U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: January 31, 1997
[ ] TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to __________________
Commission file number 0-21791
INTERACTIVE PROCESSING, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0355407
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
#1738 - 609 GRANVILLE STREET, VANCOUVER, BRITISH COLUMBIA V7Y 1G5 CANADA
(Address of principal executive offices)
(604) 689-4060
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
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___
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the last practicable date:
10,026,143 SHARES OF COMMON STOCK, $.001 PAR VALUE.
Transitional Small Business Disclosure Format (check one): Yes______ No ___X__
Exhibit index on page 14 Page 1 of 16 pages
<PAGE>
INTERACTIVE PROCESSING, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheet - January 31, 1997 (unaudited) 4
Statement of Loss and Deficit- for the nine months
ended January 31, 1997 (unaudited) 5
Statement of Cash Flow - for the nine months
ended January 31, 1997 (unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II. OTHER INFORMATION 14
<PAGE>
[LETTERHEAD OF STALEY, OKADA, CHANDLER & SCOTT]
AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Shareholders of Interactive Processing, Inc.:
We have audited the balance sheet of Interactive Processing, Inc. (a Development
Stage Company) as at 30 April 1996 and the statements of loss and deficit and
cash flow for the period then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at 30 April 1996 and the
results of its operations and the changes in its financial position for the
period then ended in accordance with accounting principles generally accepted in
the United States.
/S/STALEY, OKADA, CHANDLER & SCOTT
Burnaby, B.C. STALEY, OKADA, CHANDLER & SCOTT
28 August 1996 CHARTERED ACCOUNTANTS
- --------------------------------------------------------------------------------
COMMENTS BY AUDITORS FOR U.S. READERS ON
CANADA-U.S. REPORTING CONFLICT
- --------------------------------------------------------------------------------
To the Directors of Interactive Processing, Inc.:
In the United States, reporting standards for auditors require the expression of
a qualified opinion when financial statements are affected by significant
uncertainties such as those referred to in Note 1 to these financial statements.
The above opinion on our report to the shareholders dated 28 August 1996 for the
period ended 30 April 1996 is not qualified with respect to, and provides no
reference to these uncertainties since such an opinion would not be in
accordance with Canadian reporting standards for auditors when the uncertainties
are adequately disclosed in the financial statements.
/S/STALEY, OKADA, CHANDLER & SCOTT
Burnaby, B.C. STALEY, OKADA, CHANDLER & SCOTT
28 August 1996 CHARTERED ACCOUNTANTS
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
INTERACTIVE PROCESSING, INC. STATEMENT 1
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
U.S. Funds
<CAPTION>
31 January 30 April
ASSETS 1997 1996
(UNAUDITED -
PREPARED BY MANAGEMENT)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Cash $ 7,896 $ 38,889
Accounts receivable 6,568 -
Work in progress 5,530 -
Inventory 47,939 1,080
Prepaid expenses 393 6,216
-------------------------------
68,326 46,185
CAPITAL ASSETS, NET OF AMORTIZATION 4,340 -
LICENSE COSTS (NOTE 4) 5,600 5,600
PREPAID ROYALTY COSTS, NET OF
AMORTIZATION OF $3,261 (NOTE 9B) 18,478 -
---------------------------------------------------------------------------
$ 96,744 $ 51,785
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
CURRENT Accounts payable $ 52,929 $ 26,522
---------------------------------------------------------------------------
DUE TO A RELATED PARTY (Note 5) 12,580 12,580
---------------------------------------------------------------------------
OBLIGATION TO ISSUE SHARE CAPITAL
(Note 6) 138,750 -
---------------------------------------------------------------------------
CONTINUED OPERATIONS (Note 1)
SHAREHOLDERS' EQUITY (DEFICIENCY)
- -------------------------------------------------------------------------------------------------------------------
SHARE CAPITAL (Notes 7 and 9a) 356,300 186,300
DEFICIT - Statement 2 (463,815) (173,617)
---------------------------------------------------------------------------
$ 96,744 $ 51,785
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
ON BEHALF OF THE BOARD:
__________________________, Director
__________________________, Director
- See Accompanying Notes -
<PAGE>
<TABLE>
INTERACTIVE PROCESSING, INC. STATEMENT 2
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS AND DEFICIT
U.S. FUNDS
<CAPTION>
Nine Months Period
Cumulative Ended Ended
from 31 January 30 April
Inception 1997 1996
