-----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, NzyrhQGrxqrqI+KcowoHDAnceZialuk9Kyyes2VO8krB+vMnSbd68EnDRnh7bOiy yP3dPFH1r1SkftPfYtt8zQ== 0000906318-96-000060.txt : 19960930 0000906318-96-000060.hdr.sgml : 19960930 ACCESSION NUMBER: 0000906318-96-000060 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960927 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINTECH TELE MANAGEMENT SYSTEMS INC CENTRAL INDEX KEY: 0000926038 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 311200684 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-24448 FILM NUMBER: 96636149 BUSINESS ADDRESS: STREET 1: 2100 SHERMAN AVENUE CITY: CINCINNATI STATE: OH ZIP: 45212 BUSINESS PHONE: 5138612000 MAIL ADDRESS: STREET 1: 2100 SHERMAN AVEN STREET 2: 2100 SHERMAN AVEN CITY: CINCINNATI STATE: OH ZIP: 45212 10KSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB _____________________ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ____________________ For the Fiscal Year Ended June 30, 1996 Commission File No. 0-24448 ____________________ CINTECH TELE-MANAGEMENT SYSTEMS, INC. (Exact name of registrant as specified in its charter) Ohio (State of Incorporation) 2100 Sherman Avenue Cincinnati, Ohio (Address of principal executive offices) 31-1200684 (I.R.S. Employer Identification No.) 45212 (Zip Code) Registrant's telephone number, including area code: 513-731-6000 ____________________ Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, without par value ____________________ Check whether the registrant (1) 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 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 _____ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B (228.405 of this Chapter) is not contained herein, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB [ X ]. All amounts specified in this Annual Report are in U.S. Dollars, unless otherwise specified herein. The registrant's revenues as of June 30, 1996 were $8,161,700. The aggregate market value of the voting stock of the registrant held by non-affiliates of the registrant as of June 30, 1996 was $1,833,091. The outstanding voting securities of the registrant at the close of business on June 30, 1996 were 12,281,371 shares of Common Stock without par value. DOCUMENTS INCORPORATED BY REFERENCE The following documents are hereby incorporated by reference herein and the parts of this Form 10-KSB into which the document is incorporated are shown beside the respective documents: Document Part A. Registration Statement on Parts I, II and III Form 10-SB (Release No. 34-32231), as amended, filed June 27, 1994 B. Proxy Statement Parts II and III Filed on September 11, 1996 PART I Item 1. Description of Business Organization Cintech Tele-Management Systems, Inc. ("Company") was incorporated by means of Articles of Incorporation filed under the laws of the State of Ohio on March 20, 1987. The Company has operated continuously since that time and grown through internal development of an array of computer software products. The Company has not experienced any bankruptcy or similar proceedings, nor has it been involved in any merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business. The Company did effect a stock split, effective January 21, 1994, under which each outstanding share of its common stock was changed into 83,757 shares of such stock. On January 31, 1994, the Company completed a public offering of its common stock without par value in Canada, realizing net proceeds therefrom of $7.7 million. The Company's shares sold in the offering are registered on the Toronto Stock Exchange, and are traded under the symbol CTM. Business Overview/Market The Company operates in the emerging computer and telephone integration industry. Also known as computer telephony, the industry integrates computers with telephone systems using software to produce business applications. The combined power of a computer and telephone systems opens numerous possibilities for the market, many of which have not been fully developed. The Company believes that the ability to merge voice, database, call routing, messaging, reporting, real-time statistics and other technologies, has significant market potential, most notably for small businesses and for departments and branch offices within larger decentralized organizations. As a competitor in the computer and telephone integration industry, the Company is a developer and distributor of computer software that integrates computers and telephone switching systems to produce applications that assist in business management and operations. These applications are designed to increase productivity and service levels of small and mid-size businesses and departments or branches of larger businesses and to provide relevant additional information for managers. To date, the Company has focused on the development of applications for the modular digital key telephone switching systems ("Norstar") sold worldwide by Northern Telecom Ltd. of Missassauga, Ontario, Canada ("Nortel"). The Norstar was the first key telephone system to offer open application interface targeted for small and mid-size business units. The Company was the first developer to write a successful open application interface-based application for Norstar and is now the leader in developing business applications for Norstar. The Company's software enables small and mid-size businesses to use applications such as ACD (Automatic Call Distribution) previously generally available only to larger users. The Company began shipping its first ACD product, CINPHONY, in April, 1991 and in October, 1993, introduced a second product, PRELUDE. In June, 1994, the Company announced plans to jointly market and sell the Company's software applications with Nippon Electric Company ("NEC"). Accordingly, Cintech has developed a new ACD product, JAZZ2000, a PC-based solution for NEC s NEAX2000 IVS (Integrated Voice Server) PBX. The application performs similar functions as the CINPHONY product on the Norstar, but on a larger PBX phone switch platform. The JAZZ2000 is scheduled for general release in the Fall 1996 and will be jointly marketed by Cintech and NEC America. Under terms of the joint arrangement, the Company's product JAZZ2000 will be sold under the Cintech name by NEC America's direct sales force and distribution network in North America. The Company believes that NEC's direct sales force and distribution network will significantly expand its market for applications. Principal Products (a) Automatic Call Distribution Products (ACD Products) An ACD is a specialized software and/or hardware call management system which answers, queues and routes incoming telephone calls. It plays announcements to callers, encouraging them to hold until an agent (a person qualified to take the call) is available, provides statistics about the status of agents and callers waiting, and provides specialized management information reports. ACDs are typically employed in order to increase employee productivity and revenues, and to reduce costs. ACDs were