<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
- --------------------------------------------------------------------------------
Form 10 - QSBA
(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, 1997
[ ] 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) 886-1700
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 No X
---- ----
The number of shares of common stock, par value $.01, outstanding as of
August 15, 1997 was: 6,390,314
<PAGE>
CTI Group (Holdings) Inc.
Consolidated Balance Sheet
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
ASSETS -------- ---------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 34,050 $ 105,700
Receivables:
Trade, less allowance for doubtful
accounts of $65,000 at June 30,
1997 and March 31, 1997 694,020 649,250
Inventories 47,860 42,360
Prepaid expenses 76,170 76,430
---------- ----------
Total current assets 852,100 873,740
---------- ----------
Furniture, fixtures, equipment and
leasehold improvements at cost, less
accumulated depreciation and amortization
of $447,010 at June 30, 1997 and
$431,830 at March 31, 1997 202,680 210,530
Computer software, net of accumulated
amortization of $1,440,390 at June 30,
1997 and $1,328,930 at March 31, 1997 1,503,420 1,579,330
Excess of cost over net assets of acquired
business, net of accumulated amortizatin of
$3,310 at June 30, 1997 and $2,200
at March 31, 1997 41,250 42,360
Other assets 49,810 49,810
---------- ----------
$2,649,260 $2,755,770
---------- ----------
---------- ----------
</TABLE>
<PAGE>
CTI Group (Holdings) Inc.
Consolidated Balance Sheet
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
LIABILITIES and STOCKHOLDERS' EQUITY ----------- ---------
(Unaudited)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 160,150 $ 57,360
Accounts payable 456,870 519,750
Accrued commissions and other compensation 53,680 24,990
Other accrued expenses 298,240 283,510
Deferred revenue 340,700 365,880
----------- -----------
Total current liabilities 1,309,640 1,251,490
----------- -----------
Long-term debt, less current portion 20,880 25,280
----------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01; 10,000,000
shares authorized; 6,530,564 shares
issued at June 30, 1997 and March 31, 1997 65,310 65,310
Capital in excess of par value 7,769,180 7,769,180
Accumulated deficit (6,103,280) (5,943,020)
----------- -----------
1,731,210 1,891,470
Equity adjustment from foreign currency
translation (6,070) (6,070)
Less - Treasury stock, 140,250 shares at
June 30, 1997 and March 31, 1997
at cost (406,400) (406,400)
----------- -----------
Total stockholders' equity 1,318,740 1,479,000
----------- -----------
$ 2,649,260 $ 2,755,770
----------- -----------
----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CTI Group (Holdings) Inc.
Statement of Operations Three Months Ended
(unaudited) June 30,
--------------------------
1997 1996
---- ----
<S> <C> <C>
Net sales $ 830,270 $ 901,820
----------- -----------
Costs and expenses:
Cost of sales (exclusive of depreciation 384,050 386,590
and amortization)
Selling, general and administrative expenses 474,710 456,940
Depreciation and amortization 127,750 42,620
Interest expense, net of interest income of
$590 and $3,000 in 1997 and 1996,
respectively 4,020 (1,920)
----------- -----------
990,530 884,230
----------- -----------
Income (loss) before income taxes (160,260) 17,590
Income tax provision -- 2,110
----------- -----------
Net income (loss) $ (160,260) $ 15,480
----------- -----------
----------- -----------
Net income (loss) per common share $ (0.03) $ 0.00
----------- -----------
----------- -----------
Weighted average common shares outstanding 6,390,314 5,398,423
----------- -----------
----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CTI Group (Holdings) Inc. Three Months Ended
Consolidated Statement of Cash Flows June 30,
(Unaudited) -----------------------
1997 1996
---- ----
<S> <C> <C>
Cash Provided By (Used In):
Operating activities:
Net Income $(160,260) $ 15,480
--------- ---------
Adjustments to reconcile net income to cash provided by (used in)
operations:
Depreciation and amortization 127,750 42,620
Provision for doubtful accounts -- (8,700)
Issuance of stock option -- 24,000
Changes in Operating Working Capital:
Decrease (increase) in receivables, trade (44,770) 130,610
Increase in inventories (5,500) (9,190)
Decrease (increase) in prepaid expenses 260 (14,780)
Decrease in accounts payable (62,880) (116,970)
(Decrease) increase) in accrued commissions
and other compensation 28,690 (20,930)
(Decrease) increase in other accrued expenses 14,730 (21,710)
Decrease in deferred revenue (25,180) (31,880)
--------- ---------
Total adjustments 33,100 (26,930)
--------- ---------
Total operating activities (127,160) (11,450)
Investing Activities:
Increase in other assets -- (10,070)
Additions to equipment and leasehold improvements (7,330) (20,810)
Additions to computer software (35,550) (134,160)
--------- ---------
Total investing activities (42,880) (165,040)
--------- ---------
Financing Activities:
Repayment of debt (11,610) (20,110)
Proceeds from borrowings 110,000 --
Stock issuance via exercise of stock option -- 10,000
--------- ---------
Total financing activities 98,390 (10,110)
--------- ---------
Decrease in cash and cash equivalents (71,650) (186,600)
Effect of exchange rates on cash -- 30
Cash and cash equivalents, at beginning of period 105,700 288,870
--------- ---------
Cash and cash equivalents, at end of period $ 34,050 $ 102,300
--------- ---------
--------- ---------
Supplemental disclosures:
Cash paid during the year for:
Interest 4,620 680
</TABLE>
<PAGE>
ITEM 2
- ------
Management's Discussion and Analysis
or Plan of Operation
Results of Operations
- ---------------------
Net sales for the three months ended June 30, 1997 decreased $71,550 (8%) from
the same period in the prior year. Included in this reduction was a decline in
the Company's sales associated with its telemanagement service bureau products
of approximately $61,000 (16%) from the same period in the prior year. Sales
associated with the Company's billing products decreased approximately $240,000
(59%) from the same period in the prior year. This reduction was the result of a
major customer cancellation in September 1996. Sales associated with the
Company's telemanagement licensed software products increased approximately
$229,000 (189%). This increase was primarily due to the acquisition of Soft-Com
Inc. in January 1997.