(UNAUDITED - (UNAUDITED -
PREPARED BY PREPARED BY
MANAGEMENT) Management)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE Sales $ 28,630 $ 28,630 $ -
COST OF GOODS SOLD 25,644 25,644 -
---------------------------------------------------------------------------
GROSS PROFIT 2,986 2,986 -
---------------------------------------------------------------------------
EXPENSES Marketing and product development 211,429 106,717 104,712
Consulting fees 85,409 58,758 26,651
Legal 33,770 24,270 9,500
Travel and promotion 19,579 10,680 8,899
Investor relations 38,160 31,554 6,606
Accounting and audit 8,872 3,222 5,650
Office 35,554 29,924 5,630
Filing fees 7,355 3,200 4,155
Amortization 7,782 7,782 -
Rent 10,212 10,212 -
Salaries 5,511 5,511 -
Director fees 1,000 - 1,000
Transfer agent 1,505 905 600
Bank charges 663 449 214
-------------------------------------
466,801 293,184 173,617
---------------------------------------------------------------------------
LOSS FOR THE PERIOD (463,815) (290,198) (173,617)
Retained earnings (deficit)
- Beginning of period - (173,617) -
---------------------------------------------------------------------------
DEFICIT - END OF PERIOD $ (463,815) $(463,815) $ (173,617)
- -------------------------------------------------------------------------------------------------------------------
LOSS PER SHARE - BASIC $ (0.06) $ (0.03) $ (0.07)
- -------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,895,684 9,767,545 2,666,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
<PAGE>
<TABLE>
INTERACTIVE PROCESSING, INC. STATEMENT 3
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOW
U.S. FUNDS
<CAPTION>
Nine Months Period
Cumulative Ended Ended
from 31 January 30 April
CASH RESOURCES PROVIDED BY (USED IN) Inception 1997 1996
(UNAUDITED - (UNAUDITED -
PREPARED BY PREPARED BY
MANAGEMENT) Management)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES Loss for the year $ (463,815) $ (290,198) $ (173,617)
Amortization 7,782 7,782 -
-------------------------------------
(456,033) (282,416) (173,617)
---------------------------------------------------------------------------
Changes in non-cash working capital
Work in progress (5,530) (5,530) -
Inventory (47,939) (46,859) (1,080)
Accounts receivable (6,568) (6,568) -
Prepaid expenses (393) 5,823 (6,216)
Accounts payable 52,929 26,407 26,522
-------------------------------------
(7,501) (26,727) 19,226
---------------------------------------------------------------------------
(463,534) (309,143) (154,391)
---------------------------------------------------------------------------
FINANCING ACTIVITIES Share capital issued 395,700 170,000 225,700
Obligation to issue share capital 138,750 138,750 -
Due from related party 12,580 - 12,580
Share issuance costs (45,000) - (45,000)
-------------------------------------
502,030 308,750 193,280
---------------------------------------------------------------------------
INVESTING ACTIVITIES Capital assets purchased (5,600) (5,600) -
Prepaid royalty costs (25,000) (25,000) -
-------------------------------------
(30,600) (30,600) -
---------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 7,896 (30,993) 38,889
Cash position - Beginning of period - 38,889 -
---------------------------------------------------------------------------
CASH POSITION - END OF PERIOD $ 7,896 $ 7,896 $ 38,889
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
SUPPLEMENTARY SCHEDULE OF NON-CASH TRANSACTION SCHEDULE
FOR THE PERIODS ENDED 31 JANUARY 1997 AND 30 APRIL 1996
U.S. FUNDS
- --------------------------------------------------------------------------------
The following non-cash transaction occurred during the period ended 30 April
1996:
- - Issued 5,600,000 commmon shares at $0.01 per share to purchase electronic
product licenses (Note 4).
No non-cash transactions occurred during the period ended 31 January 1997
(Unaudited - Prepared by Management).
- --------------------------------------------------------------------------------
- See Accompanying Notes -
<PAGE>
INTERACTIVE PROCESSING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
31 JANUARY 1997 (UNAUDITED - PREPARED BY MANAGEMENT)
AND 30 APRIL 1996
U.S. FUNDS
- --------------------------------------------------------------------------------
1. CONTINUED OPERATIONS These financial statements are prepared
on a going concern basis which assumes
that the company will be able to realize
assets and discharge liabilities in the
normal course of business. As at 30
April 1996 the company had a deficit of
$173,617 (31 January 1997 - $463,815 -
UNAUDITED - PREPARED BY MANAGEMENT). The
company is not yet generating
significant sales revenue and does not
have sufficient cash flow to finance
obligations for marketing rights,
administrative and overhead expenses.
