##### 



Exhibit 99









CINTECH SOLUTIONS,
INC.

Condensed Financial Statements for the Three and Six-Months Ended December 31,
2001 and 2000 and Independent Accountants Report





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##### 



INDEPENDENT ACCOUNTANTS REPORT

To the Directors of
Cintech Solutions, Inc.

We have reviewed the accompanying condensed balance sheets of Cintech
Solutions, Inc. (the Company) as of December 31, 2001 and 2000 and the
related condensed statements of operations, stockholders equity and cash flows
for the three months and six months then ended (all expressed in U.S. dollars).
These financial statements are the responsibility of the Companys management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytic procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States
of America, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express such
an opinion.

Based on our reviews, we are not aware of any material modifications that
should be made to such condensed financial statements for them to be in
conformity with accounting principles generally accepted in the United States
of America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the balance sheet of the Company as
of June 30, 2001, and the related statements of operations, stockholders
equity, and cash flows for the year then ended (not presented herein); and in
our report dated August 24, 2001, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in the
accompanying condensed balance sheet as of June 30, 2001 is fairly stated, in
all material respects, in relation to the balance sheet from which it has been
derived.

/s/ Deloitte & Touche LLP

January 25, 2002





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##### 



CINTECH SOLUTIONS, INC.

CONDENSED BALANCE SHEETS
DECEMBER 31, 2001, JUNE 30, 2001 AND DECEMBER 31, 2000

---

|                                          |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |            |           | 
|----------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | --------- | ------------ | --------- | ----------- | ---------- | ---------- | --------- | ------------ | ---------- | ---------- | --------- | 
|                                          |                                                                                                                                                                   |                          |           | December 31, |           |             |            |            |           | December 31,
|                                          |                                                                                                                                                                   | 2001                     |           | June 30,     |           | 2000       
|ASSETS                                    |                                                                                                                                                                   | (Unaudited)              |           | 2001         |           | (Unaudited)
|                                          |                                                                                                                                                                   |                          |           |              |           |            
|CURRENT ASSETS:                           |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           
|                                          | Cash and cash equivalents (Note 1)                                                                                                                                |                          | $         | 768,195      |           |             | $          | 641,883    |           |              | $          | 4,507,954  |          
|                                          | Marketable securities (Note 2)                                                                                                                                    |                          |           | 3,921,938    |           |             |            | 6,284,141  |           |              |            | 3,290,678  |          
|                                          | Accounts receivable, trade  (Net of
allowance of $68,152, $94,958 and
$76,023 at December 31, 2001, June 30,
2001,
and December 31, 2000, respectively)
(Note 1) |                          |           | 591,457      |           |             |            | 301,389    |           |              |            | 944,055    |          
|                                          | Inventory (Note 1)                                                                                                                                                |                          |           | 11,067       |           |             |            | 21,387     |           |              |            | 24,767     |          
|                                          | Prepaid expenses                                                                                                                                                  |                          |           | 126,408      |           |             |            | 73,845     |           |              |            | 69,052     |          
|                                          | Deferred income taxes (Note 6)                                                                                                                                    |                          |           | 388,753      |           |             |            | 497,671    |           |              |            | 544,183    |          
|                                          |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           
|                                          |                                                                                                                                                                   | Total current assets     |           |              | 5,807,818 |             |            |            | 7,820,316 |              |            |            | 9,380,689 | 
|                                          |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           
|FIXED ASSETS (Note 1):                    |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           
|                                          | Equipment                                                                                                                                                         |                          |           | 1,381,911    |           |             |            | 1,198,675  |           |              |            | 1,240,990  |          
|                                          | Furniture and fixtures                                                                                                                                            |                          |           | 4,198        |           |             |            | 325,756    |           |              |            | 297,855    |          
|                                          |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           
|                                          |                                                                                                                                                                   | Total                    |           |              | 1,386,109 |             |            |            | 1,524,431 |              |            |            | 1,538,845 | 
|                                          | Less accumulated depreciation                                                                                                                                     |                          |           | (948,262     | )         |             |            | (1,208,086 | )         |              |            | (1,166,166 | )        
|                                          |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           
|                                          |                                                                                                                                                                   | Total fixed assets  net |           |              | 437,847   |             |            |            | 316,345   |              |            |            | 372,679   | 
|                                          |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           
|SOFTWARE DEVELOPMENT COSTS -
Net (Note 1) |                                                                                                                                                                   |                          | 1,931,261 |              |           |             | 1,807,357  |            |           |              | 1,560,678  |           
|DEFERRED INCOME TAXES (Note 6)            |                                                                                                                                                                   |                          | 858,455   |              |           |             | 186,580    |            |           |              |            |           
|                                          |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           
|                                          |                                                                                                                                                                   | Total other assets  net |           |              | 2,789,716 |             |            |            | 1,993,937 |              |            |            | 1,560,678 | 
|                                          |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           
|TOTAL                                     |                                                                                                                                                                   | $                        | 9,035,381 |              |           | $           | 10,130,598 |            |           | $            | 11,314,046 |           
|                                          |                                                                                                                                                                   |                          |           |              |           |             |            |            |           |              |            |           

