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FORM 10-QSB
[As last amended in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from ______________ to ________________
CINTECH TELE-MANAGEMENT SYSTEMS, INC.
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(Exact name of small business issuer as specified in its charter)
OHIO 31-1200684
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2100 Sherman Avenue, Cincinnati, Ohio 45212
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(Address of principal executive offices)
(513) 731-6000
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(Issuer's telephone number)
____________N/A
(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 X No
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APPLICABLE ONLY TO CORPORATE ISSUERS
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State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 12,320,889 SHARES OF COMMON
STOCK AS OF MARCH 31, 2000.
Transitional Small Business Disclosure Format (check one): Yes No X
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
The condensed financial statements attached to the end of this
quarterly report are filed as part of this quarterly report. The financial
statements include all adjustments, which in the opinion of management are
necessary in order to make the financial statements not misleading.
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION.
The following selected financial information set forth below has been
derived from the unaudited condensed financial statements of the Company. This
discussion and analysis should be read in conjunction with such financial
statements. All amounts are in US dollars.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS
ENDED MARCH 31, 1999
Sales for the three months ended March 31, 2000 were $2,823,000
compared to $2,979,000 for the same period last year. The $156,000 or 5%,
decrease in sales is due to a 19% decrease in ACD revenue and a 7% decrease in
other CTI software revenue, offset by a 71% increase in services revenue.
Gross profit of $2,140,000 was $84,000, or 4%, higher than the
corresponding period of last year. Gross profit as a percentage of sales was 76%
or 7% higher than that experienced during the same period of the prior year.
Research and development costs of $190,000 were $91,000, or 92%, higher
than the comparable prior year period. Selling, general and administrative
expenses of $1,421,000 were $133,000, or 10%, higher than the comparable prior
year period.
The Company realized income from operations of $528,000, or 19%, for
the three months ended March 31, 2000 compared to income from operations of
$668,000, or 22%, reported for the same period last year.
Other income was $103,000 as compared to $34,000 for the comparable
prior year period.
The income tax provision of $126,000 for the three months ended March
31, 2000 as compared to $69,000 for the comparable prior year period is due to
taxable income exceeding net operating loss carryforwards available for Federal
tax purposes.
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The Company realized Net Income of $505,000 for the three months ended
March 31, 2000 compared to Net Income of $633,000 reported for the same period
last year. Earnings Per Share, basic and diluted, were $0.04, versus $0.05 per
share, reported for the comparable prior year period.
FOR THE NINE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE NINE MONTHS
ENDED MARCH 31, 1999
Sales for the nine months ended March 31, 2000 were $9,676,000 compared
to $8,496,000 for the same period last year. The $1,180,000 or 14%, increase in
sales is due to a 10% increase in ACD revenue and a 49% increase in services
revenue, offset by an 15% decrease in other CTI software revenue.
Gross profit of $7,063,000 was $1,155,000, or 20%, higher than the
corresponding period of last year. This increase in gross profit is a direct
result of the increase in sales volume. Gross profit as a percentage of sales
was 73% or 3% higher than that experienced during the same period of the prior
year.
Research and development costs of $467,000 were $172,000, or 58%,
higher than the comparable prior year period. Selling, general and
administrative expenses of $4,201,000 were $595,000, or 16%, higher than the
comparable prior year period.
The Company realized income from operations of $2,395,000, or 25%, for
the nine months ended March 31, 2000 compared to income from operations of
$2,007,000, or 24%, reported for the same period last year.
Other income was $229,000 as compared to $77,000 for the comparable
prior year period.
The income tax provision of $591,000 for the nine months ended March
31, 2000 as compared to $69,000 for the comparable prior year period is due to
taxable income exceeding net operating loss carryforwards available for Federal
tax purposes.
The Company realized Net Income of $2,032,000 for the nine months ended
March 31, 2000 compared to Net Income of $2,015,000 reported for the same period
last year. Earnings Per Share, basic and diluted, were $0.17 and $0.16
respectively, versus $0.16 per share, basic and diluted, reported for the
comparable prior year period.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital increased to $7.4 million as compared to $3.9 million
for the corresponding period of last year. The increase of $3.5 million is
primarily due to increases in cash and marketable securities of $3.5 million and
deferred income taxes of $0.4 million, which were offset by a decrease in
accounts receivable of $0.4 million and an increase in deferred maintenance
revenue of $0.3 million. The increases in cash and marketable securities reflect
the increase in sales volume and profitability experienced by the Company in
fiscal 1999 and continued profitability to date in fiscal 2000.
As of March 31, 2000, the Company held cash and marketable securities
totaling approximately $8.6 million and had no outstanding long-term debt
obligations.
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The Company's plan of operation is to continue distributing its contact
center solutions and development of services revenue. The Company has no
material commitments for capital expenditures. The Company feels that there are
no significant elements of income or loss that does not arise from the Company's
continuing operations.
YEAR 2000 COMPLIANCE
The Company has not experienced and does not anticipate experiencing
any significant Year 2000 problems related to its internal operating systems.
The costs for Year 2000 problems, which was less than $20,000, was funded
through operating cash flows of prior periods. The Company believes that no
significant future costs will be incurred to address the Year 2000 issue.
The Company has evaluated all of its products for Year 2000 readiness.
The evaluation included comprehensive testing of the capability of its products
to handle the transition to and operate in the Year 2000. The Company has not
experienced and does not anticipate experiencing any significant Year 2000
problems with its products. Additional information regarding the Year 2000
readiness of the Company's products or services is available through the
Company's website: www.cintech-cti.com.
In addition, the Company has not experienced and does not anticipate
experiencing any significant Year 2000 problems related to its significant
suppliers and customers.
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PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
The following Exhibits are required by Item 601 of
Regulation S-B:
PAGE
EXHIBIT NO. 2 - Plan of Acquisition, Reorganization, Arrangement,
Liquidation, or Succession...........................N/A
EXHIBIT NO. 3 - (I) Articles of Incorporation, (ii) By-laws ...........*
EXHIBIT NO. 4 - Instruments Defining
Rights of Security Holders...........................N/A
EXHIBIT NO. 10 - Material Contracts.................................*, **
EXHIBIT NO. 11 - Statement re: Computation of Per Share Earnings .....N/A
EXHIBIT NO. 15 - Letter on Unaudited Interim Financial Information....N/A
EXHIBIT NO. 18 - Letter on Change in Accounting Principles............N/A
EXHIBIT NO. 19 - Reports Furnished to Security-Holders................N/A
EXHIBIT NO. 22 - Published Report Regarding Matters Submitted to
Vote ................................................N/A
EXHIBIT NO. 23 - Consent of Experts and Counsel.......................N/A
EXHIBIT NO. 24 - Power of Attorney....................................N/A
EXHIBIT NO. 99 - Additional Exhibits..................................N/A
* Previously provided in original filing on Form 10-SB.
** Previously provided in Amendment No. 2 to Form 10-SB.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, Cintech Tele-Management Systems, Inc., as Registrant, has caused this
Report on Form 10-QSB to be signed on its behalf by the undersigned, thereunto
duly authorized.
CINTECH TELE-MANAGEMENT SYSTEMS, INC.
By: /s/ Diane M. Kamionka Date: May 15, 2000
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Diane M. Kamionka
President and Chief Executive Officer
By: /s/ Michael E. Freese Date: May 15, 2000
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Michael E. Freese
Director of Finance and Administration
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