-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FobMJCamhDnXbtkBrQREjH9VHgkKbwPwjPwEYQ2P/lI/Jnk0S7+WaDroZoft0Iby +0cfiKs+wDlBZq2v9GhuPA== 0000950153-99-001407.txt : 19991117 0000950153-99-001407.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950153-99-001407 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNTELLECT INC CENTRAL INDEX KEY: 0000758830 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 860486871 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18323 FILM NUMBER: 99752346 BUSINESS ADDRESS: STREET 1: 1000 HOLCOMB WOODS PARKWAY STREET 2: SUITE 410A CITY: ROSWELL STATE: GA ZIP: 30076 BUSINESS PHONE: 7705870700 MAIL ADDRESS: STREET 1: 1000 HOLCOMB WOODS PARKWAY STREET 2: SUITE 410A CITY: ROSWELL STATE: GA ZIP: 30076 10-Q 1 10-Q 1 =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________________________ FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 0 - 18323 SYNTELLECT INC. (Exact name of registrant as specified in its charter) Delaware 86-0486871 (State or other jurisdiction of (IRS employer identification number) incorporation) 20401 North 29th Avenue, Phoenix, Arizona 85027 (Address of principal executive office) (Zip Code) (602) 789-2800 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 12,080,489 shares of common stock, $.01 par value per share, were outstanding on November 13, 1999. =============================================================================== 1 2 SYNTELLECT INC. AND SUBSIDIARIES INDEX
Page ---- PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Unaudited Condensed Consolidated Balance Sheets - September 30, 1999 and December 31, 1998 3 Unaudited Condensed Consolidated Statements of Operations - Three Months and Nine Months Ended September 30, 1999 and September 30, 1998 4 Unaudited Condensed Consolidated Statements of Cash Flows- Nine Months Ended September 30, 1999 and September 30, 1998 5 Notes to Condensed Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 ITEM 3. Quantitative and Qualitative Disclosure about Market Risk 12 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14 EXHIBITS Exhibit Index 15
2 3 ITEM 1. FINANCIAL STATEMENTS SYNTELLECT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except shares and per share amounts)
September 30, December 31, 1999 1998 ------------- ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents $ 3,429 $ 3,236 Marketable securities ($1,100 restricted) 3,690 8,298 Trade receivables, net of allowance for doubtful accounts of $1,026 and $932, respectively 13,051 11,202 Inventories, net 2,259 2,973 Prepaid expenses 630 963 ------- ------- Total current assets 23,059 26,672 Property and equipment, net 4,888 5,429 Other assets 166 32 ------- ------- Total Assets $28,113 $32,133 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $1,629 $2,560 Accrued liabilities 4,105 3,278 Customer deposits 4,590 3,080 Deferred revenue 2,893 2,717 Capital lease obligations - current portion 227 240 ------- ------- Total current liabilities 13,444 11,875 Capital lease obligations - non-current portion 381 445 ------- ------- Total liabilities 13,825 12,320 ------- ------- Shareholders' equity: Preferred stock, $.01 par value per share. Authorized 2,500,000 shares; no shares issued or outstanding - - Common stock, $.01 par value per share. Authorized 25,000,000 shares; issued, 13,841,421 and 13,699,095, respectively 138 137 Additional paid-in capital 61,106 60,917 Accumulated deficit (42,267) (40,072) Accumulated other comprehensive loss (41) (21) -------- -------- 18,936 20,961 Treasury stock, at cost, 1,760,932 and 179,232 shares, respectively (4,648) (1,148) -------- -------- Total shareholders' equity 14,288 19,813 -------- ------- Total liabilities and shareholders' equity $28,113 $32,133 ======= ======= See accompanying notes to condensed consolidated financial statements.
3 4 SYNTELLECT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1999 1998 1999 1998 ---- ---- ---- ---- Net revenues: System sales $ 6,599 $ 6,503 $ 18,466 $ 16,139 Service bureau 1,978 2,202 6,149 6,716 Maintenance and other services 5,480 3,961 11,703 12,276 -------- -------- -------- -------- Total net revenues 14,057 12,666 36,318 35,131 Cost of revenues: System sales 3,342 3,657 10,853 9,722 Service bureau 1,168 1,094 3,962 3,756 Maintenance and other services 1,908 1,016 4,258 3,308 -------- -------- -------- -------- Total cost of revenues 6,418 5,767 19,073 16,786 -------- -------- -------- -------- Gross margin 7,639 6,899 17,245 18,345 Operating expenses: Selling, marketing and administrative 4,338 5,100 14,860 15,263 Research and development 1,075 1,400 3,442 4,254 Depreciation and amortization 640 626 1,864 2,015 -------- -------- -------- -------- Total operating expenses 6,053 7,126 20,166 21,532 -------- -------- -------- -------- Operating income (loss) 1,586 (227) (2,921) (3,187) Other income (expense), net Interest income 54 137 231 503 Other 493 (15) 495 (31) -------- -------- -------- -------- Total other income 547 122 726 472 -------- -------- -------- -------- Income (loss) before income taxes 2,133 (105) (2,195) (2,715) Income taxes -- -- -- -- -------- -------- -------- -------- Net income (loss) $ 2,133 $ (105) $ (2,195) $ (2,715) ======== ======== ======== ======== Net income (loss) per common share - basic $ 0.16 $ (.01) $ (.16) $ (.20) ======== ======== ======== ======== Net income (loss) per common share - diluted $ 0.16 $ (.01) $ (.16) $ (.20) ======== ======== ======== ======== Weighted average shares - basic 13,170 13,651 13,373 13,604 Weighted average shares - diluted 13,550 13,651 13,373 13,604 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 152 22 (14) 64 Unrealized loss on marketable securities -- (11) (6) (3) -------- -------- -------- -------- Other comprehensive income (loss) 152 11 (20) 61 -------- -------- -------- -------- Comprehensive income (loss) $ 2,285 $ (94) $ (2,215) $ (2,654) ======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements. 4 5 SYNTELLECT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Nine Months Ended September 30, ------------- 1999 1998 ---- ---- Cash flows from operating activities: Net loss $(2,195) $(2,715) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 1,864 2,015 Provision for doubtful accounts 821 343 Decrease (increase) in receivables (2,670) (344) Decrease (increase) in prepaid expenses 333 (261) Decrease (increase) in inventories 714 (502) Stock option compensation expense - 16 Increase (decrease) in accounts payable (931) (586) Increase (decrease) in accrued liabilities 827 (857) Increase (decrease) in customer deposits 1,510 1,495 Increase (decrease) in deferred revenues 176 (264) Change in other assets and liabilities (134) (54) ------- ------- Net cash provided (used) by operating activities 315 (1,714) ------- ------- Cash flows from investing activities: Purchase of marketable securities (11,627) (14,195) Maturities of marketable securities 16,235 17,133 Proceeds from notes receivables - 4,250 Purchase of property and equipment (1,202) (1,390) ------- ------- Net cash provided by investing activities 3,406 5,798 ------- ------- Cash flows from financing activities: Proceeds from issuance of common stock 190 117 Purchase of treasury stock (3,500) - Principal payments on long-term debt (198) (149) ------- ------- Net cash used in financing activities (3,508) (32) ------- ------- Effect of exchange rates on cash (20) 63 ------- ------- Net increase in cash and cash equivalents 193 4,115 Cash and cash equivalents at beginning of period 3,236 2,290 ------- ------- Cash and cash equivalents at end of period $ 3,429 $ 6,405 ======= ======= Supplemental disclosure of cash flow information: Cash paid for interest $ 52 $ 53 ======= ======= Capital lease obligations incurred $ 121 $ - ======= =======
See accompanying notes to condensed consolidated financial statements. 5 6 SYNTELLECT INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except shares and per share amounts) (unaudited) (1) Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Syntellect Inc. ("Syntellect" or the "Company") and its wholly-owned subsidiaries, Telecorp Systems, Inc., Syntellect Canada Inc., Syntellect Europe Ltd., Syntellect Deutschland GmbH, Syntellect Technology Corporation and Syntellect Interactive Services, Inc. ("SIS"). All significant intercompany balances and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with generally accepted accounting principles, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the financial statements include all adjustments of a normal recurring nature which are necessary for a fair presentation of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. Although the Company believes that the disclosures are adequate to make information presented not misleading, it is suggested that these financial statements be read in conjunction with the consolidated financial statements, and the notes thereto, included in the Company's 1998 Annual Report on Form 10-K. The results of operations for the three and nine months ended September 30, 1999 are not necessarily indicative of the results to be expected for the full year. Revenue Recognition Syntellect recognizes revenue from sales of systems and services in accordance with Statement of Position 97-2, Software Revenue Recognition ("SOP 97-2"). (2) Business Segments Effective for financial statements for fiscal periods beginning after December 15, 1997, Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information," requires that an enterprise disclose certain information about operating segments. An operating segment is defined as a component of an enterprise that engages in business activities which may earn revenues and incur expenses, whose results are regularly reviewed by a chief operating decision maker, and for which discrete financial information is available. The Company has three operating segments which are organized based on differences in products and services: Systems, Service Bureau ("SB"), and Patents:
QUARTER ENDED SEPTEMBER 30, 1999 SYSTEMS SB PATENTS TOTAL Revenues from customers $ 9,679 $ 1,978 $ 2,400 $ 14,057 Depreciation and amortization 524 116 - 640 Segment income 464 101 1,568 2,133 Expenditures for segment assets 243 147 - 390 QUARTER ENDED SEPTEMBER 30, 1998 Revenues from customers $ 9,881 $ 2,202 $ 583 $ 12,666 Depreciation and amortization 491 135 - 626 Segment income (loss) (869) 360 404 (105) Expenditures for segment assets 189 153 - 342
6 7