originally designed for environments such as airline reservation services and mail order firms which have high call volumes and generate high revenues per call. As more companies have focused on productivity and customer service, the ACD market has expanded to include other types of businesses. Using open application interface technology, the Company made it feasible and cost effective for Norstar users to bring ACD into departments, branch offices and small companies. The Company has developed two ACD systems for Nortel's Norstar, CINPHONY and PRELUDE and JAZZ2000 for NEC s NEAX2000 PBX. CINPHONY AND PRELUDE are generally targeted towards organizations that have less than 50 telephone agents ("small call centers") and can be effectively utilized by small businesses and departments or branch offices in larger organizations. JAZZ2000 is targeted toward the small to mid-size call center market and provides more capacity than the CINPHONY product. More detailed information on these products is as follows: CINPHONY CINPHONY, introduced in April 1991, is targeted to a sophisticated small call center with advanced ACD needs. CINPHONY was designed for use with a larger model of the Norstar system. Typically, the CINPHONY user has experience with ACD in a large call center within the organization and wants that same level of capability in smaller areas. Reporting often becomes the critical sales element. CINPHONY users range from small businesses with as few as 15 employees to Fortune 500 companies. In 1993, the Company began to focus on major accounts that would typically have the potential for multiple installations. In 1994, over 50% of CINPHONY installations were in large corporations, government agencies and institutions, many of them with multiple installations. CINPHONY is available in two levels. Level I is designed for small call centers staffed with up to 30 agents and 4 groups. Level II supports up to 80 agents and a maximum of 24 groups. PRELUDE PRELUDE is an entry level product offering basic ACD functionality and was introduced in October 1993. PRELUDE also offers real-time status, voice capabilities and reports. The Company believes that PRELUDE is broadening the market for ACDs because of its straightforward feature set and affordability for even the smallest center. Many departments, branch offices and small businesses do not believe they are candidates for ACD because of its reputation as a product for large users only, its historically high cost, and a perceived overabundance of features. PRELUDE also replaces older technology, such as call sequencers. Cintech's plan is to introduce less sophisticated users to ACD with PRELUDE and then upgrade them to CINPHONY as their needs expand. JAZZ2000 The JAZZ2000 application performs similar functions as the CINPHONY product on the Norstar, but on a larger PBX phone switch platform designed by NEC, the NEAX2000 IVS. JAZZ2000 provides Cintech with an advanced ACD solution targeted at sophisticated small to mid-size call centers, while complementing the power and versatility of a PBX. The JAZZ2000 s capacity exceeds that of CINPHONY as it can handle a maximum of 80 active agents, and 24 groups of agents. The first generation of the JAZZ2000 is targeted for shipment in the Fall of 1996. (b) Call Accounting Products Call accounting products provide management with various reports that show how a company's telephone systems are being used. These products typically generate a variety of reports which detail, on a call by call basis, the origination and destination of the call, the cost of the call, and the duration of each call. Call accounting packages assist managers and employees in understanding how time is being spent on the telephone and the related costs and can also help protect against the potential abuse of outsiders gaining access to the telephone system. The Company entered the call accounting market in 1987 with its personal computer-based TELE-SERIES call accounting product. The technology of using a personal computer as the call accounting platform was relatively new at the time and allowed the Company to offer a full-featured package at low cost. This matched the Company's strategy of bringing high-productivity software to small and mid-sized businesses. The Company's initial call accounting product, TELE-SERIES, continues to be sold today through various US and Canadian dealers. It works with a large number of telephone switches including those of NEC, Nortel, AT&T and Mitel. TELE-SERIES consists of a number of products and feature modules and is designed to allow the user to build its own systems. In 1992, Nortel entered into an agreement with the Company to replace the existing Norstar call accounting product with a rewritten version of TELE-SERIES that would take advantage of Norstar's unique technology. In February 1993, the Company introduced TELE-SERIES for Norstar. It replaced the previous Norstar call accounting product and is endorsed by Nortel as the official replacement product in the United States. As part of its agreement with Nortel, Cintech provides technical product support for Nortel's installed base of the previous call accounting product. Tele-Series for Norstar, in addition to basic call accounting functions, takes advantage of features unique to Norstar. These advantages include the ability to: (i) display the incoming caller's telephone number on the user's telephone set; (ii) prompt users to enter account codes at the telephone set; (iii) monitor for possible toll fraud (unauthorized individuals gaining access to and misusing the Norstar); and (iv) track intercom calls. Marketing and Distribution In 1994, Cintech announced plans for joint marketing and distribution arrangements with both Nortel and NEC America. The Nortel arrangement was implemented during April 1996 with the release of new versions of CINPHONY and PRELUDE that were designed to perform on Nortel s newly released Norstar Application Module platform. Under the arrangement, Cintech s CINPHONY and PRELUDE are now included in the Nortel product catalog and sold directly by the Nortel direct sales force and distributors. Cintech s products for Norstar are distributed by Nortel to all of the Regional Bell Operating Companies, Canadian provincial telephone companies, the three largest US independent operating companies: GTE, Sprint and Wiltel and approximately 500 smaller dealers. In the Company's opinion this distribution stronghold represents one of its major competitive advantages. The Company also has a joint marketing and distribution arrangement with NEC America for its JAZZ2000 ACD solution. The JAZZ2000 is scheduled for general release in the Fall 1996 and will be jointly marketed by Cintech and NEC America s direct sales force and NEC distributors. The Company believes that NEC's direct sales force and distribution network will significantly expand its market for applications as well as provide a vehicle for further international expansion. In addition to the US and Canada, the Company's products are installed in