These factors raise substantial doubt
about the company's ability to continue
as a going concern. These financial
statements do not include any
adjustments that might result from the
outcome of these uncertainties. The
ability to continue as a going concern
is dependent on its ability to:
a) Generate profitable operations in
the future.
b) Obtain additional financing.
Management plans to raise funds through
issuance of treasury shares to finance
ongoing operations and commitments until
sufficient cash flow from operations is
generated.
- --------------------------------------------------------------------------------
2. NATURE OF OPERATIONS The company was incorporated on 15
September 1995 under the laws of the
State of Nevada. The business purpose of
the company is to engage in the
marketing and sale of high tech consumer
electronics.
The company began active operations in
December 1995 by issuing seed stock for
cash and investigating the potential
market for a consumer electronic
product.
On 17 April 1996, the company purchased
the manufacturing and marketing rights
to an electronic product (NOTE 4).
On 16 July 1996, the company purchased
the licensing rights to promote a second
product (NOTE 9B).
These financial statements present the
results of the company's operations in
the 229 day period since inception to 30
April 1996 and the nine month period
ended 31 January 1997 (UNAUDITED -
PREPARED BY MANAGEMENT).
- --------------------------------------------------------------------------------
3. SIGNIFICANT ACCOUNTING
POLICIES a) INVENTORY
Inventory is valued at lower of cost
and net realizable value.
b) LICENSE COSTS
License costs are deferred and
amortized over three years beginning
with commercial production.
c) PREPAID ROYALTY COSTS
Prepaid royalty costs are deferred
and amortized at the greater of:
i) straight line over the 23 month
term of the contract, or
ii) the royalty rate under the terms
of the contract.
- --------------------------------------------------------------------------------
<PAGE>
INTERACTIVE PROCESSING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
31 JANUARY 1997 (UNAUDITED - PREPARED BY MANAGEMENT)
AND 30 APRIL 1996
U.S. FUNDS
- --------------------------------------------------------------------------------
3. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED d) WORK IN PROGRESS
Work in progress is carried at the
lower of cost and estimated net
realizable value, and to 31 January
1997 is represented by cash advances
made to a manufacturer of the
product.
e) INTERIM FINANCIAL STATEMENTS
The financial statements as of 31
January 1997 and for the nine months
ended 31 January 1997 are unaudited.
In the opinion of management the
interim financial statements include
all adjustments which management
considers necessary for a fair
presentation of the financial
condition and the operating results
and cash flows for those periods. In
addition, all such adjustments are
of a normal, recurring nature.
Interim periods may not be
indicative of results for the entire
year.
- --------------------------------------------------------------------------------
4. LICENSE AGREEMENTS Under the terms of four agreements dated
17 April 1996, the company purchased the
non-exclusive rights to develop,
manufacture, market, distribute and sell
a patented product known as the "TV
Terminator" in most countries around the
world.
The company agreed to pay consideration
to the licensors as follows:
a) 5,600,000 common shares (issued).
b) Royalties of $1.50 for each unit
sold by the company or any sub-
licensee of the company due on a
quarterly basis.
- --------------------------------------------------------------------------------
5. DUE TO RELATED PARTY Amounts due to a company controlled by a
director are non-interest bearing,
unsecured, and have no specific terms of
repayment.
- --------------------------------------------------------------------------------
6. OBLIGATION TO ISSUE SHARE
CAPITAL The company has received funds for which
management intends to issue treasury
shares under a private placement. To
date the obligation is unsecured and
non-interest bearing. No agreement has
been reached with the prospective
shareholders for the share issuance.
