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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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Form 10 - QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0(10560)
CTI Group (Holdings) Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 51(0308583)
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 S. Trooper Road, P.O. Box 80360, Valley Forge, PA 19484
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(Address of principal executive offices; zip code)
Issuer's telephone number, including area code (610) 666(1700)
Not Applicable
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(Former name, address, and fiscal year)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
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The number of shares of common stock, par value $.01, outstanding as of
August 7, 1996 was: 5,431,756
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CTI Group (Holdings) Inc.
Consolidated Balance Sheet
June 30, March 31,
1996 1996
ASSETS ------------- -------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 102,300 $ 288,870
Receivables:
Trade, less allowance for doubtful
accounts of $51,300 at June 30,
1996 and $60,000 at March 31, 1996 680,500 802,410
Note receivable - current 3,110 ----
Inventories 28,640 19,450
Prepaid expenses 41,370 26,590
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Total current assets 855,920 1,137,320
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Note receivable - non-current 6,890 ----
Furniture, fixtures, equipment and
leasehold improvements at cost, less
accumulated depreciation and amortization
of $385,670 at June 30, 1996 and
$371,410 at March 31, 1996 252,840 246,300
Computer software, net of accumulated
amortization of $1,178,140 at June 30,
1996 and $1,149,790 at March 31, 1996 800,070 694,260
Other assets 29,450 29,380
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$ 1,945,170 $ 2,107,260
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CTI Group (Holdings) Inc.
Consolidated Balance Sheet
June 30, March 31,
1996 1996
LIABILITIES and STOCKHOLDERS' EQUITY ------------- -------------
(Unaudited)
Current liabilities:
Current portion of long-term debt $ 11,600 $ 28,710
Accounts payable 333,850 450,820
Accrued commissions and other compensation 31,670 52,600
Other accrued expenses 196,120 217,830
Deferred revenue 177,510 209,390
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Total current liabilities 750,750 959,350
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Long-term debt, less current portion 31,720 34,720
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Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01; 10,000,000
shares authorized; 5,572,006 shares
issued at June 30, 1996 and 5,522,006
shares issued at March 31, 1996 55,720 55,220
Capital in excess of par value 7,248,230 7,214,730
Accumulated deficit (5,730,030) (5,745,510)
Cumulative translation adjustment (4,820) (4,850)
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1,569,100 1,519,590
Less - Treasury stock, 140,250 shares at
March 31, 1996 and June 30, 1996
at cost (406,400) (406,400)
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Total stockholders' equity 1,162,700 1,113,190
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$ 1,945,170 $ 2,107,260
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CTI Group (Holdings) Inc.
Statement of Operations Three Months Ended
June 30,
(Unaudited) ----------------------------------
1996 1995
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Net sales $ 901,820 $ 1,033,180
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Costs and expenses:
Cost of sales (exclusive of depreciation 386,590 460,780
and amortization)
Selling, general and administrative expenses 456,940 453,510
Depreciation and amortization 42,620 60,080
Interest income, net of interest expense of
$680 and $400 in 1996 and 1995,
respectively (1,920) (1,420)
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884,230 972,950
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Income before income taxes 17,590 60,230
Income tax provision 2,110 5,460
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Net income $ 15,480 $ 60,230
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Net income per common share $ 0.00 $ 0.01
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Weighted average common shares outstanding 5,398,423 5,121,756
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CTI Group (Holdings) Inc. Three Months Ended
Consolidated Statement of Cash Flows June 30,
(Unaudited) ------------------------------
1996 1995
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Cash Provided By (Used In):
Operating activities:
Net Income $ 15,480 $ 54,770
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Adjustments to reconcile net income to
cash provided by (used in) operations:
Depreciation and amortization 42,620 60,080
Provision for doubtful accounts (8,700) (10,000)
Issuance of stock option 24,000 ---
Changes in Operating Working Capital:
Decrease (increase) in receivables, trade 130,610 (64,370)
Increase in note receivable (10,000) ---
Decrease (increase) in inventories (9,190) 20,770
Increase in prepaid expenses (14,780) (8,480)
(Decrease) increase in accounts payable (116,970) 10,890
Decrease in accrued commissions and
other compensation (20,930) (4,240)
Decrease in other accrued expenses (21,710) (117,910)
Decrease in deferred revenue (31,880) (38,210)
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Total adjustments (36,930) (171,470)
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Total operating activities (21,450) (116,700)
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Investing Activities:
Increase in other assets (70) (4,050)
Additions to equipment and leasehold
improvements (20,810) (39,470)
Additions to computer software (134,160) (22,450)
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Total investing activities (155,040) (65,970)
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Financing Activities:
Repayment of debt (20,110) (16,080)
Stock issuance via exercise of stock option 10,000 ---
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Total financing activities (10,110) (16,080)
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Decrease in cash and cash equivalents (186,600) (198,750)
Effect of exchange rates on cash 30 ---
Cash and cash equivalents, at beginning
of period 288,870 570,310
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Cash and cash equivalents, at end of period $ 102,300 $ 371,560
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Supplemental disclosures:
Cash paid during the year for:
Interest 680 400
Taxes --- 11,180
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CTI Group (Holdings) Inc.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - The consolidated balance sheet as of June 30, 1996, the
statement of operations for the three months ended June 30,
1996 and 1995, and the statement of cash flows for the three
months ended June 30, 1996 and 1995 have been prepared
by the Company without audit. In the opinion of management
all adjustments necessary to present fairly the financial
position, results of operations, and statement of cash flows
at June 30, 1996 have been made. The results of operations
for interim periods are not necessarily indicative of the
results for the full year.