NINE MONTHS ENDED SEPTEMBER 30, 1999 SYSTEMS SB PATENTS TOTAL Revenues from customers $ 27,769 $ 6,149 $ 2,400 $ 36,318 Depreciation and amortization 1,514 350 - 1,864 Segment income (loss) (3,837) 74 1,568 (2,195) Expenditures for segment assets 754 569 - 1,323 NINE MONTHS ENDED SEPTEMBER 30, 1998 Revenues from customers $ 26,158 $ 6,716 $ 2,257 $ 35,131 Depreciation and amortization 1,430 585 - 2,015 Segment income (loss) (4,816) 583 1,518 (2,715) Expenditures for segment assets 1,111 279 - 1,390
(3) INVENTORIES Inventories consist of the following:
September 30, December 31, 1999 1998 ------------- ------------ Finished goods $ 932 $ 795 Purchased components 1,120 1,746 Repair, warranty and maintenance inventory 1,967 2,695 ------- ------- 4,019 5,236 Less allowances for obsolescence (1,760) (2,263) ------- ------- $ 2,259 $ 2,973 ======= =======
7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET REVENUES Net revenues for the quarter ended September 30, 1999 were $14.1 million, an increase of $1.4 million, or 11%, from the comparable prior quarter of 1998. The increase for the period was due primarily to the settlement of a patent lawsuit, aided by slightly increased System sales, but offset by reduced Service Bureau and Maintenance and Other Services revenues. For the nine month period ended September 30, 1999, net revenues were $36.3 million, an increase of 3% from $35.1 million for the corresponding period in 1998. Net revenues consist of SYSTEM SALES, SERVICE BUREAU REVENUES and MAINTENANCE AND OTHER SERVICES REVENUES, which represented 47%, 14%, and 39% of net revenues, respectively, for the quarter ended September 30, 1999, and 51%, 17%, and 32% of net revenues, respectively, for the nine month period ended September 30, 1999. SYSTEM SALES revenues increased $96,000, or 1.5%, over the comparable quarter and increased $2.3 million, or 14.4%, over the corresponding nine month period. The increases for both periods were due primarily to the strength of the Vista(TM) product line, which has shown increased sales in every quarter since it started generating revenues in the third quarter of 1998. Core product sales include Vista(TM), an open standards-based Interactive Communications Management ("ICM") software platform for enterprise customer call centers; VocalPoint, an open architecture Interactive Voice Response ("IVR") platform; VocalPoint Interactive Services, providing computer telephony integration ("CTI") functionality, and Interactive Web Response ("IWR"). Non-core products include the Premier and Premier 030 proprietary IVR systems and the VocalPoint ARU (Audio Response Unit) for the cable television industry. SERVICE BUREAU REVENUES decreased by $224,000, or 10%, quarter-over-quarter and $567,000, or 8%, from the comparable nine month period. The cable TV industry has been deploying new order entry technologies for consumer purchases of pay-per-view events which do not utilize toll free 800 numbers. This has resulted in a downward trend in transaction processing fees by the Company which is expected to continue. MAINTENANCE AND OTHER SERVICE REVENUES increased $1.5 million, or 38%, from the same quarter of the prior year, and decreased $573,000, or 5% from the comparable nine month period. For the quarter, the Maintenance component decreased $831,000, or 29%, from the prior year, and for the nine month period the Maintenance component decreased $1.2 million, or 14%, from the prior year. This was consistent with Company expectations because the Company had earlier advised customers that certain products were not Year 2000 compliant and would not be made so, causing some maintenance contracts not to be renewed. For the quarter, the Other Services Revenues component increased $2.3 million, or 122%, from the prior year, and for the nine month period, the Other Services Revenues component increased $633,000, or 17%, from the prior year. The increases were primarily due to the settlement of a $2.4 million patent lawsuit in the three month period. This settlement related to economic rights maintained by the Company after the sale of a patent portfolio in 1997. There were no other such settlements during the first nine months of the current year. During the prior year's quarter and nine month periods, the company had revenues of $583,000 and $2.26 million, respectively, from settlements of patent lawsuits. The realization of any further revenues related to the Company's former patent portfolio is uncertain. INTERNATIONAL REVENUES for the third quarter of 1999 were $3 million, or 21% of total revenues, compared to $2.5 million, or 20% of total revenues, for the third quarter of 1998. For the nine month period ended September 30, 1999, international revenues were $6.3 million, or 17% of total revenues, as compared to $6.1 million, or 17% of total revenues, for the prior comparable period. International revenues continue to be dominated by a few number of relatively large transactions and its relationship to total revenues is likely to vary from quarter to quarter. 8 9 GROSS MARGIN The gross margin percentage for the quarter ended September 30, 1999 was 54% of net revenues, the same as in the comparable prior year quarter. The gross margin percentage for the nine months ended September 30, 1999 was 47% of net revenues as compared to 52% in the comparable year ago period. The gross margin percentage for System Sales in the quarter ended September 30, 1999 increased to 49% from 44% in the prior year period. For the nine month period, the gross margin percentage on System Sales was 41% compared to 40% in the prior year period. The improved margins for both periods were primarily due to cost reductions and higher volumes. The gross margin percentage for the Service Bureau decreased to 41% from 50% in the comparable quarter, and decreased to 36% from 44% in the comparable nine month period. Service Bureau margins for the current three and nine month periods declined on reduced sales primarily due to the relatively fixed nature of Service Bureau costs. The gross margin percentage on Maintenance and Other Services decreased to 65% from 74% in the comparable quarter, and decreased to 64% from 73% in the comparable nine month period. Maintenance and Other Services margins, less the contribution of patent lawsuit settlements, for the current three and nine-month periods declined on reduced sales due to the relatively fixed nature of maintenance and other services costs. The Company includes those costs directly associated with the generation of revenue in its computation of gross margin, including direct labor, application development, travel, maintenance, customer support, supplies and hardware. Gross margins will fluctuate on a quarterly basis due to changes in competitive pressures, sales volume, product mix, variations in the ratio of domestic versus international sales, or changes in the mix of direct and indirect sales activity. Accordingly, the gross margins reported for the third quarter and the first nine months of 1999 are not necessarily indicative of the results to be expected for the full year. OPERATING EXPENSES Operating expenses for the third quarter of 1999 were $6.1 million, a decrease of $1 million, or 15%, from the prior year quarter. For the nine month period ended September 30, 1999, operating expenses were $20.2 million, a decrease of $1.3 million, or 6%, from the prior year period. Selling, marketing and administrative expenses decreased $762,000, or 15%, from the comparable quarter and $403,000, or 3%, from the corresponding nine month period. Contributing to the decrease for both periods was the consolidation of the corporate structure and general cost reductions which took place during the second and third quarters of the current year. Research and development expenses for the third quarter of 1999 decreased $325,000, or 23%, from the prior year quarter and decreased by $812,000, or 19%, from the comparable nine month period. The prior year periods were impacted by the development of the Vista product which was released in May of 1998. OTHER INCOME During the period ending September 30, 1999, the Company sold its predictive dialer product line to Nobel Systems Corporation contributing $509,000 net to other income. NET INCOME (LOSS) Syntellect reported net income of $2.1 million, or $0.16 per share, both basic and diluted, for the third quarter of 1999, compared to a net loss of $105,000, or $(.01) per share, for the prior year quarter. For the nine month period ended September 30, 1999, the Company reported a net loss of $2.2 million, or $(.16) per share, compared to a net loss of $2.7 million, or $(.20) per share, for the comparable prior year period. 9 10 LIQUIDITY AND CAPITAL RESOURCES For the first nine months of 1999, the Company had cash flows from operations of $315,000 compared to negative cash flows from operations of $1.7 million in the same period in 1998. The cash flows from operations were primarily due to decreases in prepaid expenses and inventories, increases in accrued liabilities, customer deposits, deferred revenues, and the provision for doubtful accounts; partially offset by the net loss, increases in accounts receivable and other assets, and a decrease in accounts payable. Cash flows from investing activities provided $3.4 million during the period. Net sales of marketable securities provided $4.6 million, while cash used in the acquisition of fixed assets totaled $1.2 million. Cash used in financing activities totaled $3.5 million for the period. Proceeds from the issuance of common stock totaled $190,000; while the purchase of treasury stock used $3.5 million, and the repayment of long-term debt used $198,000. Syntellect had working capital of $9.6 million at September 30, 1999, as compared to $14.8 million at December 31, 1998. The current ratio was 1.7:1 and 2.2:1 on such dates, respectively. Cash, cash equivalents and marketable securities at the end of the third quarter totaled $7.1 million as compared with $11.5 million at year end. Syntellect expects that its current cash, cash equivalents and marketable securities, combined with future cash flows from operating activities, will be sufficient to support the Company's operations for the remainder of 1999. The Company has a $1.1 million letter of credit pledged as a security deposit for the Company's facility in Phoenix, Arizona. This $1.1 million letter of credit is secured by a U.S. Treasury security held in the Company's available-for-sale portfolio and accordingly, this marketable security is restricted as to the disposal by such letter of credit agreement. On November 13, 1998, the Board of Directors of Syntellect approved a stock buyback plan to purchase up to 1.5 million shares of the Company's common stock over the next two years. The Company completed the buyback plan during the period ended September 30, 1999. On November 5, 1999, the Company announced a new stock buyback plan pursuant to which the Company may acquire up to 1 million shares over the next year. YEAR 2000 COMPLIANCE The Year 2000 issue is related to the date-sensitive computer programs and applications using two digits rather than four to designate the year. After January 1, 2000, these systems may incorrectly recognize the year as 1900 causing system failures or incorrect processing of financial information. The Company is addressing the Year 2000 compliance issues. The Company's state of readiness can be explained via three elements: (1) information technology ("IT") and non-IT systems, (2) external customers on maintenance, and (3) third party issues, as listed in the table below:
YEAR 2000 - ---------------------------------------------------------------------------------------------------------------------------------- ISSUE DESCRIPTION COMPLIANT STATUS - ---------------------------------------------------------------------------------------------------------------------------------- IT-internal financial Production problems system necessitated an upgrade to new version of current Yes Installed and in production software - ---------------------------------------------------------------------------------------------------------------------------------- IT-systems Internal hardware and In progress Substantially complete. software, primarily desktop PC's, servers, and SIS Transaction Center equipment - ---------------------------------------------------------------------------------------------------------------------------------- Non-IT systems Building and equipment In progress Substantially complete. - ----------------------------------------------------------------------------------------------------------------------------------
10 11
YEAR 2000 - ---------------------------------------------------------------------------------------------------------------------------------- ISSUE DESCRIPTION COMPLIANT STATUS - ---------------------------------------------------------------------------------------------------------------------------------- External customers on Inform customers as to All maintenance customers Maintenance whether product purchased is have been informed via Year 2000 compliant and Not applicable letter as to status of options in migrating to their product and options versions which are compliant available. - ---------------------------------------------------------------------------------------------------------------------------------- Third party issues Assess third party risks - Ongoing assessment in primarily suppliers In progress place via accessing suppliers' WEB page via the Internet and direct contact with suppliers. - ----------------------------------------------------------------------------------------------------------------------------------
Costs related to remedying Year 2000 compliance issues are not fully known at this time. The Company is currently analyzing the issues as stated above. The following table provides the status as currently known:
- ---------------------------------------------------------------------------------------------------------------------------------- ISSUE COSTS REASON - ---------------------------------------------------------------------------------------------------------------------------------- IT-internal financial system None Production problems required the Company to upgrade to new version of current software regardless of Year 2000 compliance issue. - ---------------------------------------------------------------------------------------------------------------------------------- IT-systems Unknown Evaluation of PC related hardware and software has been integrated into current staff's responsibilities and has not required additional assistance. The Company does not anticipate the costs to remedy this issue to be material. $490,000 (1998) Cost to upgrade equipment in the $700,000 (1999 estimate) Service Bureau Transaction Center to improve functionality and address Year 2000 compliance issues. - ---------------------------------------------------------------------------------------------------------------------------------- Non-IT systems Not material Completion of projects has been integrated into current staff's responsibilities. - ---------------------------------------------------------------------------------------------------------------------------------- Third party suppliers Not material Evaluation of suppliers has been integrated into current staff's responsibilities and has not required additional assistance. - ---------------------------------------------------------------------------------------------------------------------------------- External customers $25,000 Administration of customer letters and coordination of project. - ----------------------------------------------------------------------------------------------------------------------------------
Major risks caused by Year 2000 compliance are primarily related to customers. The Company has reviewed the current products available to customers and has determined that all are Year 2000 compliant. Of the products still supported under maintenance contracts, the ARU (Audio Response Unit) is not Year 2000 compliant and will not be made so. ARU customers have been notified of this issue and informed that maintenance contracts of this product will be discontinued by December 31, 1999. The Company will be extending services to these customers on a time and materials basis as their maintenance contracts expire. Total exposure for lost maintenance revenue from this product line is approximately $1.9 million annually based on 1998 revenues earned. The time and materials services plus any ARU customers who choose to migrate to a current product that is Year 2000 compliant will mitigate the exposure of lost ARU maintenance revenue. Other customers may also be on earlier versions of current products, which are not Year 2000 compliant. As described above, the Company has notified all customers on maintenance as to whether products purchased are Year 2000 compliant and options in migrating to the Company's current products which are on versions that are Year 2000 compliant. The risk of lost revenue for the fourth quarter of 1999 and beyond is unknown at this time. 11 12 Because costs related to this project are based on estimates by management of the Company, there is no assurance that actual costs will not differ materially from the current expectations which may cause an adverse effect on the Company's financial position or results of operations. OPERATING BUSINESS SEGMENTS An operating segment is defined as a component of an enterprise that engages in business activities which may earn revenues and incur expenses, whose results are regularly reviewed by a chief operating decision maker, and for which discrete financial information is available. The Company has three operating segments which are organized around differences in products and services: Systems; Service Bureau; and Patents (see Note 2). Systems is the operating segment that has products and services including IVR, IWR, CTI, and maintenance. Service Bureau is the operating segment that has products and services including Home Ticket pay-per-view, Hot Spots, Call Redirect, Cyberstats, and a variety of out-sourced electronic capabilities such as benefits enrollment and broadcast faxing. Patents is the operating segment that held the Company's patent portfolio. In October 1997, the Company sold the patent portfolio to a third party for $10 million. The Company received cash of $5 million at closing and a $5 million promissory note which was fully collected by September 1998. As additional consideration under the agreement, the Company retained certain economic rights, including the right to pursue certain litigation against third parties. Revenues include payments for settlement of patent lawsuits. The Company recognized $2.4 million in revenue in the nine months ended September 30, 1999 from patent lawsuits, compared to $2.26 million in the comparable period last year. The Company is still pursuing certain litigation against third parties, but the realization of revenue, if any, from potential settlements is uncertain. FORWARD LOOKING STATEMENTS This report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Also see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 for a discussion of important factors that could affect the validity of any such forward-looking statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK There has been no change since the Form 10-K for the year ended December 31, 1998; see Part II, item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. 12 13 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 10.1 - Asset Purchase Agreement dated September 15, 1999, by and among Syntellect Inc., Telecorp Systems, Inc., Syntellect Europe Ltd., and Noble Systems Corporation. Exhibit 27.1 - Financial Data Schedule-1999 (b) Reports on Form 8-K No current reports on Form 8-K were filed during the three months ended September 30, 1999. 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SYNTELLECT INC. Date: November 12, 1999 By: /s/ Peter W. Pamplin Peter W. Pamplin Vice President, Chief Financial Officer,Secretary and Treasurer By: /s/ Keith A. Pekkala Keith A. Pekkala Vice President and Controller, (Principal Accounting Officer) 14 15 EXHIBIT INDEX Exhibit 10.1 - Asset Purchase Agreement dated September 15, 1999, by and among Syntellect Inc., Telecorp Systems, Inc., Syntellect Europe Ltd., and Noble Systems Corporation. Exhibit 27.1 - Financial Data Schedule - 1999 15 EX-10.1 2 EX-10.1 1 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT is made this 15th day of September, 1999, by and among SYNTELLECT INC., a Delaware corporation ("Syntellect"), TELECORP SYSTEMS, INC., a Georgia corporation and a wholly owned subsidiary of Syntellect ("Telecorp"), SYNTELLECT EUROPE LTD., a corporation formed under the laws of the United Kingdom and a subsidiary of Syntellect ("Syntellect Europe"), and NOBLE SYSTEMS CORPORATION, a Georgia corporation ("Purchaser"). BACKGROUND Sellers are the owners of, and desire to sell to Purchaser, and Purchaser desires to purchase from Sellers, certain customer assets of Sellers, upon the terms and subject to the conditions set forth herein. Certain capitalized terms used in this Agreement shall have the meanings assigned to them in Article 9 hereof. IN CONSIDERATION OF the foregoing, the mutual covenants, agreements, representations and warranties contained in this Agreement, and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged by each party hereto, the parties hereto agree as follows: ARTICLE 1 PURCHASE AND SALE OF PURCHASED ASSETS 1.1 Purchase of the Purchased Assets. Subject to the terms and conditions of this Agreement, at the Closing (which shall take place simultaneously with the execution and delivery of this Agreement), Sellers shall sell convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase and accept from Sellers, all of the Purchased Assets, free and clear of any and all Liens. 