDITION
The following is a discussion of the material changes in financial
condition from July 31, 1998 to October 31, 1998.
Current assets at October 31, 1998 were $284,101 as compared to $589,930
at July 31, 1998. The basis for this decrease in current assets is as
follows. Accounts receivable totaled $137,466 at October 31, 1998 as
compared to $419,933 at July 31. The decrease was the result of the
Company's aggressive collection of outstanding receivables as of the
year end and a softening of revenue generation in the quarter.
The Company recorded material changes to Accounts payable and Accrued
expenses. Accounts payable at October 31, 1998 was $413,639 as compared
to $350,890 at July 31, 1998. Accrued expenses were $188,678 at October
31, 1998 as compared to $230,201 at July 31, 1998. These increases are
due to the Company's management of available cash resources and
expansion of the business.
The Company issued convertible debentures for cash in the quarter ended
October 31, 1998. The company recorded Convertible debt totaling
$300,000 for the period. The debt is convertible to shares in the
Company and, will not require the outlay of cash in coming periods.
Details on the convertible debentures are outlined in the Notes to the
Financial Statements.
Additional paid-in capital at October 31, 1998 was $6,832,963 as
compared to $6,266,719 at July 31, 1998. The increase in paid-in capital
for the period was the result of the issuance of convertible debentures
for cash in the amount of $437,844, the discount related to the issuance
of convertible debentures totaling $75,000, and the fair value of stock
options related to the issuance of convertible debentures totaling
$53,400.
Deficit accumulated during the development stage totaled $(7,812,254) as
compared to $(3,137,367) at October 31, 1997. The discussion of losses
incurred for the periods are outlined in the Results of Operations
below.
RESULTS OF OPERATIONS
The following is a discussion of the material change in results of
operations for the three-month periods ending October 31, 1998 and 1997.
NET LOSSES
For the quarters ended October 31, 1998 and 1997, the Company incurred
net losses of $727,165 and $352,831, respectively. Cumulative losses
from April 1, 1996 to October 31, 1998, the Development period, totaled
$7,812,254. Explanations of these results are set forth below. The
Company expects to continue to incur operating losses until such time,
if ever, that it may generate adequate revenues from its ongoing
services. |