|                                      |                                       |                                          |                            |            |              |             |            |            |         |           |              |           |         |           | 
|------------------------------------- | ------------------------------------- | ---------------------------------------- | -------------------------- | ---------- | ------------ | ----------- | ---------- | ---------- | ------- | --------- | ------------ | --------- | ------- | --------- | 
|                                      |                                       |                                          |                            |            | December 31, |             |            |            |         |           | December 31,
|LIABILITIES AND                       |                                       | 2001                                     |                            | June 30,   |              | 2000       
|STOCKHOLDERS EQUITY                  |                                       | (Unaudited)                              |                            | 2001       |              | (Unaudited)
|                                      |                                       |                                          |                            |            |              |            
|CURRENT LIABILITIES:                  |                                       |                                          |                            |            |              |             |            |            |         |           |              |          
|                                      | Accounts payable                      |                                          | $                          | 238,857    |              |             | $          | 134,919    |         |           | $            | 174,573   |        
|                                      | Accrued liabilities:                  |                                          |                            |            |              |             |            |            |         |           |              |           |        
|                                      |                                       | Accrued wages and compensation           |                            |            | 435,560      |             |            |            | 505,310 |           |              |           | 440,118 |          
|                                      |                                       | Accrued income taxes                     |                            |            |              |             |            |            |         |           |              |           | 52,636  |          
|                                      |                                       | Warranty reserve                         |                            |            | 64,939       |             |            |            | 82,382  |           |              |           | 106,949 |          
|                                      |                                       | Accrued lease termination costs
(Note 3) |                            |            | 113,365      |             |            |            |         |           |              |           |         |          
|                                      |                                       | Other                                    |                            |            | 90,534       |             |            |            | 115,615 |           |              |           | 206,733 |          
|                                      | Deferred maintenance revenue (Note 1) |                                          |                            | 511,314    |              |             |            | 638,193    |         |           |              | 684,737   |        
|                                      |                                       |                                          |                            |            |              |             |            |            |         |           |              |           |        
|                                      |                                       |                                          | Total current liabilities  |            |              | 1,454,569   |            |            |         | 1,476,419 |              |           |         | 1,665,746 | 
|                                      |                                       |                                          |                            |            |              |             |            |            |         |           |              |           |        
|DEFERRED INCOME TAXES (Note 6)        |                                       |                                          |                            |            |              |             |            |            |         |           | 145,767      |          
|                                      |                                       |                                          |                            |            |              |             |            |            |         |           |              |          
|STOCKHOLDERS EQUITY (Notes 1, 4, 5): |                                       |                                          |                            |            |              |             |            |            |         |           |              |          
|                                      | Common stock                          |                                          |                            | 9,008,289  |              |             |            | 9,008,289  |         |           |              | 9,006,013 |        
|                                      | Contributed capital                   |                                          |                            | 675,757    |              |             |            | 675,757    |         |           |              | 675,757   |        
|                                      | Treasury stock                        |                                          |                            | (2,290     | )            |             |            | (2,290     | )       |           |              | (2,290    | )      
|                                      | Accumulated deficit                   |                                          |                            | (2,100,944 | )            |             |            | (1,027,577 | )       |           |              | (176,947  | )      
|                                      |                                       |                                          |                            |            |              |             |            |            |         |           |              |          
|                                      |                                       |                                          | Total stockholders equity |            |              | 7,580,812   |            |            |         | 8,654,179 |              |           |         | 9,502,533 | 
|                                      |                                       |                                          |                            |            |              |             |            |            |         |           |              |          
|TOTAL                                 |                                       | $                                        | 9,035,381                  |            |              | $           | 10,130,598 |            |         | $         | 11,314,046   |          
|                                      |                                       |                                          |                            |            |              |             |            |            |         |           |              |          