1.2 Purchase Price. The total Purchase Price for the Purchased Assets shall be equal to the sum of (a) the amount paid by Purchaser to Sellers pursuant to Section 1.3(a), and (b) the amount paid by Purchaser to Sellers pursuant to Section 1.3(b). 1.3 Payment of the Purchase Price. Purchaser shall pay the Purchase Price to Sellers as follows: (a) On the Closing Date, Purchaser shall pay to Sellers, in immediately available funds, the sum of (A) $924,185.00, less (B) $250,813.00 (which amount represents the total of customer deposits and prepayments received by Sellers as of the Closing Date with respect to the Purchased Contracts as shown on Schedule 1.3) (the sum of (A) and (B) being referred to as the "Closing Portion of the Purchase Price"). In the event Purchaser determines that any customer deposits or prepayments were received by Sellers as of the Closing Date and are not listed on Schedule 1.3, Sellers shall promptly refund to the applicable customer the 2 amount of such customer deposit or prepayment or shall pay such amount to Purchaser for credit to the customer's account. (b) During the following time periods, Purchaser will pay to Sellers the positive difference, if any, between (i) the sum of (A) 50% of the total Maintenance and Support Revenues actually collected under the Purchased Contracts during the twenty-four month period following the Transition Date, (B) 40% of the total Sales Order Backlog Revenues actually collected under the Purchased Contracts during the twenty-four month period following the Closing Date, and (C) 20% of the total New Sales Revenues actually collected under the Purchased Contracts during the twenty-four month period following the Closing Date, less (ii) $924,185. Once amounts become due in accordance with the foregoing sentence, Purchaser will pay such amounts to Sellers on the last day of each calendar quarter. 1.4 Closing. The Closing shall take place at the offices of Sutherland, Asbill & Brennan LLP, 999 Peachtree Street, N.E., Suite 2300, Atlanta, Georgia 30309 on the Closing Date. Title to the Purchased Assets shall pass from Sellers to Purchaser upon the occurrence of the Closing, unless the parties shall otherwise have agreed in writing. ARTICLE 2 ASSUMPTION OF LIABILITIES 2.1 Assumption of Assumed Liabilities. Purchaser agrees, effective on the Closing Date, to assume the Assumed Liabilities and thereafter to pay, perform and discharge such Assumed Liabilities in full, in accordance with their terms. Notwithstanding anything contained in this Agreement to the contrary, Purchaser shall not assume or become liable for any Retained Liability. 2.2 Assignment of Purchased Contracts. (a) Nothing contained in this Agreement shall be construed as an attempt to agree to assign any Purchased Contract which is non-assignable without the consent of any other party thereto, unless such consent shall have been given. Sellers and Purchaser acknowledge and agree that the assignment of certain of the Purchased Contracts will require the consent of the customer party thereto. With respect to such Purchased Contracts, each Seller shall use its commercially reasonable efforts to obtain such consents after the Closing and each Seller shall take all such commercially reasonable action as shall be necessary or proper (i) in order to enable Purchaser to realize the full value of every such Purchased Contract and to preserve for the benefit of Purchaser the rights and obligations of Sellers under such Purchased Contract, and (ii) to facilitate the collection of the monies due and payable, or to become due and payable, to Sellers pursuant to every such Purchased Contract, and Sellers shall remit such monies to Purchaser within five business days of collection. Purchaser, at its expense, shall perform all of Sellers' obligations due to be performed under any such non-assigned Purchased Contract to the extent (i) Purchaser can perform such obligations without violating the terms of such non- 2 3 assigned Purchased Contract, and (ii) Purchaser is being provided the benefits of such non-assigned Purchased Contract. (b) If within 90 days after the Closing Date, Sellers are unable to obtain consents from customers party to Purchased Contracts whose total Maintenance and Support Revenues that would be due under such Purchased Contracts following the Closing exceed $198,859, Purchaser will be entitled to deduct from any amounts due to Sellers pursuant to Section 1.3(b) an amount equal to the product obtained by multiplying (i) the amount of the total Maintenance and Support Revenues that would have been due and owing pursuant to such Purchased Contracts for the balance of the term of each such Purchased Contract (excluding any renewal terms) but for which Sellers were unable to obtain consents to assignment, by (ii) 25%. Sellers shall have no liability to Purchaser under this Section 2.2(b) in the event Sellers are unable to obtain consents from customers party to Purchased Contracts whose total Maintenance and Support Revenues that would be due under such Purchased Contracts following the Closing are less than or equal to $198,859. (c) If within 90 days after the Closing Date, Sellers are unable to obtain consents from customers party to Purchased Contracts whose total Sales Order Backlog Revenues that would be due under such Purchased Contracts following the Closing exceed $97,219, Purchaser will be entitled to deduct from any amounts due to Sellers pursuant to Section 1.3(b) an amount equal to the product obtained by multiplying (i) the amount of the total Sales Order Backlog Revenues that would have been due and owing pursuant to such Purchased Contracts for the balance of the term of each such Purchased Contract (excluding any renewal terms) but for which Sellers were unable to obtain consents to assignment, by (ii) 20%. Sellers shall have no liability to Purchaser under this Section 2.2(c) in the event Sellers are unable to obtain consents from customers party to Purchased Contracts whose total Sales Order Backlog Revenues that would be due under such Purchased Contracts following the Closing are less than or equal to $97,219. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLERS Sellers, jointly and severally, hereby represent and warrant to Purchaser that: 3.1 Organization and Standing. Syntellect is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with the corporate power and authority to carry on its business and to own, lease and operate its properties. Telecorp is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia, with the corporate power and authority to carry on its business and to own, lease and operate its properties. Syntellect Europe is a corporation duly organized, validly existing and in good standing under the laws of the United Kingdom, with the corporate power and authority to carry on its business and to own, lease and operate its properties. 3 4 3.2 Authority and Binding Effect. Each Seller has the corporate power and authority necessary to enter into and perform its obligations under this Agreement and the Other Agreements and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Other Agreements have been duly approved by all necessary action of the board of directors of each Seller. This Agreement has been, and the Other Agreements will be, duly executed and delivered by properly authorized officers of each Seller and each constitutes, or when executed and delivered will constitute, the legal valid and binding obligation of each Seller, enforceable against each Seller in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and general principles of equity (regardless of whether considered in a proceeding in equity or at law). 3.3 Validity of Contemplated Transactions; Governmental Consents. (a) The execution, delivery and performance of this Agreement and the Other Agreements by each Seller and the consummation of the transactions contemplated hereby or thereby, do not and will not (i) violate any provision of the charter or by-laws of any Seller, or any Law or Order relating to any Seller, or (ii) result in the creation or imposition of any Lien on the Purchased Assets. (b) No consent, authorization, order or approval of, or filing or registration with, any Governmental Authority is required for or in connection with the execution and delivery of this Agreement or any of the Other Agreements by each Seller or the consummation by each Seller of the transactions contemplated hereby and thereby. 3.4 Title to Purchased Assets. Sellers have good, valid and marketable title to all of the Purchased Assets free and clear of any and all Liens. 3.5 Compliance with Law. Each Seller is in compliance with all Material Laws, Licenses and Orders applicable to the Purchased Assets and no Seller has Knowledge of any basis for any claim of current or past non-compliance with any such Law, License or Order. No notice from any Governmental Authority with respect to any failure or alleged failure of the Purchased Assets to comply with any Material Law, License or Order has been received by either Seller, nor, to the Knowledge of either Seller is any such notice proposed or threatened. 3.6 Litigation and Claims. There is no Litigation pending, or to the Knowledge of any Seller threatened, against any Seller (and no Seller has Knowledge of any basis for any such Litigation) which, if determined adversely to any Seller might individually or in the aggregate have a Material Adverse Effect upon the Purchased Assets or which might give rise to any Lien, claim, recourse or right of indemnification against the Purchased Assets, or the Purchaser as the successor to the Sellers under the Purchased Assets. There are no pending, or to the Knowledge of any Seller, threatened investigations or inquiries regarding the Purchased Assets by any Governmental Authority. 