NOTE 2 - Inventories are stated at the lower of cost or market determined
principally by the first-in, first-out (FIFO) method.
Substantially all inventory consists of equipment purchased for
resale and repair parts.
NOTE 3 - Income per common share is computed on the basis of the weighted
average number of common shares outstanding during the period.
Per share computations do not assume the exercise of stock
options outstanding because such exercises would not be dilutive.
NOTE 4 - Certain reclassifications have been made to the comparative June
30, 1995 data to conform to the current years presentations.
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ITEM 2
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Management's Discussion and Analysis
or Plan of Operation
RESULTS OF OPERATIONS
Net sales for the three months ended June 30, 1996 decreased $131,360
(13%) from the same period in the prior year. Service bureau revenue
decreased approximately $73,000 (9%) while licensed software sales
decreased approximately $58,000 (32%). The decrease in service bureau
revenues was the result of a lower level of equipment sales of
approximately $130,000 which was offset by an increase in the Company's
recurring service bureau revenues of approximately $57,000. Until the
Company is able to re-engineer its telemanagement licensed software
product, management expects to continue to have declining revenues of its
telemanagement licensed software products. The revenues being generated by
its current product are mainly the result of recurring maintenance and
renewal fees.
Cost of sales decreased $74,190 (16%) for the three months ended June 30,
1996 as compared to the prior year period. Cost of sales was 43% of sales
for the three months ended June 30, 1996 as compared to 45% of sales for
the prior year period. The overall reduction in cost of sales was
primarily due to the lower level of equipment sales. Certain production
costs have increased in direct relation to the rise in service bureau
reveneus. However, because of the higher profit margin on the Company's
service bureau and licensed software revenues, versus equipment sales, the
overall profit margin has increased.
Selling, general and administrative expenses (S, G & A) increased $3,430
(1%) for the three months ended June 30, 1996. S, G & A was 51% of sales
for the three months ended June 30, 1996 as compared to 45% of sales for
the prior year period. The Company has been marketing its Neptune billing
software during the quarter ended June 30, 1996 in preparation for its
general release which occured in June 1996. Based upon the level of
activity generated from this marketing effort management anticipates the
Company to begin generating revenues during the quarter ending September
1996 from its Neptune product.
Depreciation and amortization expense decreased $17,460 (29%) from the
same period in the prior year. The reduction is primarily the result of
the Company's ITMS III Telemanagement Software being fully amortized as
of March 31, 1996.
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LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1996 was $105,170, a decrease of $72,800 from
the March 31, 1996 working capital of $177,970. The working capital ratio
was 1.14 to 1 as of June 30, 1996 and 1.19 to 1 as of March 31, 1996.
Working capital decreased as the result of the Company using some of its
cash reserves to continue to invest in modernizing its proprietary software
products and equipment needs. The Company's bank has extended the maturity
of the Company's $200,000 revolving line of credit to July 31, 1997. The
bank has also provided the Company with a $50,000 line of credit to be used
as needed for equipment purchases. As a result of the availability of these
funds and the Company's current operating position, management believes
its working capital is adequate to fund its operations for the foreseeable
future.
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PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - CHANGES IN SECURITIES
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted for a vote of security holders during the
three months ended June 30, 1996.
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) Form 8-K
None filed in the three months ended June 30, 1996.
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Pursuant on the requirements of the Securities 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.
8/9/96 /s/ A. P. Jones
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Date Anthony P. Jones
President & Chief Executive Officer
8/9/96 /s/ Mark H. Daugherty
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Date Mark H. Daugherty
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 102,300
<SECURITIES> 0
<RECEIVABLES> 731,800
<ALLOWANCES> 51,300
<INVENTORY> 28,640
<CURRENT-ASSETS> 855,920
<PP&E> 638,510
<DEPRECIATION> 385,670
<TOTAL-ASSETS> 1,945,170
<CURRENT-LIABILITIES> 750,750
<BONDS> 0
0
0
<COMMON> 55,720
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,945,170
<SALES> 901,820
<TOTAL-REVENUES> 901,820
<CGS> 386,590
<TOTAL-COSTS> 884,230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 680
<INCOME-PRETAX> 17,590
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,110
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,480
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
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