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, 1998

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from to
--------------- ---------------

CINTECH TELE-MANAGEMENT SYSTEMS, INC.
-------------------------------------
(Exact name of small business issuer as specified in its charter)

OHIO 31-1200684
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)

2100 Sherman Avenue, Cincinnati, Ohio 45212
-------------------------------------------
(Address of principal executive offices)

(513) 731-6000
---------------------------
(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
----- -----

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 12,279,751 shares of common
stock as of March 31, 1998.

Transitional Small Business Disclosure Format (check one): Yes No X
--- ---

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

The 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 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 nine months ended March 31, 1998 compared to the nine months
ended March 31, 1997

Sales for the nine months ended March 31, 1998 were $6,745,000 compared
to $5,063,000 for the same period last year. The $1,682,000 or 33%, increase in
sales is primarily attributable to the combined effects of a 57% increase in ACD
unit volume and a 97% increase in training, installation and maintenance revenue
which were slightly offset by a 21% decrease in sales realized from the
Tele-Series call accounting product. During September 1997, the Company released
its new MINUET ACD product which is distributed by Nortel.

Gross Margin of $4,376,000 was $1,892,000 or 76%, greater than the
corresponding period of last year. Approximately $800,000 of the increase in
Gross Margin was due to the Company's decision to record a reserve for OCTuS
PCTA inventory during the third fiscal quarter of last year. Excluding the
impact of the OCTuS PCTA inventory reserve, Gross Margin increased $1,092,000 or
33% as compared to the same period last year. This increase in Gross Margin is a
direct result of the increase in sales volume. Gross Margin as a percentage of
sales was 65% or 1% less than that experienced during the same period of the
prior year excluding the OCTuS PCTA inventory reserve. This difference in Gross
Margin percentage is due primarily to fluctuations in product mix.

Research and Development costs increased to $409,000 or 34%, over the
same prior year period. This reflects the Company's continued efforts to produce
new products such as the MINUET ACD for Nortel which began distribution in
September. Selling, General and Administrative (S,G&A) expenses of $3,424,000
were approximately $98,000 or 3%, lower than the comparable prior year period.

2
3

The Company realized Net Income of $570,000 for the nine months ended
March 31,1998 compared to a $1,321,000 Net Loss reported for the same period
last year. Earnings Per Share were $0.05 versus a $0.11 Loss Per Share reported
for the prior year quarter. Excluding the effects of the OCTuS PCTA inventory
reserve in the corresponding period of last year, the Company would have
realized a Net Loss of $521,000 and Loss Per Share of $0.04 for the comparable
prior year period.

Liquidity and Capital Resources

Working Capital increased by approximately $773,000 or 120%, to
$1,420,000 when compared to the corresponding period of last year. The increase
is primarily due to the $755,000 increase in cash and marketable securities
offset by a decrease in accounts receivable of $112,000 and an increase in
deferred maintenance revenue of $197,000. The increases in cash and marketable
securities reflect the profitability experienced by the Company thus far during
fiscal 1998.

As of March 31, 1998, Cintech held cash and marketable securities
totaling approximately $1,605,000 and had no outstanding long-term debt
obligations.

The Company's plan of operation is to continue distributing its
ACD-related products via joint marketing agreements with Northern Telecom and
NEC America. The Company believes that increases in sales and/or the liquidation
of marketable securities will provide sufficient cash flow to meet these
expenses in future periods. The Company has no material commitments for capital
expenditures, nor is the Company subject to seasonal aspects that could be
expected to have a material effect on the Company's financial condition or its
results of operations. The Company feels that there are no significant elements
of income or loss that do not arise from the Company's continuing operations.

3
4

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) 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

(b) On September 15, 1995, the Company changed its fiscal year end to
June 30 commencing June 30, 1995. The Company filed a Form 8-K regarding this
change in fiscal year on September 26, 1995. This form is incorporated in this
report by reference.

* Previously provided in original filing on Form 10-SB.

** Previously provided in Amendment No. 2 to Form 10-SB.

4
5

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, 1998
---------------------------------
Diane M. Kamionka, President and
Chief Executive Officer

By: /s/ MICHAEL E. FREESE Date: May 15, 1998
---------------------------------
Michael E. Freese, Controller