- --------------------------------------------------------------------------------
<PAGE>
INTERACTIVE PROCESSING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
31 JANUARY 1997 (UNAUDITED - PREPARED BY MANAGEMENT)
AND 30 APRIL 1996
U.S. FUNDS
- --------------------------------------------------------------------------------
7. SHARE CAPITAL a) Details are as follows:
<TABLE>
<CAPTION>
31 January 1997 30 April 1996
(UNAUDITED - PREPARED
BY MANAGEMENT)
--------------------- ---------------------
Number Amount Number Amount
---------------------------------------------------------------------------------
Authorized:
i) As at 30 April 1996
25,000,000 common shares with a par value of $0.001
ii) As at 31 January 1997 (UNAUDITED - PREPARED BY MANAGEMENT)
20,000,000 common shares with a par value of $0.001
5,000,000 cumulative, convertible, preferred shares with a par value
of $0.001
Issued and fully paid:
Common shares
<S> <C> <C> <C> <C>
Opening balance 9,419,000 $ 186,300 - $ -
- private placements 607,143 170,000 3,819,000 225,700
- for license costs - - 5,600,000 5,600
- share issuance costs - - - (45,000)
---------------------------------------------------------------------------------
10,026,143 $ 356,300 9,419,000 $ 186,300
---------------------------------------------------------------------------------
</TABLE>
b) Of the total issued and outstanding
common shares of the company,
5,600,000 are restricted from
trading until 17 April 1998.
<TABLE>
c) Stock options issued to directors in
the 31 January 1997 period are as
follows:
<CAPTION>
Number Price Expiry Date
-----------------------------------------------------------------------
<S> <C> <C> <C>
500,000 $ 0.656 16 August 2006
</TABLE>
d) On 29 April 1996, the company began
trading its shares on the National
Association of Security Dealers
("NASD") over-the-counter market.
e) Subsequent to the period ended 30
April 1996, the authorized share
capital was amended to 20,000,000
common shares and 5,000,000
cumulative, convertible, preferred
shares. The preferred shares are
redeemable after 31 December 1997 at
$0.50 per share and carry a 10%
dividend rate. No preferred shares
are issued at 31 January 1997
(UNAUDITED - PREPARED BY
MANAGEMENT).
- --------------------------------------------------------------------------------
8. RELATED PARTY TRANSACTIONS The following related party transactions
are at fair market value as estimated by
management:
a) During the period ended 30 April
1996:
i) INVENTORY
The company purchased 60 units
of a consumer electronics
product at cost from a company
controlled by a director for
$18 per unit.
ii) ACCOUNTS PAYABLE
Included in accounts payable is
$7,933 owing to a company
controlled by a director.
<PAGE>
INTERACTIVE PROCESSING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
31 JANUARY 1997 (UNAUDITED - PREPARED BY MANAGEMENT)
AND 30 APRIL 1996
U.S. FUNDS
- --------------------------------------------------------------------------------
8. RELATED PARTY TRANSACTIONS
- CONTINUED a) - CONTINUED
iii) MARKETING AND PRODUCT
DEVELOPMENT
Included in marketing expense
are fees of $57,095 paid to a
company controlled by a
director.
iv) CONSULTING FEES EXPENSE
Included in consulting fees
expense is $10,301 paid to a
company controlled by a
director. An additional $8,000
of consulting fees were paid to
a company controlled by a
second director.
v) OFFICE EXPENSE
Included in office expense is
$3,500 in rent paid to a
company controlled by a
director.
b) During the period ended 31 January
1997 (UNAUDITED - PREPARED BY
MANAGEMENT):
i) CONSULTING FEES EXPENSE
Included in consulting fees
expense is $31,000 paid to a
company controlled by a
director. An additional $12,658
of consulting fees were paid to
a company controlled by a
second director.
ii) OFFICE EXPENSE
Included in office expense is
$700 in rent paid to a company
controlled by a director.
- --------------------------------------------------------------------------------
9. SUBSEQUENT EVENTS a) SHARE CAPITAL ISSUED
On 28 August 1996, the company
agreed to issue 607,143 treasury
shares for cash consideration of
$0.28 per share for a total of
$170,000.
<PAGE>
INTERACTIVE PROCESSING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
31 JANUARY 1997 (UNAUDITED - PREPARED BY MANAGEMENT)
AND 30 APRIL 1996
U.S. FUNDS
- --------------------------------------------------------------------------------
9. SUBSEQUENT EVENTS - CONTINUED b) LICENSE AGREEMENT
Under the terms of an agreement
dated 16 July 1996, the company
purchased the exclusive licensing
rights in the United States and
Canada for the use of the trademarks
of the "Married ... with Children"
television series to promote the
company's "The Bundy Sport Remote"
product.