Central and South America as well as in the Middle East. The Company intends to expand its sales internationally to fill the needs of global accounts. This objective complements the Company's joint marketing and distribution strategy. Retail Distribution On March 8, 1995, the Company announced an agreement with OCTuS Inc. giving Cintech exclusive distribution of OCTuS' retail computer-telephony products in North America. The product line covered by the agreement includes OCTuS PTA, OCTuS' powerful PC-based telephone management software; OCTuLINK, a portable PC-telephone hardware interface; and the OCTuS PTA Personal Fax and Personal Voice Mail software add-ons. During 1996, the Company moved forward with its retail expansion by negotiating distribution agreements with Graybar, Gates/Arrow and Tech Data. Computer City is the leading retailer of the OCTuS PTA product at this early stage of the Company's expansion into the computer retail market. Competitive Position The Company is still in a relatively early stage of development and, accordingly, its business operations are subject to all the risks inherent in the establishment and maintenance of a young business enterprise and the competitive environment in which it operates. While the Company has been in operation for approximately nine years, its relationship with its major distributors began in 1990, the commercial release of CINPHONY only began in April 1991, and substantial working capital resources became available only in 1994. The Company's long term future expansion will depend upon the continued availability of working capital, the ability of management to implement and successfully develop the distribution of products, and the continued and increased demand in the market place for the products and services provided by the Company. The market for the Company's products is characterized by rapid technological change and evolving industry standards. The Company's competitiveness depends on its ability to enhance its existing products and to offer new products on a timely basis. The long term success of the Company's products is based primarily on product features, performance, ease-of-use, reliability, compatibility, brand name recognition, product reputation, levels of advertising, pricing, merchandising and training, quality customer support, excellence and timeliness of product upgrades, and the capability of the Company to introduce complementary new products. Presently, the Company is not aware of any existing or upcoming technologies which would render obsolete or significantly displace its products in the near future. Dependence on Customers/Distribution The Company derives a significant portion of its revenue from products which are integrated with the Norstar system. Because of this product concentration, the Company would be materially adversely affected if users of the Norstar system determined to use another system or similar device or if the Norstar system ceased to be competitive in the marketplace. Also, the Company has entered into various marketing, selling and similar arrangements with a number of regional providers of telephone systems and service. Under these arrangements, the Company's products are generally sold in conjunction with sales of goods and services by such distributors. Approximately 10% of the Company's sales in the year ended June 30, 1996 were made to one such distributor. Consequently, the Company's business is in part dependent upon the degree of marketing support and effort provided by these distributors. Sources and Availability of Raw Materials/Principal Suppliers The Company, as a supplier primarily of software products, is not dependent upon availability of raw materials. Hardware components used primarily for bundling with the Company's JAZZ2000 product are readily available for open market purchase and the Company can acquire such components from any number of available primary and secondary sources. The Company is dependent upon both Nortel and NEC for the supply of Norstar and NEAX2000, respectively, components required for testing and development of Company products. Proprietary Rights CINPHONY and Tele-Series have been copyrighted by the Company with the United States Copyright Office. The Company has applied for trademarks in respect to CINPHONY, PRELUDE, JAZZ2000, Tele-Series and StarDome in the United States. In addition, the Company is a licensee of certain of Nortel's development toolkits, under which the Company has developed and will continue to develop products for use with Nortel's own product offerings. This license, under which the Company makes periodic royalty payments, extends from year to year under an automatic renewal arrangement, subject to termination upon proper notice. Government Impact The Company knows of no material governmental approvals required for the development, marketing or sale of the Company's principal products or services. Likewise, the Company knows of no existing or probable governmental regulations which have or would have a material adverse effect on the operation of the Company's business. Finally, the Company knows of no material costs or effects of compliance with environmental laws (federal, state or local) in the operation of its business. Research and Development The Company spent on research and development during each of the last two fiscal years the following sums: $326,000 for the fiscal year ending June 30, 1996, and $373,000 for fiscal year ending June 30, 1995. The cost of such activities are considered overhead items which are reflected only indirectly in the pricing of the company's products sold into the market. Employees The Company presently has 60 employees, 58 of which are full time. Of these employees, 21 are involved primarily in sales and marketing, 17 work on systems support, 13 are involved in product development and the remaining nine are responsible for all management and administrative functions. Item 2. Properties The Company's plant and its executive offices comprising approximately 20,000 square feet are located at 2100 Sherman Avenue, Cincinnati, Ohio 45212. The Company leases this facility. The lease extends until February 28, 2002 and calls for escalating lease payments. The Company had maintained its executive offices at 3006 Vernon Place, Cincinnati, Ohio 45219 until early March 1995, at which time it relocated to 2100 Sherman Avenue. The offices at 3006 Vernon Place were leased from a partnership in which two of the Company's shareholders (one of whom is also a director) are partners. In May, 1996, the Company negotiated a buyout of the lease. The transaction was funded by execution of a Term Note Payable with The Fifth Third Bank and a second Term Note Payable with the partnership previously serving as lessor. Lease payments for the year ending June 30, 1996 amounted to approximately $277,000. The Company owns minimum amounts of tangible personal property in the form of equipment, furniture and fixtures, and inventory (comprised of computer hardware and literature and other