4 5 3.7 Purchased Contracts. Prior to the date hereof, Sellers have provided Purchaser true and correct copies of all Purchased Contracts. Except as set forth in or contemplated by the Purchased Contracts, there are not and shall not be any Liabilities of Sellers (including, without limitation, any Liability arising from (a) any failure to comply with any Material Law or Order applicable to the Purchased Contracts, or (b) any representation, warranty or agreement made by any employee, agent or other representative of Sellers to any customer pursuant to a Purchased Contract as to the Year 2000 Compliance status or other features of any product or service provided to any customer pursuant to any Purchased Contract) which relate to the products and services provided by Sellers to any customer pursuant to the Purchased Contracts. Except as set forth on Schedule 3.7, no significant dispute or disagreement exists under any Purchased Contract. Except as set forth on Schedule PC, all Purchased Contracts are assignable to Purchaser as contemplated herein without any consent or notice to the other parties to such Purchased Contracts or any other Person. Neither Sellers nor, to the Knowledge of any Seller, any other party is in Default under any of the Purchased Contracts and there is no basis, to the Knowledge of any Seller, for any claim of Default under any such Purchased Contract. Each of the Purchased Contracts is in full force and effect and constitutes a valid, legal and binding agreement of the parties thereto, enforceable in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and general principles of equity (regardless of whether considered in a proceeding in equity or at law). No Seller has violated, infringed upon or unlawfully or wrongfully used the Intellectual Property of any other Person in connection with Sellers' provision of goods or services to any customer pursuant to a Purchased Contract. The continuation, validity and effectiveness of each of the Purchased Contracts will not be affected in any way by the consummation of the transactions contemplated by this Agreement. Sellers have, and upon consummation of the transactions contemplated by this Agreement, Purchaser will have, all Computer Software necessary to fulfill Sellers' obligations under each of the Purchased Contracts and all documentation relating to all such Computer Software. 3.8 Brokers and Finders. Except for T.V. Metz and Co., no finder or any agent, broker or other Person acting pursuant to authority of Sellers is entitled to any commission or finder's fee in connection with the transactions contemplated by this Agreement. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser hereby represents and warrants to Sellers that: 4.1 Organization and Standing. Purchaser is a corporation duly organized, validly existing, and in good standing under the laws of the State of Georgia with the corporate power and authority to carry on its business and to own, lease and operate its properties. 4.2 Authority and Binding Effect. Purchaser has the corporate power and authority necessary to enter into and perform its obligations under this Agreement and the Other 5 6 Agreements and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Other Agreements have been duly approved by all necessary action of the board of directors of Purchaser. This Agreement has been, and the Other Agreements will be, duly executed and delivered by properly authorized officers of Purchaser and each constitutes, or will constitute when executed and delivered, the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and general principles of equity (regardless of whether considered in a proceeding in equity or at law). 4.3 Validity of Contemplated Transactions, Restrictions. (a) The execution, delivery and performance of this Agreement and the Other Agreements by Purchaser and the consummation of the transactions contemplated hereby or thereby, do not and will not (i) violate any provision of the Articles of Incorporation or By-laws of Purchaser, or any Law or any Order relating to Purchaser, or (ii) result in the creation or imposition of any Lien on Purchaser's assets. (b) No consent, authorization, order or approval of, or filing or registration with, any Governmental Authority is required for or in connection with the execution and delivery of this Agreement or any of the Other Agreements by Purchaser or the consummation by Purchaser of the transactions contemplated hereby and thereby. 4.4 Brokers and Finders. No finder or any agent, broker or other Person acting pursuant to authority of Purchaser is entitled to any commission or finder's fee in connection with the transactions contemplated by this Agreement. ARTICLE 5 COVENANTS AND ADDITIONAL AGREEMENTS OF SELLERS AND PURCHASER 5.1 Confidentiality. Each party hereto agrees that, for a period of five years from and after the date hereof, it will not, and will use reasonable efforts to ensure that its representatives and Affiliates will not, use in the conduct of its business (except as contemplated by this Agreement), or disclose to any other Person, any confidential or non-public information relating to the other party; provided, however, that the foregoing prohibitions shall not apply to (i) disclosures that are required by Law, by a Governmental Authority or pursuant to applicable stock exchange or automated quotation system rules or regulations; (ii) information that is ascertainable or obtained from public or published information; (iii) information received from a Third Party not known to the disclosing party to be under an obligation to keep such information confidential; (iv) information independently developed by the disclosing party; or (v) information disclosed to or filed with any Person for the purpose of obtaining consents to, or the financing of, the transactions contemplated by this Agreement. Notwithstanding the foregoing, 6 7 the provisions of this Section shall not prohibit Purchaser from using or disclosing such confidential or non-public information that relates to the Purchased Assets after consummation of the transactions contemplated hereby at the Closing. 5.2 Publicity. Neither Purchaser nor Sellers shall make any public disclosures about the existence or contents of this Agreement or the negotiations relating to the transactions contemplated hereby or cause to be publicized in any manner whatsoever by way of interviews, responses to questions or inquiries, press releases or otherwise any aspect of the transactions contemplated by this Agreement without prior notice to and approval of the other, except as may otherwise be required by Law or stock exchange or automated quotation system rules or regulations. 5.3 Agreement Not to Solicit Customers. Each Seller acknowledges that the consideration to be paid to Sellers pursuant to this Agreement reflects the future value to Purchaser of the business relationships with customers party to the Purchased Contracts. Each Seller further acknowledges that customers party to the Purchased Contracts are located throughout the Territory and that the restrictions contained in this Section are necessary and reasonable to give Purchaser the full value of the Purchased Contracts which it is purchasing. Each Seller therefore covenants and agrees with Purchaser that, during the period commencing on the Closing Date and ending four years thereafter, no Seller nor any of its Affiliates will, directly or indirectly, on behalf of itself or any other Person, contact, divert, take away or solicit, for the purpose of providing Dialer-Based Products thereto in the Territory, any Person which was a customer receiving Dialer-Based Products from any Seller as of the Closing Date. Each Seller recognizes that the breach of any of its obligations under this Section may give rise to irreparable injury to Purchaser inadequately compensable in damages and that, accordingly, Purchaser may seek injunctive relief against the breach or threatened breach of this Section, in addition to any available remedies at law. 5.4 Sellers' Obligations During the Transition Period. During the Transition Period, Sellers shall continue to provide all Maintenance and Support Services to be provided under the Purchased Contracts and shall be entitled to receive any Maintenance and Support Revenues due under the Purchased Contracts for Maintenance and Support Services provided during the Transition Period. 5.5 Post-Closing Assistance. For a period of 45 days after the Closing Date, Sellers shall provide to Purchaser and its employees and agents reasonable access to Sellers' employees and agents who are familiar with Sellers' Dialer-Based products and the customers party to the Purchased Contracts (including, without limitation, project managers, application developers, installers and customer service personnel), for purposes of enabling Purchaser to adequately service and support such customers. Such access shall be provided during Sellers' normal business hours and without adversely affecting Sellers' operations. Each Seller acknowledges that the employees and agents of Purchaser who will be given access to Sellers' employees and agents for purposes of this Section 5.5 will acquire information and knowledge that is valuable to the Purchaser in providing Dialer-Based Products to its customers. Accordingly, each Seller 7 8 covenants and agrees that it shall not, during the period commencing on the Closing Date and ending on the first anniversary of the Closing Date, directly or indirectly, solicit or recruit any employee or agent of Purchaser who has contact with any employee or agent of Sellers for purposes of this Section 5.5; provided, however, that general employment advertisements and recruiter calls not specifically targeted to Purchaser shall not be considered solicitation for employment so long as no follow-up is pursued when any Seller learns that any prospect is such an employee or agent of Purchaser. Purchaser covenants and agrees that it shall not, during the period commencing on the Closing Date and ending on the first anniversary of the Closing Date, directly or indirectly, solicit or recruit any employee or agent of Sellers whose primary responsibilities are not related to Dialer-Based Products; provided, however, that general employment advertisements and recruiter calls not specifically targeted to any Seller shall not be considered solicitation for employment so long as no follow-up is pursued when Purchaser learns that any prospect is such an employee or agent of any Seller. 