The licensing rights expire on 30
June 1998 but can be terminated by
the licensor under certain
conditions.
The company will pay a royalty of
10% to 12% of net sales depending
upon the terms of the product sale.
The company has guaranteed a minimum
of $75,000 in total royalties during
this term. The first $25,000 of the
total guaranteed minimum was due as
an advance upon signing the
agreement (paid).
Until 12 July 1997, the company has
an option to extend the agreement to
exclusively worldwide by paying an
additional $25,000. In addition, if
the company has paid the guaranteed
minimum royalty and met certain
sales targets, it can extend the
term of the agreement to 30 June
2000 by providing written notice by
1 May 1998.
c) STOCK OPTIONS ISSUED
On 16 August 1996, the company
granted incentive stock options to
Sheldon Silverman (300,000 shares)
and Keith Balderson (200,000 shares)
exercisable at $0.656 per share
until 16 August 2006. Both are
directors of the company.
- --------------------------------------------------------------------------------
<PAGE>
INTERACTIVE PROCESSING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1997
(UNAUDITED)
10. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and Item 310(b) of Regulation SB. They do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation have been included. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for the
full year. For further information, refer to the financial statements of the
Company as of April 30, 1996, and the notes thereto, included in the Company's
Form 10-SB/A.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
Since the Company's inception in September 1995, the Company has been
engaged primarily in raising its initial capitalization and obtaining license
agreements critical to its business plan. Through April 30, 1996, gross proceeds
of $225,700 were obtained through the sale of the Company's Common Stock. In
August 1996, an additional $170,000 in gross proceeds were obtained through the
sale of the Company's Common Stock, pursuant to Rule 504 of Regulation D
promulgated under the Act. See Part II, Item 4. Recent Sales of Unregistered
Securities.
The Company's working capital was $19,663 at April 30, 1996, and
decreased to $15,397 at January 31, 1997. The decrease was due primarily to the
costs associated with the production and marketing of the TV Terminator ("TVT")
and the development of the Company's other TVT based products.
Management is negotiating the terms of a private placement with
prospective investors, who are not affiliated with the Company. As of January
31, 1997, the Company had received $138,750 in funds from these investors, who
originally intended to invest in the Company's prior offering under Rule 504. No
shares were issued to these investors, since the Company's stock was trading
significantly below the offering price. Management intends to offer up to
$400,000 in common stock at $0.20 per share. Management anticipates that any
such offering would be pursuant to the registration exemption provided by
Regulation D, as promulgated under the Securities Act of 1933, as amended. The
funds received by the Company have been accounted for as a liability, until the
shares are issued. Management believes the proceeds of this offering, if
successful, would provide the Company with sufficient funds to continue
operations into the fall of 1997.
12
<PAGE>
RESULTS OF OPERATIONS
The Company was formed on September 15, 1995, and has only been subject
to the reporting requirements of the Securities Exchange Act of 1934 since
January 24, 1997. Therefore, the Company has no comparable financial statements
for the nine month period ended January 31, 1997. The following discussion is
based upon the Company's operations from inception and for the nine month period
ending January 31, 1997, without reference to any comparable period.
The Company has not yet generated significant revenues. For the nine
months ended January 31, 1997, revenues of only $28,630 have been generated.
Expenses incurred for the nine months ending January 31, 1997 of $293,184 were
primarily for marketing, product development, and consulting fees. The research
and development on the TV Terminator ("TVT") has been completed. The Company is
in negotiations with AIFA Technology Corp., a Taiwanese company ("AIFA"), to
expand the Company's line of remotes. As of March 15, 1997, the Company's
negotiations with AIFA have focused on the Company acquiring the exclusive
marketing rights in the United States and Canada for AIFA's EZ 5-in-1 and URC5
remotes. The Company is also negotiating with AIFA for an option on the
marketing rights in South America and Europe. As of March 7, 1997, no definitive
agreement had been entered into with AIFA. If the Company's negotiations with
AIFA are successful, the Company may also incur development and marketing cost
on these products in the near future.
Management is continuing to pursue licensing agreements with other
organizations and companies, in an effort to increase the marketability of the
Company's Football Sport Remote.