documentation). The value of these items is modest in comparison to the value of the Company's overall assets, inclusive of cash and cash equivalents. All of the Company's leased premises and tangible personal property are in good condition. Executive Officers of the Company. The names, ages and positions of the executive officers of the Company as of June 30,1996 are as follows: NAME AGE POSITION Diane M. Kamionka 49 President and Chief Executive Officer Bryant A. Downey 33 Chief Technology Officer David J. Thibodeau 46 Vice President - Customer Support Services Each of the directors and officers has been engaged in their principal occupation indicated above for the previous five years, except for Mr. Thibodeau who became an Executive Officer of the Company during 1996. Item 3. Legal Proceedings The Company is not a party to any pending legal proceedings which would have a material adverse impact on the Company's financial condition or results of operations. Item 4. Submission of Matters to a Vote of Security Holders. The Company has nothing to report under this Item. PART II Item 5. Market for the Company's Common Equity and Related Stockholder Matters The Company's common stock is held by approximately 700 shareholders of record as of June 30, 1996, and is traded on The Toronto Stock Exchange. The range of price quotations in each quarter of the two years ended June 30, 1996 are shown below. These prices represent actual transactions and do not reflect retail markup, markdowns or commissions. FOR THE QUARTER ENDED HIGH(1) LOW(1) June 30, 1995 $2.50 1.40 September 30, 1995 2.80 1.55 December 31, 1995 2.20 1.11 March 31, 1996 1.70 1.10 June 30, 1996 1.98 1.40 (1) Based on quotations obtained from the Toronto Stock Exchange. All amounts are in Canadian dollars. No dividends were declared or paid during the two years ended June 30, 1996 and June 30, 1995, and the Company does not anticipate paying dividends in the foreseeable future. Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources In January 1994, the Company completed its initial public offering ("IPO") of 2,181,820 shares of common stock (see Note 1 of Notes to the Financial Statements). The net proceeds of this offering, after deducting applicable issuance costs and expenses, were $7.7 million. The proceeds of the offering have been used to retire the debt of the Company incurred prior to the offering. In addition, the proceeds are being used to implement sales and marketing programs, as well as for product development. Working Capital decreased to $1.9 million in 1996 from $2.2 million in 1995. The decrease of $300,000 was primarily due to a corresponding decrease in cash and marketable securities investments of $892,000 offset by increases in inventory and accounts by increases in inventory and accounts required for testing and development of Company by increases in inventory and accounts receivable of $510,000 and $279,000 respectively. The remainder of the decrease in Working Capital was attributable to a $186,000 increase in current liabilities. During 1996, the Company used cash of $725,000 for operating activities and invested another $193,000 and $115,000 in software development and fixed assets, respectively. The ending cash balance increased by $85,000. These activities were funded primarily through sales of marketable securities of $975,000 and the execution of a $140,000 note payable (see Note 5 of the Financial Statements). At the end of 1996, the Company had $130,000 in outstanding debt in the form of a note payable and held cash and marketable securities totaling $974,000. Results of Operations The following selected financial information set forth below has been derived from the financial statements of the Company. This discussion and analysis should be read in conjunction with the financial statements and notes thereto which follow. Results of Operations 1996 versus 1995 Sales for fiscal 1996 increased by $3,076,000 or 60% compared with fiscal 1995. This increase by product is broken down as follows (in thousands): PRODUCT CATEGORY 1996 1995 INCREASE Automatic Call Distribution (ACD) $5,184 $3,885 $1,299 Call Accounting 697 541 156 Other 660 1,621 ______ _______ ______ Total $8,162 $5,086 $3,076 The increase in the sales of the Automatic Call Distribution products and Tele-Series, the Company's Call Accounting product, was due to achieving a greater level of penetration through the Company's distribution channels for the product. Other sales increased due to the effectiveness of programs designed to increase revenues from maintenance contracts, training and installation, sales demo systems, and product literature. Cost of products sold increased $705,000 or 45% due to the related increase in sales volume. In contrast, as a percentage of sales, cost of products sold for 1996 actually decreased to 28% from 31% experienced in 1995, due to the combination of a reduction of lower margin hardware sales attributable to the Company's joint marketing arrangement with Nortel effective in March, 1996 and continued efforts to decrease component costs while maintaining product quality. License fees increased $227,000 or 52% due to the related increase in sales volume. Gross Profit increased $2,135,000 or 72% due to the increased sales volume combined with the reduction in the cost of sales margin. Research and development costs of $326,000 were $47,000 or 13% lower than 1995. This decrease is largely due to more effective allocation of resources as the Company continues to develop new products. In addition, the Company capitalized software development costs of $193,000 during the year. Selling, general, and administrative expenses increased $1,275,000 or 35% over 1995. This was due to the Company's investment in its customer support services and product management due to the continued growth in sales. However, selling, general and administrative expenses have decreased as a percentage of sales from 61% for 1996 compared to 72% in 1995, reflecting the continued implementation of the Company s distribution strategy. A schedule of the selling, general, and administrative expense categories appears below (in thousands): CATEGORY 1996 1995 INCREASE Payroll $2,584 $1,986 $ 598 Professional Services 480 280 200 Sales and Marketing 1,189 857 332 Occupancy 306 223 83 Other 396 334 62 ------ ------ ------ Total $4,955 $3,680 $1,275 ====== ====== ====== The increase in payroll costs reflects an 18% increase in staff levels and related salary and expense increases. Professional services rose as a result of increased subcontracted installations due to increased installation sales. The increase in sales and marketing expenses is primarily due to expenses associated with the increase in the Company s sales such as commissions, travel, and marketing programs. The increase in other expenses is due to increases in office costs and depreciation related to the increased size of the Company s staff. Lease termination costs of $55,000 decreased $251,000 or 82% from 1995 due to the favorable impact of negotiating a buy-out of the lease obligation on the former corporate offices (see notes 4 and 5 of the financial statements). The Company s loss from operations decreased $1,158,000 or 84%, due to increased sales volume and gross profit margins combined with lower levels of selling, general and administrative expenses and research and development costs when compared to sales. Other income of $67,000 decreased by $110,000 or 63% compared to 1995 due to a reduction in the amount of funds invested in marketable securities. The net loss of $160,000 represents a decrease of $1,048,000 compared to the loss reported in 1995. The corresponding loss per share was $0.01 in 1996 compared to $0.10 in 1995. The Company's operating plans are to continue distributing its products through the current channels. While operating expenses did increase in 1996, the Company believes that increases in sales and/or the liquidation of marketable securities will provide sufficient cash flow to meet these expenses in 1997. 