5.6 Access; Dispute Resolution. Purchaser shall provide Sellers access to Purchaser's books and records, during Purchaser's normal business hours and upon reasonable notice to Purchaser, for purposes of Sellers verifying the amounts due to Sellers pursuant to Section 1.3 and the amounts owed to Purchaser pursuant to Section 2.2. If Sellers disagree with any amount paid to Sellers pursuant to Section 1.3, or any amount Purchaser claims is owed to Purchaser pursuant to Section 2.2, Sellers shall notify Purchaser of such disagreement within 20 days after the receipt of such payment or notice of payment due, as applicable, specifying in detail the reasons for such disagreement and providing Sellers' calculation of the amount of such payment Sellers believe is due. If, within 30 days after the receipt by Purchaser of Sellers' notice of disagreement, Purchaser and Sellers are unable to agree upon the amount of such payment, then Sellers and Purchaser shall jointly select an independent public accounting firm, and such independent accounting firm shall determine the amount of such payment due within 30 days of the submission of the issue to such independent accounting firm. If it is necessary to engage such an independent accounting firm, the cost thereof shall be borne equally by the parties. In the event that Sellers and Purchaser are unable to agree, within ten days after such 30-day period, as to who shall serve as such independent accounting firm, then either Purchaser or Sellers shall be authorized to ask the Atlanta office of the American Arbitration Association to appoint an independent accounting firm so to determine the amount of any such payment. Any determination made by any independent accounting firm selected pursuant to this Section 5.6 shall be final, conclusive and binding upon the parties hereto. 5.7 Expenses. Each party hereto will pay its own expenses (including attorney's fees), except as may be otherwise provided herein. 5.8 Further Assurances. At any time and from time to time after the Closing, (i) each Seller shall, at the request of Purchaser, take any and all actions necessary to fulfill its obligations hereunder and to put Purchaser in actual possession and operating control of the Purchased Assets, and (ii) Sellers and Purchaser shall execute and deliver such further instruments of conveyance, sale, transfer and assignment, and take such other actions as may be necessary or appropriate to effectuate, record or perfect the transfer of the Purchased Assets to 8 9 Purchaser, free and clear of all Liens, to confirm the title of the Purchased Assets to Purchaser, to assist Purchaser in exercising rights relating thereto, or otherwise to effectuate and consummate any of the transactions contemplated hereby. ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER At the Closing (which shall take place simultaneously with the execution and delivery of this Agreement), Sellers shall have satisfied each of the following conditions: 6.1 Bill of Sale; Assignments; Etc. Purchaser shall have received from Sellers (i) an executed Bill of Sale and Assignment, and (ii) such other assignments and instruments of conveyance as may be necessary or appropriate to transfer the Purchased Assets to Purchaser. 6.2 Regulatory Approvals. All necessary consents and approvals to the transactions contemplated herein by all regulatory authorities having jurisdiction over the proposed transactions shall have been received. 6.3 Consents. There shall have been received all governmental and other consents and approvals as may be necessary or appropriate to enable the parties to consummate the transactions contemplated hereby. 6.4 Other Documents. Sellers shall have executed such other documents and instruments as Purchaser shall have reasonably requested in connection with the consummation of the transactions contemplated hereby. ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS At the Closing (which shall take place simultaneously with the execution and delivery of this Agreement), Purchaser shall have satisfied each of the following conditions: 7.1 Payment of the Purchase Price. The Closing Portion of the Purchase Price shall have been paid to Sellers in the manner described in Article I hereof. 7.2 Assumption. Sellers shall have received from Purchaser an executed Assumption of Certain Liabilities. 7.3 Other Documents. Purchaser shall have executed such other documents and instruments as Sellers shall have reasonably requested in connection with the consummation of the transactions contemplated hereby. 9 10 ARTICLE 8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION 8.1 Survival of Representations and Warranties. All representations and warranties made by the parties in this Agreement or the Other Agreements are material, have been relied upon by the other parties hereto and shall survive until the second anniversary of the Closing Date, and all covenants and agreements contained herein shall survive without limitation as to time except as may otherwise be specified herein. 8.2 Obligation of Sellers to Indemnify. Sellers, jointly and severally, agree to pay, indemnify, defend and hold Purchaser and its officers, directors, employees, counsel, agents, Affiliates and assigns harmless from and against all Losses which may be asserted against, imposed upon or incurred by any of them by reason of, resulting from, or in connection with (a) any inaccuracy in any representation or warranty made by any Seller pursuant to this Agreement or the Other Agreements, (b) any breach of any covenant or agreement made or to be performed by any Seller pursuant to this Agreement or the Other Agreements, (c) any claim by any customer party to a Purchased Contract based on or arising out of any failure by Sellers to perform Maintenance and Support Services under the Purchased Contracts during the Transition Period, and (d) any Retained Liability. 8.3 Obligation of Purchaser to Indemnify. Purchaser agrees to pay, indemnify, defend and hold Sellers and their officers, directors, employees, counsel, agents, Affiliates and assigns harmless from and against all Losses which may be asserted against, imposed upon or incurred by any of them by reason of, resulting from or in connection with (a) any inaccuracy in any representation or warranty made by Purchaser pursuant to this Agreement or the Other Agreements, (b) any breach of any covenant or agreement made or to be performed by Purchaser pursuant this Agreement or the Other Agreements, and (c) any Assumed Liability. 8.4 Notice of Loss or Asserted Liability. Promptly after (a) becoming aware of circumstances that have resulted in a Loss for which any Person entitled to indemnification pursuant to Section 8.2 or Section 8.3 intends to seek indemnification under such Section (the "Indemnified Party") or (b) receipt by the Indemnified Party of written or oral notice of any demand, claim or circumstances which, with or without the lapse of time, the giving of notice or both, would give rise to a claim or the commencement (or threatened commencement) of any Litigation that may result in a Loss (an "Asserted Liability"), the Indemnified Party shall give notice thereof (the "Claims Notice") to any other party or parties obligated to provide indemnification pursuant to Section 8.2 or Section 8.3 (the "Indemnifying Party"). The Claims Notice shall describe the Loss or the Asserted Liability in reasonable detail, and shall indicate the amount (estimated, if necessary) of the Loss that has been or which may be suffered by the Indemnified Party. The Claims Notice may be amended on one or more occasions with respect to the amount of the Asserted Liability or the Loss at any time prior to final resolution of the obligation to indemnify relating to the Asserted Liability or the Loss. If a Claims Notice is not provided promptly as required by this Section 8.4, the Indemnified Party nonetheless shall be 10 11 entitled to indemnification by the Indemnifying Party to the extent that the Indemnifying Party is unable to establish that it has been prejudiced by such late receipt of the Claims Notice; provided, however, that the Indemnified Party shall not be entitled to indemnification unless the Claims Notice is delivered to the Indemnifying Party prior to compromise or payment of any Asserted Liability by the Indemnified Party. 8.5 Opportunity to Contest. The Indemnifying Party may elect to compromise or contest, at its own expense and with counsel of its choice reasonably acceptable to the Indemnified Party, any Asserted Liability. If the Indemnifying Party elects to compromise or contest such Asserted Liability, it shall, within 30 days (or sooner, if the nature of the Asserted Liability so requires), notify the Indemnified Party of its intent to do so by sending a notice to the Indemnified Party (the "Contest Notice"), and the Indemnified Party shall cooperate, at the expense of the Indemnifying Party, in the compromise or contest of such Asserted Liability. If the Indemnifying Party elects not to compromise or contest the Asserted Liability, fails to notify the Indemnified Party of its election as herein provided or contests its obligation to indemnify under this Agreement, the Indemnified Party (upon further notice to the Indemnifying Party) shall have the right to pay, compromise or contest such Asserted Liability on behalf of and for the account and risk of the Indemnifying Party. Anything in this Section 8.5 to the contrary notwithstanding, the Indemnifying Party shall not, without the Indemnified Party's written consent, settle or compromise any Asserted Liability or consent to entry of any judgment which does not include an unconditional term releasing the Indemnified Party from all Liability in respect of such Asserted Liability. In any event, the Indemnified Party and the Indemnifying Party may participate, at their own expense, in the contest of such Asserted Liability. Sellers and Purchaser shall cooperate fully with each other as to all Asserted Liabilities, shall make available to each other as reasonably requested all information, records, and documents relating to all Asserted Liabilities and shall preserve all such information, records, and documents until the termination of any Asserted Liability. Sellers and Purchaser also shall make available to each other, as reasonably requested, their personnel, agents, and other representatives who are responsible for preparing or maintaining information, records, or other documents, or who may have particular knowledge with respect to any Asserted Liability. 