Cost of sales decreased $2,540 (1%) for the three months ended June 30, 1997
as compared to the prior year period. Cost of sales was 46% of sales for the
three months ended June 30, 1997 as compared to 43% of sales for the prior year
period. The Company reduced its ongoing cost of sales in the third quarter of
fiscal year ended March 31, 1997 as the result of the loss of a major customer,
however these costs were offset by the costs associated with the Company's
purchase of Soft-Com Inc in January 1997.
Selling, general and administrative expenses (S, G & A) increased $17,770 (4%)
for the three months ended June 30, 1997. S, G & A was 57% of sales for the
three months ended June 30, 1997 as compared to 51% of sales for the prior year
period. The increase is due to the additional staff and marketing costs
associated with the purchase of Soft-Com Inc. in January 1997.
Depreciation and amortization expense increased $85,130 (200%) from the same
period in the prior year. The increase is the result of the Company continuing
to amortize its new Windows based software products.
The Company continues to market its new software products Neptune and Unity.
The Neptune billing software was completed as of the fiscal year ended March 31,
1997. The Company continues to install the smaller customers since March 1997
and has installed Neptune at a large customer site. Revenues will begin to be
generated from this larger customer site in the second quarter of this fiscal
year. Unity sales have been received and installed beginning in the last quarter
of the fiscal year ended March 31, 1997.
Liquidity and Capital Resources
- -------------------------------
Working capital at June 30, 1997 was a deficit of $457,540, a decrease of
$79,790 from the March 31, 1997 deficit of $79,790. The working capital ratio
was .65 to 1 as of June 30, 1997 and .70 to 1 as of March 31, 1997. Working
capital decreased as the result of the Company's operating activities utilizing
cash. The Company utilized the line of credit it has with the bank to fund its
operations for the quarter ending June 30, 1997. Subsequent to June 30, 1997 the
Company has reduced its cost structure so as to assist the Company in generating
cash for its operations. The Company's bank has extended the maturity of the
Company's $200,000 revolving line of credit to September 30, 1997. The Company
intends to discuss with the bank a further extension of the line of credit as
well as to seek additional funding.
<PAGE>
CTI Group (Holdings) Inc.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - The consolidated balance sheet as of June 30, 1997, the
statement of operations for the three months ended June 30,
1997 and 1996, and the statement of cash flows for the three
months ended June 30, 1997 and 1996 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, 1997 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, 1996 data to conform to the current years
presentations.
NOTE 5 - The reason for an amended filing is due to the misreporting
of amortization.
<PAGE>
Part II - Other Information
- ---------------------------
ITEM 1 - Legal Proceedings
- --------------------------
On August 11, 1997, John Perri, the former president of the Company's CTI
Soft-Com Inc. subsidiary, and Soft-Com Inc. ("Soft-Com") filed suit against the
Company, CTI Data Solutions (USA) Inc., Anthony P. Johns, and Mark Daugherty in
connection with the Company's termination of Mr. Perri's employment on July 28,
1997 and the Company's acquisition of Soft-Com in January 1997. Mr. Perri is
seeking a preliminary and permanent injunction restricting the Company from
enforcing the non-competition provisions of his employment agreement and from
selling or dissipating any of the assets of Soft-Com. Mr. Perri is also seeking
recission of the Merger Agreement pursuant to which the Company acquired
Soft-Com and certain monetary damages.
The Company filed a motion to dismiss the complaint for lack of subject
matter jurisdiction, a motion to partially dismiss the complaint for failure to
state a claim and a motion to stay discovery. The court has directed discovery
to proceed and will rule on the motion to dismiss in due course.
The Company intends to vigorously defend the action and believes it has
meritorious defenses to Mr. Perri's claims.
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, 1997.
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, 1997.
<PAGE>
Pursuant to 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.
- ------------------------------------ ----------------
Anthony P. Johns Date
President & Chief Executive Officer
- ----------------------------------- ----------------
Geoffrey L. Powell Date
Acting Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> MAR-31-1998 MAR-31-1997
<PERIOD-START> APR-01-1997 APR-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 34,050 105,700
<SECURITIES> 0 0
<RECEIVABLES> 835,190 725,680
<ALLOWANCES> 65,000 0
<INVENTORY> 47,860 76,430
<CURRENT-ASSETS> 852,100 873,740
<PP&E> 3,687,870 3,644,990
<DEPRECIATION> 1,890,710 1,762,960
<TOTAL-ASSETS> 2,649,260 2,755,770
<CURRENT-LIABILITIES> 1,330,520 1,276,770
<BONDS> 0 0
0 0
0 0
<COMMON> 65,310 65,310
<OTHER-SE> 1,253,430 1,413,690
<TOTAL-LIABILITY-AND-EQUITY> 2,649,260 2,755,770
<SALES> 830,270 901,820
<TOTAL-REVENUES> 830,270 901,820
<CGS> 384,050 386,590
<TOTAL-COSTS> 602,460 499,560
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,020 (1,920)
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (160,260) 15,480
<EPS-PRIMARY> .03 .00
<EPS-DILUTED> 0 0
</TABLE>