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 believes that there are no significant elements of income or loss that do not arise from the Company's continuing operations. Item 7. Financial Statements and Supplementary Data The response to Item 7 is included Exhibit 13 to this report. Item 8. Changes and Disagreements with Accountants on Accounting and Financial Disclosure The Company has nothing to report under this Item. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons of the Registrant; Compliance with Section 16(a) of the Exchange Act The information required by this Item is incorporated herein by reference to the Company s 1996 definitive proxy statement filed on September 11, 1996 with the Securities and Exchange Commission as set forth under the captions "Voting Shares and Security Ownership of Certain Beneficial Owners and Management" and Compensation of Directors and Officers". Item 10. Executive Compensation The information required by this Item is incorporated herein by reference to the Company s 1996 definitive proxy statement filed on September 11, 1996 with the Securities and Exchange Commission as set forth under the caption "Compensation of Directors and Officers". Item 11. Security Ownership of Certain Beneficial Owners and Management The information required by this Item is incorporated herein by reference to the Company s 1996 definitive proxy statement filed on September 11, 1996 with the Securities and Exchange Commission as set forth under the caption "Voting Shares and Security Ownership of Certain Beneficial Owners and Management". Item 12. Certain Relationships and Related Transactions During the last two years, the Company was a party directly or indirectly to the following transactions with its directors, executive officers, and principal shareholders (including any of their associates or affiliates): 1. During 1996, the Company was a party to a lease dated July 13, 1990 with Renaissance Partners, a partnership in which S. William Miller and Frank W. Terrizzi are partners. Messrs. Miller and Terrizzi are principal shareholders of the Company, and Mr. Terrizzi is also a director. The lease relates to the Company's former headquarters at 3006 Vernon Place, Cincinnati, Ohio, with expiration on December 31, 1997. On May 13, 1996, the Company negotiated a buyout of the lease. A portion of the buyout proceeds consisted of a Term Note Payable to the lessor partnership. The Term Note Payable bears interest at 6% and matures on May 13, 1997 with principal and interest due in full. With respect to the above transactions, the consideration was determined by means of negotiation conducted between the Company and the other party. Management believes that no better terms could have been obtained from any third parties, and that such transactions represented "fair market value" transactions at the time they were entered into. Item 13. Exhibits, Financial Statements and Reports on Form 8-K (a)(1) and (2). Financial Statements The financial statements attached to the end of this annual report are filed as part of this annual report. (a)(3). Exhibits Exhibit No. Description Where Provided 3. Charter and Bylaws * ----- 4. Instruments Defining Rights of Security Holders * ----- 4.1 Agency Agreement by and among Cintech Tele-Management Systems, Inc., Loewen, Ondaatje, McCutcheon Limited, and Toronto Dominion Securities, Inc. dated January 20, 1994 * ----- 4.2 Cintech Tele-Management Systems, Inc. 1993 Stock Option Plan * ----- 9. Voting Trust Agreements * ----- 10. Material Contracts * ----- 10.1 Agency Agreement by and among Cintech Tele-Management Systems, Inc., Loewen, Ondaatje, McCutcheon Limited, and Toronto Dominion Securities, Inc. dated January 20, 1994 * ----- 10.2 Escrow Agreement described in Part II, Item 1 * ----- 10.3 Lease between Renaissance Partners and Cintech Tele-Management Systems, Inc. dated July 13, 1990 * ----- 10.4 Cintech Tele-Management Systems, Inc. Stock Option Plan * ----- 10.5 Lease between Cintech Tele-Management Systems, Inc. and Norwood Real Estate Partners dated October 25, 1994 *** ----- 13. Portions of the Annual Report to Shareholders 14. Material Foreign Patents N/A 27. Financial Data Schedule 99. Additional Exhibits ** --- 99.1 Marketing Communique ** --- 99.2 StarDome Distribution Agreement (Form) ** --- 99.3 Press Release dated June 8, 1994 ** --- 99.4 Letter of Understanding between Cintech Tele-Management Systems, Inc. and NEC America, Inc. dated May 5, 1994 ** --- 99.5 October 10, 1991 Letter *** ----- 99.6 Amendment to License Agreement dated October 10, 1991 *** ----- 99.7 Status and Disposition Agreement *** ----- 99.8 Loan Agreement *** ----- 99.9 Agreement for Purchase of Preferred Stock *** ----- 99.10 Debt Exchange Agreement *** ----- 99.11 Agreement to Finance *** ----- 99.12 Supplementary Agreement to Finance *** ----- 99.13 Second Supplementary Agreement to Finance *** ----- 99.14 Third Supplementary Agreement to Finance *** ----- 99.15 Term Note Payable dated May 13, 1996 to Related Parties * Previously provided in original filing of Form 10-SB. ** Previously provided in Amendment No. 1 to Form 10-SB *** Previously provided in Amendment No. 2 to Form 10-SB (a)(4). Reports on Form 8-K The Company has not made any reports on Form 8-K during the last quarter of the period covered by this report. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CINTECH TELE-MANAGEMENT SYSTEMS, INC. /s/ Diane M. Kamionka ------------------------ By: Diane M. Kamionka, President and Chief Executive Officer September 23, 1996 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. PRINCIPAL EXECUTIVE OFFICER: /s/ Diane M. Kamionka September 23, 1996 ___________________________ _____________________ Diane M. Kamionka, Date President, Chief Executive Officer and Director PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER: /s/James K. Keller September 23, 1996 ___________________________ _____________________ James K. Keller, Date Chief Financial Officer DIRECTORS: /s/ Diane M. Kamionka September 23, 1996 ___________________________ _____________________ Diane M. Kamionka, Date President, Chief Executive Officer and Director /s/ Bryant A. Downey September 23, 1996 ___________________________ _____________________ Bryant A. Downey, Date Chief Technology Officer and Director /s/ Robert I. Westheimer September 23, 1996 ___________________________ _____________________ Robert I. Westheimer, Date Director /s/ Frank W. Terrizzi September 23, 1996 ___________________________ _____________________ Frank W. Terrizzi, Date Director /s/ Christopher S.L. Hoffmann September 23, 1996 ___________________________ _____________________ Christopher S.L. Hoffmann, Date Director EX-13 2 EXHIBIT 13 CINTECH TELE-MANAGEMENT SYSTEMS, INC. Financial Statements for the Years Ended June 30, 1996 and 1995 and Independent Auditors' Report INDEPENDENT AUDITORS' REPORT To the Stockholders of Cintech Tele-Management Systems, Inc. We have audited the accompanying balance sheets of Cintech Tele-Management Systems, Inc. (the "Company") as of June 30, 1996 and 1995 and the related statements of operations, stockholders' equity and cash flows for the years then ended (all expressed in U.S. dollars). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 1996 and 1995 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP August 23, 1996 CINTECH TELE-MANAGEMENT SYSTEMS, INC.
BALANCE SHEETS JUNE 30, 1996 AND 1995 LIABILITIES AND ASSETS 1996 1995 STOCKHOLDERS' EQUITY 1996 1995 CURRENT ASSETS: CURRENT LIABILITIES: Cash and cash equivalents $ 203,441 $ 118,713 Accounts payable $ 715,258 $ 599,950 Marketable securities (Notes 3,5) 770,391 1,745,663 Accrued liabilities: Accounts receivable, trade - (Net of Accrued salaries 82,228 34,827 allowance of $53,726 and $57,073 in 1996 and Accrued payroll taxes 13,568 12,660 1995 respectively) (Note 2) 1,151,471 872,363 Accrued vacation 60,945 50,649 Inventory (Note 2) 1,009,960 499,496 Accrued lease termination costs (Notes 4, 5) 164,702 Prepaid expenses 18,224 Other 62,555 38,573 --------- --------- Total current assets 3,153,487 3,236,235 Current portion --------- --------- of notes payable (Note 5) 100,000 Deferred maintenance revenue (Note 2) 140,667 88,008 --------- ------- FIXED ASSETS (Note 2): Total current liabilities 1,175,221 989,369 Equipment 574,551 475,068 Furniture and fixtures 123,906 110,113 ACCRUED LEASE TERMINATION --------- --------- Total 698,457 585,181 COSTS (Note 4, 5) 84,298 Less accumulated --------- -------- depreciation 394,184 286,767 --------- --------- Total fixed assets - net 304,273 298,414 NOTES PAYABLE 30,000 --------- --------- (Note 5) --------- -------- OTHER ASSETS: STOCKHOLDERS' EQUITY (Notes 1, 6, 7): Deposits 5,062 Common stock 8,982,580 8,965,690 Deferred software development Contributed capital 675,757 675,757 costs - net (Note 2) 303,205 232,357 Treasury stock (2,290) (2,290) -------- -------- Total other assets 303,205 237,419 Accumulated deficit (7,100,303) (6,940,756) Total stockholders'---------- --------- equity 2,555,744 2,698,401 -------- --------- ---------- --------- TOTAL $3,760,965 $3,772,068 TOTAL $3,760,965 $3,772,068 ========= ========= ========= =========
See notes to financial statements. CINTECH TELE-MANAGEMENT SYSTEMS, INC. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 1996 AND 1995 1996 1995 NET SALES (Note 2) $8,161,700 $5,085,572 COST OF PRODUCTS SOLD 2,263,491 1,558,950 AMORTIZATION OF DEFERRED SOFTWARE DEVELOPMENT COSTS (Note 2) 122,494 113,247 LICENSING FEES 665,773 438,720 --------- ---------- GROSS PROFIT 5,109,942 2,974,655 RESEARCH AND DEVELOPMENT 326,141 372,844 SELLING, GENERAL AND ADMINISTRATIVE (Notes 2, 4) 4,955,329 3,679,698 LEASE TERMINATION COSTS (Note 4, 5) 54,675 305,834 --------- ---------- LOSS FROM OPERATIONS (226,203) (1,383,721) OTHER INCOME - Interest income 66,656 176,605 --------- ---------- NET LOSS $ (159,547) $(1,207,116) ========= ========== NET LOSS PER SHARE (Note 6) $ (0.01) $ (0.10) ========= ========== See notes to financial statements. CINTECH TELE-MANAGEMENT SYSTEMS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED JUNE 30, 1996 AND 1995 Common Total Stock Contributed Treasury Accumulated Stockholders' No Par Value Capital Stock Deficit Equity BALANCE AT JUNE 30, 1994 $8,958,211 $675,757 $(5,733,640) $3,900,328 PURCHASE OF TREASURY SHARES $(2,290) (2,290) SALE OF COMMON STOCK 7,479 7,479 NET LOSS (1,207,116) (1,207,116) --------- ---------- --------- ---------- --------- BALANCE AT JUNE 30, 1995 8,965,690 675,757 (2,290) (6,940,756) 2,698,401 SALE OF COMMON STOCK 16,890 16,890 NET LOSS (159,547) (159,547) --------- ---------- --------- --------- --------- BALANCE AT JUNE 30, 1996 $8,982,580 $675,757 $(2,290) $(7,100,303) $2,555,744 ========== ======== ======= =========== ==========
See notes to financial statements. CINTECH TELE-MANAGEMENT SYSTEMS, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 1996 AND 1995 1996 1995 CASH FLOWS FOR OPERATING ACTIVITIES: Net loss $(159,547) $(1,207,116) Adjustments to reconcile net loss to net -------- ---------- cash used in operating activities: Depreciation 108,338 69,811 Accrued rent 15,427 1,202 Amortization of software development costs 122,494 113,247 Provision for doubtful accounts (3,347) 37,225 Loss on disposal of fixed assets 613 3,422 Changes in assets and liabilities: Increase in accounts receivable (275,761) (278,931) Increase in inventory (510,464) (347,132) (Increase) decrease in prepaid expenses (18,224) 10,840 Decrease in deposits 5,062 Increase in accounts payable 115,308 150,141 Increase (decrease) in accrued expenses 71,421 (61,278) Increase (decrease) in accrued lease termination costs (Note 4, 5) (249,000) 249,000 Increase in deferred maintenance revenue 52,659 21,613 -------- ------- Total adjustments (565,474) (30,840) -------- --------- Net cash used in operating activities (725,021) (1,237,956) -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from marketable securities 975,272 1,651,459 Purchase of fixed assets (114,810) (219,019) Expenditures for software development costs (193,342) (92,500) -------- --------- Net cash provided by investing activities 667,120 1,339,940 -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of common stock 12,629 5,223 Proceeds from notes payable 140,000 Payment on notes payable (10,000) Purchase of treasury shares (2,290) --------- ---------- Net cash provided by financing activities 142,629 2,933 ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS 84,728 104,917 CASH AND CASH EQUIVALENTS: Beginning of period 118,713 13,796 ---------- ---------- End of period $203,441 $118,713 ========== ========== SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES - Upon exercise of common stock options for the years ended June 30, 1996 and 1995, $4,261 and $2,256 was charged to previously accrued compensation expense, respectively. See notes to financial statements. CINTECH TELE-MANAGEMENT SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 1996 AND 1995 1. INITIAL PUBLIC OFFERING In January 1994, Cintech Tele-Management Systems, Inc. (the "Company") completed its initial public offering of 2,181,820 shares of common stock (the "Offering"). The Company's shares are traded on the Toronto Stock Exchange (TSE) under the symbol "CTM". 