8.6 Subrogation Rights. In the event that the Indemnifying Party shall be obligated to indemnify the Indemnified Party pursuant to this Article 8, the Indemnifying Party shall upon payment of such indemnity in full, be subrogated to all rights of the Indemnified Party with respect to the Loss to which such indemnification relates; provided, however, that the Indemnifying Party shall only be subrogated to the extent of any amount paid by it pursuant to this Article 8 in connection with such Loss. 8.7 Indemnification Payments; Right of Offset. Subject to the terms hereof and unless contested pursuant to Section 8.5, an Indemnifying Party shall pay to the Indemnified Party the full amount of any and all Losses (other than Losses resulting from an Asserted Liability) under this Article 8 within ten days of receipt of the Claims Notice thereof and the full amount of any Loss resulting from an Asserted Liability within ten days of the date such Litigation is terminated or the date a final judgment or award is rendered and no appeal is taken, 11 12 and thereafter the amount of such Loss shall bear interest at a rate equal to the lesser of two percent (2%) per month or the maximum amount permitted by law. In the event the Purchaser becomes entitled to any indemnification amount pursuant to this Article 8, or has any claims against Sellers for breach of any of the terms of this Agreement or any Other Agreement, then Purchaser, in addition to any other rights it might have, shall be entitled to off-set the amount of such claim for indemnification or breach from any further payments owing by Purchaser to Sellers pursuant to this Agreement or any Other Agreement; provided, however, that Purchaser shall provide Sellers with written notice of its intent to off-set any such amount and Sellers shall have ten days in which to cure the circumstances leading to Purchaser's claim of off-set to the reasonable satisfaction of Purchaser prior to Purchaser's off-set of such amount. 8.8 Limitations on Recovery. Neither party shall make any claim against the other for indemnification under this Agreement for a breach of a representation or warranty contained in this Agreement unless and until the aggregate amount of such claims exceeds $25,000. The aggregate liability of each party hereto for breaches of representations and warranties made pursuant to this Agreement and any claims for indemnification arising under such representations and warranties shall be limited to the amount of the Purchase Price; provided, however, that this limitation shall be in no way construed to limit any remedy for fraud, willful misconduct, bad faith or any other misrepresentation. Amounts paid as indemnification for matters described in the proviso to the preceding sentence shall not be taken into account in determining the limitation on the aggregate liability under this Section. ARTICLE 9 DEFINITIONS The following terms (in their singular and plural forms as appropriate) as used in this Agreement shall have the meanings set forth below unless the context requires otherwise: "Affiliate" shall mean, with respect to any Person, (i) any Person who directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, (ii) who beneficially owns or holds five percent or more of any class of voting stock of such Person, and (iii) any Person who is a member of the board of directors of such Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting stock, by contract or otherwise. "Agreement" means this Asset Purchase Agreement, including the Schedules delivered pursuant hereto or referred to herein. "Assumed Liabilities" means Liabilities incurred in the ordinary course of business to be paid or performed from and after the Closing Date under or pursuant to the Purchased Contracts validly assigned to Purchaser pursuant to this Agreement. 12 13 "Closing" means the consummation of the transactions contemplated by this Agreement and shall be deemed to have occurred upon receipt of the Closing Portion of the Purchase Price by Sellers and satisfaction or waiver of the conditions precedent contained in Articles 6 and 7. "Closing Date" means the date hereof. "Computer Software" means all computer programs, materials, tapes, source and object codes, and all prior and proposed versions, releases, modifications, updates, upgrades and enhancements thereto, as well as all documentation and listings related thereto. "Contract" means any written or oral contract, agreement, understanding, lease, usufruct, license, commitment, arrangement, obligation, undertaking of any kind or character or other document that is binding on any Person or its assets. "Default" means (1) a breach of, default under, or misrepresentation in or with respect to, any Purchased Contract, (2) the occurrence of an event that with the passage of time or the giving of notice or both would constitute such a breach, default or misrepresentation, or (3) the occurrence of an event that with or without the passage of time or the giving of notice or both would give rise to a right to terminate, change the terms of, or renegotiate, any Purchased Contract or to accelerate, increase, or impose any Liability under any Purchased Contract. "Dialer-Based Product" means a software product whose primary function is to rapidly place outbound customer calls and connect live contacts with available call center agents, while rapidly providing information screens containing transactional information to that agent. "Dialer-Based Computer Software" means all Computer Software owned, licensed, leased, internally developed or otherwise used in connection with Sellers' provision of Dialer-Based Products, including, without limitation, custom interfaces to Cable Data and CSG. "Governmental Authority" means any federal, state, county, local, foreign or other governmental or public agency, instrumentality, commission, authority, board or body. "Intellectual Property" means (i) patents and pending patent applications together with any and all continuations, divisions, reissues, extensions and renewals thereof (ii) trade secrets, know-how, inventions, formulae and processes, whether trade secrets or not, (iii) trade names, trademarks, service marks, logos, assumed names, brand names and all registrations and applications therefor together with the goodwill of the business symbolized thereby, (iv) copyrights and any registrations and applications therefor, (v) technology rights and licenses, and (vi) Computer Software and all other intellectual property owned by, registered in the name of, or used in the business of a Person or in which a Person or its business has any interest. "Knowledge", with respect to any Person, shall mean such information either actually known by such Person or which such Person reasonably should have known. Further, with 13 14 respect to any Person who is not an individual, "Knowledge" shall refer to such information known or which reasonably should have been known by any officer or director thereof. "Law" means any code, law, order, ordinance, regulation, rule, or statute of any Governmental Authority. "Liability" means any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, expense (including, without limitation, costs of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes, bills and checks presented to banks for collection or deposit in the ordinary course of business) of any type, whether accrued, absolute, contingent, liquidated, unliquidated, matured, unmatured or otherwise. Without limiting the generality of the foregoing, "Liability" shall mean and include any claim made by a Person to whom any Seller may have, prior to Closing, sold or delivered goods or rendered services whether or not such Person would have the legal right validly to assert such claim against Purchaser. "License" means any license, franchise, notice, permit, easement, right, certificate, authorization, approval or filing that is binding on any Person or its assets. "Lien" means any mortgage, lien, security interest, pledge, hypothecation, encumbrance, restriction, reservation, encroachment, infringement, easement, conditional sale agreement, title retention or other security arrangement, defect of title, adverse right or interest charge or claim of any nature whatsoever of, on, or with respect to any property or property interest. "Litigation" means any lawsuit, action, claim, arbitration or other legal proceeding (including governmental investigations or criminal prosecutions) and notices (oral or written) received, threatening or advising as to any of the foregoing proceedings. "Loss" means any loss, Liability, obligation, claim, demand, lawsuit, action, claim, payments, assessment, damage, including punitive, exemplary or consequential damages (including, lost income and profits and interruptions of business), liabilities, costs, expenses (including without limitation, (i) interest, penalties, fines, and reasonable attorneys' fees and expenses, (ii) attorneys' fees and expenses necessary to enforce rights to indemnification hereunder, and (iii) consultant's fees and other costs of defense or investigation), and interest on any amount payable to a Third Party as a result of the foregoing, in each case whether accrued, absolute, contingent, known, unknown, or otherwise as of the Closing Date or thereafter. "Maintenance and Support Revenues" means monies actually collected for maintenance and support services provided under the Purchased Contracts or any renewals thereof. "Maintenance and Support Services" means maintenance and support services provided under the Purchased Contracts or any renewals thereof. 