Expenses for the nine months ended January 31, 1997 in the amount of
$293,184 were incurred primarily for consulting fees ($58,758), investor
relations ($31,554), legal ($24,270), office ($29,924), and marketing and
product development ($106,717). Consulting services were provided to the Company
by S.A. Alden Holdings, Inc. ("S.A. Alden"), a company owned by Mr. Balderson's
wife. S.A. Alden provides the Company with management and contract negotiations
expertise. The Company also received consulting services relating to
distribution of the Company's products, from Golden Treasures, a company owned
and controlled by Sheldon Silverman. During the nine months ended January 31,
1997, the Company had paid $31,000 to Golden Treasures and $12,658 to S.A.
Alden. The Company's investor relations fees includes the costs of providing
answers to investors' questions, including the associated costs for travel and
the fees paid to Mr. Jeffery, an independent contractor.
As a result of its operations through January 31, 1997, the Company had
an accumulated deficit as of January 31, 1997 of $465,815. Note 1 of the Notes
to Financial Statements included herein states that substantial doubt has been
raised about the Company's ability to continue as a going concern. The ability
of the Company to continue as a going concern is dependent on its ability to
generate profitable operations in the future and obtain additional financing.
Management plans to raise the funds, through the issuance of additional shares
of stock, necessary to finance ongoing operations and commitments until
sufficient cash flow from operations is generated; however, there can be no
assurance that the Company will be able to do so. See Liquidity and Capital
Resources, above.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not Applicable.
ITEM 2. CHANGES IN SECURITIES.
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 5. OTHER INFORMATION.
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
A) EXHIBITS
<CAPTION>
REGULATION SEQUENTIAL
S-B NUMBER EXHIBIT PAGE
NUMBER
<S> <C> <C>
2 PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, N/A
LIQUIDATION, SUCCESSION
3 ARTICLES OF INCORPORATION, AS AMENDED (1)<F1> N/A
3 BYLAWS, AS AMENDED (1)<F1> N/A
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS N/A
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (2)<F2> N/A
15 LETTER ON UNAUDITED FINANCIAL INFORMATION (2)<F2> N/A
18 LETTER ON CHANGE IN ACCOUNTING PRINCIPLES N/A
19 REPORT FURNISHED TO SECURITY HOLDERS N/A
22 PUBLISHED REPORT REGARDING MATTERS SUBMITTED TO VOTE OF N/A
SECURITY HOLDERS
23 CONSENTS OF EXPERTS AND COUNSEL N/A
24 POWER OF ATTORNEY N/A
27 FINANCIAL DATA SCHEDULE 16
- ------------
<FN>
<F1>
(1) INCORPORATED BY REFERENCE TO THE EXHIBITS FILED WITH THE COMPANY'S FORM 10-SB.
COMMISSION FILE NUMBER 0-21791.
<F2>
(2) SEE PART I - FINANCIAL STATEMENTS.
</FN>
</TABLE>
14
<PAGE>
B) REPORTS ON FORM 8-K:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTERACTIVE PROCESSING, INC.
(Registrant)
Date: March 17, 1997 By:/s/Sheldon Silverman
Sheldon Silverman
Principal Financial Officer
President and Chief Executive Officer
Date: March 17, 1997 By:/s/Keith Balderson
Keith Balderson
Vice-President, Secretary and Treasurer
13197.10Q
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
BALANCE SHEET, STATEMENT OF LOSS AND DEFICIT, STATEMENT OF CASH FLOW AND THE
NOTES THERETO, CONTAINED ON PAGES 4 THROUGH 11 OF THE COMPANY'S FORM 10-QSB FOR
THE PERIOD ENDING JANUARY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JAN-31-1997
<EXCHANGE-RATE> 1
<CASH> 7,896
<SECURITIES> 0
<RECEIVABLES> 6,568
<ALLOWANCES> 0
<INVENTORY> 53,469
<CURRENT-ASSETS> 68,326
<PP&E> 5,600
<DEPRECIATION> 1,260
<TOTAL-ASSETS> 96,744
<CURRENT-LIABILITIES> 52,929
<BONDS> 0
0
0
<COMMON> 356,300
<OTHER-SE> (463,815)
<TOTAL-LIABILITY-AND-EQUITY> 96,744
<SALES> 28,630
<TOTAL-REVENUES> 28,630
<CGS> 25,644
<TOTAL-COSTS> 25,644
<OTHER-EXPENSES> 293,184
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (290,198)
<INCOME-TAX> 0
<INCOME-CONTINUING> (290,198)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (290,198)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