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business - The Company develops and markets computer software in the emerging Computer-to-Telephone Integration (CTI) industry which integrates the voice functions of the telephone with the data functions of the computer to provide various business applications. This provides the means for small to mid-sized offices to take advantage of the rapid advances and emerging capabilities of CTI. Cintech has key strategic product partnerships with Nortel and NEC America, and extensive distribution capabilities with product sold through Nortel and NEC's direct sales organizations as well as their authorized distributors throughout North America. Use of Estimates - The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Financial Statement Presentation - These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and are expressed in United States dollars. The differences in accounting principles generally accepted in the United States of America and Canada are described in Note 9. Revenue - Generally, the Company records revenue from product sales when the product is shipped. Contracts with certain distributors may have terms which cause the Company to record revenue when the product is sold to third parties. Also, the Company records an estimate of potential future returns of product sold during the year. The Company sells product maintenance agreements which provide for repair of hardware and no-cost upgrade of software. These agreements normally cover a one-year period with revenue being recognized on a straight-line basis over the maintenance period. Depreciation - Fixed assets are carried at cost. Depreciation is based on the estimated useful lives of the assets and is computed using an accelerated method. Depreciation is computed using the following useful lives: Equipment 5 years Furniture and Fixtures 7 years Inventory - Inventories are valued at the lower of cost or market, with cost being computed using the first-in, first-out method. Inventories consist of: 1996 1995 Literature and other documentation $ 70,935 $ 51,980 Computer hardware 973,166 447,516 Allowance for obsolete inventory (34,141) ________ _______ Total inventory $1,009,960 $499,496 ========== ======== Significant Customers - Most of the Company's sales are to distributors in the telephony industry. The Company had sales to one major distributor, as follows: Sales for the Years Ended June 30, 1996 1995 --------------- --------------- Amount % Amount % Distributor $813,346 10% $604,427 12% The Company had gross accounts receivable from major distributors, each of which was in excess of 10% of the Company's total accounts receivable, as follows: Distributors Percent of Gross Accounts Receivable June 30, 1996 2 58% June 30, 1995 2 20% International Sales - The Company had international sales as follows: Sales for the Years Ended June 30, 1996 1995 Amount % Amount % Canada $925,333 11% $756,163 15% Other 14,255 0% 31,928 1% ________ ___ ________ ___ Total $939,588 11% $788,091 16% ======== === ======== === Software Development Costs - Costs incurred internally for creation of the computer software product are charged to research and development expense when incurred until technological feasibility has been established for the product. Thereafter, until general release, all software production costs are capitalized and subsequently reported at the lower of amortized cost or net realizable value. As the Company's products are in their early product life cycle, the capitalized costs are amortized on a straight-line basis over the estimated economic life of the product. Costs capitalized were $193,342 and $92,500 and related amortization was $122,494 and $113,247 for 1996 and 1995, respectively. Fair Value of Financial Instruments - The carrying value of certain of the Company's financial instruments, such as cash, trade accounts receivable and trade accounts payable, approximate their fair values. The Company's notes payable also approximate fair value based on the borrowing rates currently available to the Company for notes with similar terms and average maturities. Cash and Cash Equivalents - For purposes of reporting cash flows, the Company considers all money market instruments to be cash equivalents. 3. MARKETABLE SECURITIES The Company maintains various investments in treasury bills which are classified as held to maturity and are reported at amortized cost in accordance with FASB Statement No. 115 "Accounting for Certain Investments in Debt and Equity Securities". All items mature within one year. At June 30, 1996 and 1995 the cost and market value of the investments is summarized below: Net Amortized Unrealized Description Cost Market Gain June 30, 1996 - United States $ 770,391 $ 778,146 $7,755 Treasury Bills ========== ========== ======= June 30, 1995 - United States $1,745,663 $1,748,549 $2,886 Treasury Bills ========== ========== ======= 4. OPERATING LEASES Operating Leases - The Company leases its office facility in Norwood, Ohio. This operating lease, which began in March 1995 and expires in March 2002, calls for escalating lease payments over the term of the lease. The Company records lease expense on a straight-line basis over the life of the lease. The annual minimum rent to be paid under the operating lease agreement for the facility in Norwood, Ohio is as follows: Years Ending June 30: $165,750 1997 184,500 1998 205,000 1999 210,000 2000 220,000 2002 and thereafter 183,330 Rent expense for the leased office space was $276,927 and $199,286 in 1996 and 1995, respectively. During 1996 and 1995, the Company remained obligated for the lease on its former office facility in Cincinnati, Ohio leased from a partnership in which two of the Company's stockholders, one of whom is also a director, are partners. As a result of the duplicate office facility the Company accrued as lease termination cost the remaining lease payments on the Cincinnati facility, less projected sublease income and expenses. In May 1996, this obligation was removed through a buyout of the lease as discussed in Note 5. 5. NOTES PAYABLE Notes Payable consist of the following at June 30, 1996: Term Note Payable - Bank $ 90,000 Term Note Payable - Third Party 40,000 _______ Total $130,000 ======== The Term Note Payable - Bank bears interest at the prime lending rate (8.25% at June 30, 1996). The remaining term is 18 months. The note is secured by various securities on deposit with the bank. The Term Note Payable - Third Party bears interest at 6%. The term of the note is for 12 months with principal and interest due in full on May 13, 1997. The note is with a partnership in which two of the company's stockholders, one of whom is also a director, are partners. The notes are a result of the buyout of the lease on the Company's former office facility in Cincinnati, Ohio. As a result of the lease buyout, the Company has eliminated the liability for accrued lease termination costs. 