14 15 "Marketing Database" means Sellers' database (in whatever form, version or media) of prospects and leads for the sale of Dialer-Based Products, including all documentation with respect thereto. "Material" or "Materially" shall be determined in light of the facts and circumstances of the matter in question; provided, however, that any specific monetary amount cited in this Agreement shall be deemed to determine materiality in that instance. "Material Adverse Change" or "Material Adverse Effect" means, with respect to any Person, any Material adverse change in or effect upon (i) the business, operations, assets, Liabilities, condition (financial or otherwise), or results of operations of such Person (ii) the ability of such Person to consummate the transactions contemplated by this Agreement or any of the Other Agreements to which it is or will be a party, or (iii) the ability of such Person to perform its obligations under this Agreement or any of the Other Agreements to which it is or will be a party. "New Sales Revenues" means monies actually collected for sales of Purchaser's products to any customer party to a Purchased Contract. "Order" means any decree, injunction, judgment, order, ruling, writ, quasi judicial decision or award or administrative decision or award of any federal, state, local, foreign or other court, arbitrator, mediator, tribunal, administrative agency or Governmental Authority to which any Person is a party or that is or may be binding on any Person or its securities, assets or business. "Other Agreements" means the agreements, documents, assignments and instruments to be executed and delivered by Sellers or Purchaser pursuant to this Agreement. "Person" means a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, trust, business association or any person acting in a representative capacity. "Purchased Assets" means (a) the Purchased Contracts,(b) the Marketing Database and (c) the Dialer-Based Computer Software. "Purchase Price" means the total consideration to be paid to Sellers by Purchaser for the purchase of the Purchased Contracts pursuant to this Agreement and which shall be calculated in accordance with Section 1.2 and paid in accordance with Section 1.3 of this Agreement. "Purchased Contracts" means all Contracts between any Seller and the customers listed on Schedule PC attached hereto, pursuant to which any Seller provides such customers with Dialer-Based Products (including all related arrangements for the taking and holding of customer deposits after the Closing Date and all guarantees from third parties to satisfy obligations of the 15 16 customer to such Seller arising in connection with such Seller's provision of Dialer-Based Products to such customer). "Retained Liabilities" means any Liability of any Seller which is not an Assumed Liability. Without limiting the generality of the foregoing, "Retained Liabilities" shall mean and include: (i) any Liability for any Taxes of any Seller; (ii) any Liability under any Purchased Contract not validly assigned to Purchaser; (iii) any Liability incurred by any Seller as a result of any Default by any Seller under this Agreement or any of the Other Agreements; and (iv) any claim by any broker, finder or other Person employed or allegedly employed by any Seller in connection with the transactions contemplated by this Agreement (including, without limitation, T.V. Metz and Co.). "Sales Order Backlog Revenues" means monies actually collected under sales Contracts included within the Purchased Contracts. "Seller" or "Sellers" means Syntellect Inc., a Delaware corporation, Telecorp Systems, Inc., a Georgia corporation, and Syntellect Europe Ltd., a corporation formed under the laws of the United Kingdom. "Tax" or "Taxes" means any federal, state, county, local, foreign and other taxes, assessments, charges, fees, and impositions, including interest and penalties thereon or with respect thereto, whether disputed or not. "Territory" means the entire United States. "Third Party" or "Third Parties" means any Person that is not Purchaser or a Seller, or an Affiliate of Purchaser or any Seller. "Transition Date" means October 1, 1999. "Transition Period" means the period from the Closing Date through and including September 30, 1999. "Year 2000 Compliant" means that, with regard to each product or service provided to any customer party pursuant to any Purchased Contract, provided the product or service is used in accordance with its specifications and operating instructions and has not been modified by any party except Sellers: (i) the functionality of each product or service will not be materially adversely affected as a result of the advent of the year 2000, including leap year calculations; and (ii) each product or service will accurately calculate, compare, sequence, accept, store, retrieve, output, and otherwise process dates that are before, on, after, and spanning the year 2000, including leap years. 16 17 ARTICLE 10 MISCELLANEOUS 10.1 Notices. (a) All notices, requests, demands and other communications hereunder shall be (i) delivered by hand, (ii) mailed by registered or certified mail, return receipt requested, first class postage prepaid and properly addressed, (iii) sent by overnight courier service, or (iv) sent by facsimile and, in each case, addressed as follows: If to Sellers: Syntellect Inc. 20401 N. 29th Avenue Suite 100 Phoenix, Arizona 85027 Attention: Peter Pamplin Fax: 602-789-2911 with copies to: Alan J. Prince, Esq. King & Spalding 191 Peachtree Street Atlanta, Georgia 30303 Fax: 404-572-5100 If to Purchaser: Noble Systems Corporation Suite 550 4151 Ashford Dunwoody Road Atlanta, Georgia 30319-1462 Attention: President Fax: 404-851-1421 with copies to: Charles D. Ganz, Esq. Sutherland, Asbill & Brennan LLP 999 Peachtree Street, N.E. Suite 2300 Atlanta, Georgia 30309 Fax: (404) 853-8806 (b) All notices, requests, instructions or documents given to any party in accordance with this Section 10.1 shall be deemed to have been given (i) on the date of receipt, if delivered by hand, if sent by overnight courier service, or if sent by facsimile, or (ii) on the date that is three business days after mailing, if mailed in the manner described and addressed as set forth above. 17 18 (c) Any party hereto may change its address specified for notices herein by designating a new address by notice given in accordance with this Section 10.1. 10.2 Entire Agreement. This Agreement, the Schedules and the Other Agreements constitute the entire agreement between the parties relating to the subject matter hereof and thereof and supersede all prior oral and written, and all contemporaneous oral negotiations, discussions, writings and agreements relating to the subject matter of this Agreement. 10.3 Amendments and Waivers. This Agreement may not be amended except in writing signed by the party against whom the change is being asserted. The failure or delay of any party at any time or times to require performance of any provision of this Agreement shall in no manner affect its right to enforce that provision. No single or partial waiver by any party of any condition of this Agreement, or the breach of any term, agreement or covenant or the inaccuracy of any representation or warranty of this Agreement, whether by conduct or otherwise, in any one or more instances shall be construed or deemed to be a further or continuing waiver of any such condition, breach or inaccuracy or a waiver of any other condition, breach or inaccuracy. 10.4 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto, and their respective successors and assigns, but no assignment shall relieve any party of the obligations hereunder. This Agreement cannot be assigned by any party without the prior written consent of the other party hereto, except by operation of law. 10.5 Captions; References. The captions and other headings contained in this Agreement as to the contents of particular articles, sections, paragraphs or other subdivisions contained herein are inserted for convenience of reference only and are in no way to be construed as part of this Agreement or as limitations on the scope of the particular articles, sections, paragraphs or other subdivisions to which they refer and shall not affect the interpretation or meaning of this Agreement. All references in this Agreement to "Section" or "Article" shall be deemed to be references to a Section or Article of this Agreement. 10.6 Governing Law. This Agreement has been negotiated and executed in the State of Georgia, will be substantially performed in the State of Georgia, and shall be controlled, construed and enforced in accordance with the substantive Laws of the State of Georgia, without respect to the Laws related to choice or conflicts of Laws. 10.7 Pronouns. All pronouns used herein shall be deemed to refer to the masculine, feminine or neuter gender as the context requires. 10.8 Severability. Should any one or more of the provisions of this Agreement (including, without limitation, the provisions of Section 5.3) be determined to be invalid, illegal or unenforceable in any respect, the validity and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. To the extent such determination is 18 19 reasonably likely to give rise to a Material Adverse Effect, the parties shall endeavor in good faith to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as practicable to that of the invalid, illegal or unenforceable provisions. 10.9 Remedies. Absent fraud, willful misconduct, bad faith or any other misrepresentation, the indemnification provisions contained herein shall be the exclusive remedy for any breach or violation of the agreements, covenants, obligations, representations or warranties set forth in this Agreement; provided, however, that such indemnification provisions shall not prevent any party from seeking equitable remedies (including specific performance and injunctive relief) in connection with any such breach or violation. 10.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of such counterparts shall together constitute one and the same instrument. 10.11 Interpretations. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Purchaser or Sellers, whether under any rule of construction or otherwise. No party to this Agreement shall be considered the draftsman. On the contrary, this Agreement has been reviewed, negotiated and accepted by all parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as fairly to accomplish the purposes and intentions of all parties hereto. 10.12 No Intention to Benefit Third Parties. Except as set forth in Article 8, this Agreement is not intended to, and shall not, (i) benefit any Person other than the parties who are signatories hereto or (ii) create any third party beneficiary right in any Person. 19 20 IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement as of the date first above written. SYNTELLECT: SYNTELLECT INC. By: ----------------------------- Name: ----------------------------- Title: ----------------------------- TELECORP: TELECORP SYSTEMS, INC. By: ----------------------------- Name: ----------------------------- Title: --------------------------- PURCHASER: NOBLE SYSTEMS CORPORATION By: ----------------------------- James K. Noble, Jr. President 21 [SIGNATURES CONTINUED FROM PREVIOUS PAGE] SYNTELLECT EUROPE: SYNTELLECT EUROPE LTD. By:_____________________________________ Name:___________________________________ Title:____________________________________ 22 LIST OF SCHEDULES ----------------- SCHEDULE TITLE - -------- ----- 1.3 Customer Deposits and Prepayments 3.7 Disputes and Disagreements PC Purchased Contracts and Purchased Contracts Not Assignable Without Consent EX-27.1 3 EX-27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET OF SYNTELLECT, INC. AND SUBSIDIARIES AS OF SEPTEMBER 30, 1999, AND THE CONSOLIDATED STATEMENT OF OPERATIONS OF SYNTELLECT,INC. AND SUBSIDIARIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 U.S.DOLLARS 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 1 3429 3690 14077 1026 2259 23059 15703 10815 28113 13444 0 0 0 138 14288 28113 18466 36318 10853 19073 21066 0 0 (2195) 0 (2195) 0 0 0 (2195) (0.16) (0.16)
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