6. CAPITAL STOCK AND LOSS PER SHARE The following schedule is a summary of the Company's shares of capital stock. Common In Authorized Issued Outstanding Treasury Balance at June 30, 1995 15,000,000 12,266,422 12,264,422 2,000 ========== ========== ========== ===== Balance at 15,000,000 12,281,371 12,279,371 2,000 June 30, 1996 ========== ========== ========== ===== Loss per common share was based on the weighted average number of common shares outstanding during each period. Exercise of stock options is not assumed as the effect is antidilutive. The weighted average number of common shares outstanding was 12,269,699 and 12,261,454 in 1996 and 1995, respectively. 7. STOCK OPTION PLAN During 1994, the Board of Directors approved a plan providing for the granting, to employees, options for the purchase of a maximum of 1,500,000 shares of common stock. In February 1994 the Company granted 141,500 stock options to its employees to purchase common stock at prices which reflect a discount from the market value at the date of grant. The related compensation expense is recognized over the period earned. Options granted become exercisable over a two-year period and expire at the end of ten years from the date of grant. In November 1994, the Company adjusted the exercise price on the options to $.88. In March 1995, the Company granted an additional 118,000 stock options to its employees. These options were granted at prices equal to the market value at the date of grant and become exercisable over a four-year period and expire at the end of ten years from the date of grant. In January, March and June of 1996, the Company granted additional stock options to its employees of 35,000, 10,000 and 174,015, respectively. These options were all granted at prices equal to market value at the date of the grant and become exercisable over a four year period and expire at the end of ten years from the date of grant. As of June 30, 1996, the Company had granted options to purchase 478,515 shares of which 20,885 have been exercised; 90,447 are currently exercisable; 72,405 will become exercisable during 1997, 1998, and 1999; and 54,754 will become exercisable during 2000. The remaining 95,213 options have been forfeited. 8. INCOME TAXES Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Deferred taxes at June 30, 1996 and 1995 consist of the following: 1996 1995 Current deferred tax asset: Deferred revenue $47,827 $ 29,923 Accrued compensation 9,411 6,297 Reserves not currently deductible 18,267 19,405 Accured lease termination costs 55,999 Accrued rent 14,328 9,082 _______ _______ Total 89,833 120,706 Less valuation allowance (89,833) (120,706) _______ _______ Net $ $ ======= ======== 1996 1995 Non-current deferred tax asset: Accrued lease termination costs $ 28,661 Net operating loss carryforward $2,173,836 2,046,318 Research and development credits 134,525 112,325 ---------- ---------- Total 2,308,361 2,187,304 Non-current deferred tax liability: Deferred software development costs (103,007) (79,001) --------- ---------- Net non-current deferred tax asset 2,205,354 2,108,803 Less valuation allowance (2,205,354) (2,108,303) ---------- ---------- Net $ $ ========= ========= The provision for income taxes for the years ended June 30, 1996 and 1995 consists of the following: 1996 1996 Current provision $ $ Deferred credit 66,178 151,983 _______ ________ Total 66,178 151,983 Less increase in the valuation allowance (66,178) (151,983) Income tax expense $ $ ======== ======== At June 30, 1996, the Company has net operating loss carry forwards of $6,393,636 for U.S. Federal tax purposes. Such loss carryforwards, if unused as offsets to future taxable income, will expire beginning in 2002 and continuing through 2010. Also at June 30, 1996, for U.S. Federal tax purposes, the Company has research and development credit carryforwards available to offset future income taxes of $134,525 which will begin to expire in 2002. 9. RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("CANADIAN GAAP AND U.S. GAAP") These financial statements have been prepared in accordance with accounting principles generally accepted in the United States. During the years ended June 30, 1996 and 1995, differences between Canadian GAAP and U.S. GAAP arose as a result of depreciation. For U.S. GAAP purposes, furniture and fixtures and equipment are depreciated over useful lives of seven and five years, respectively, using an accelerated method. For Canadian GAAP purposes, furniture and fixtures and equipment are to be depreciated over useful lives of five and three years, respectively, using a straight-line method. The difference does not have a material effect on income nor on the earnings per share calculation. * * * * * * EX-27 3
5 12-MOS JUN-30-1996 JUN-30-1996 203441 770391 1205197 53726 1009960 3153487 698457 394184 3760965 1175221 30000 0 0 8982580 (6426836) 3760965 8161700 8161700 2263491 3051758 5336145 0 0 (159547) 0 (159547) 0 0 0 (159547) (.01) (.01)
EX-99 4 EX-99.15 5 EXHIBIT 99.15 NOTE $40,000.00 Cincinnati, Ohio May 13, 1996 On or before May 13, 1997, for value received, the undesigned Borrower promises to pay to the order of Renaissance Partners ("Lender") the principal sum of Forty Thousand and No/100 Dollars ($40,000.00) together with interest at Six and No/100 percent (6.00%) per annum payable in full on May 13, 1997. This note may be paid at any time prior to maturity without penalty. The Lender, at its option, may accelerate this note and declare the principal and interest on this note immediately due and payable if any of the following conditions of default occur: (1) failure of Borrower to pay interest or principal when due; (2) failure of Borrower to perform under any of the terms contained in this note or other writings related to this note; (3) insolvency of Borrower or the filing of a Chapter proceeding under the Bankruptcy Code with respect to Borrower; (4) appointment of a receiver, or any marshaling of any assets of Borrower for the benefit of creditors. Borrower waives notice of default, notice of acceleration of maturity, presentment and notice of dishonor. In the event of an actual default or in the event the principal and interest on this note could be declared immediately due and payable, then Borrower agrees to pay all costs (including the fees of attorneys and other professional persons) incurred by Lender in collecting this note or in working with Borrower to eliminate the conditions for which the principal and interest could be declared immediately due and payable. This note shall be governed by and construed in accordance with Ohio law. The rights granted to Lender are not exclusive but are in addition to all other rights accruing to Lender in law or equity. Any failure of Lender to exercise these rights shall not operate as a waiver of such right or any other right under this note. BORROWER: Cintech Tele-Management Systems, Inc., an Ohio corporation By: /s/ James K. Keller Title: Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----