See notes to condensed financial statements and independent accountants report.

-2-



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##### 



CINTECH SOLUTIONS, INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE-MONTHS AND SIX-MONTHS ENDED DECEMBER 31, 2001 AND 2000

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|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |           |           |           | 
|----------------------------------------------------------- | -------------------------------- | ------------------------------------------------- | --------------- | --------- | -------------------------- | --------- | ------------------------ | --------- | ------- | --------- | ---------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | 
|                                                            |                                  |                                                   |                 |           | For the Three-Months Ended |           | For the Six-Months Ended
|                                                            |                                  |                                                   |                 |           | December 31,               |           | December 31,            
|                                                            |                                  |                                                   |                 |           |                            |           |                         
|                                                            |                                  |                                                   |                 |           | 2001                       |           | 2000                     |           | 2001    |           | 2000      
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |           
|NET SALES (Note 1):                                         |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|                                                            | Product sales                    |                                                   | $               | 1,405,630 |                            |           | $                        | 2,104,288 |         |           | $          | 2,619,737 |           |           | $         | 4,128,071 |          
|                                                            | Services and other sales         |                                                   |                 | 358,143   |                            |           |                          | 559,736   |         |           |            | 757,194   |           |           |           | 1,146,670 |          
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|                                                            |                                  |                                                   | Total net sales |           |                            | 1,763,773 |                          |           |         | 2,664,024 |            |           |           | 3,376,931 |           |           |           | 5,274,741 | 
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|COST OF PRODUCTS SOLD AND                                   |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|SERVICES PROVIDED (Note 1):                                 |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|                                                            | Cost of products sold            |                                                   |                 | 409,782   |                            |           |                          | 605,368   |         |           |            | 912,597   |           |           |           | 1,173,629 |          
|                                                            | Cost of services and other sales |                                                   |                 | 57,853    |                            |           |                          | 121,208   |         |           |            | 135,133   |           |           |           | 232,894   |          
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|                                                            |                                  | Total cost of products sold and services provided |                 |           | 467,635                    |           |                          |           | 726,576 |           |            |           | 1,047,730 |           |           |           | 1,406,523 |          
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|GROSS PROFIT                                                |                                  |                                                   | 1,296,138       |           |                            |           | 1,937,448                |           |         |           | 2,329,201  |           |           |           | 3,868,218 |          
|RESEARCH AND DEVELOPMENT                                    |                                  |                                                   | 302,236         |           |                            |           | 247,482                  |           |         |           | 581,006    |           |           |           | 511,886   |          
|LEASE TERMINATION COSTS (Note 3)                            |                                  |                                                   | 104,397         |           |                            |           |                          |           |         |           | 104,397    |           |           |           |           |          
|SELLING, GENERAL AND
ADMINISTRATIVE (Notes 1, 3)            |                                  |                                                   | 1,669,781       |           |                            |           | 1,665,711                |           |         |           | 3,361,331  |           |           |           | 3,333,529 |          
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|INCOME (LOSS) FROM OPERATIONS                               |                                  |                                                   | (780,276        | )         |                            |           | 24,255                   |           |         |           | (1,717,533 | )         |           |           | 22,803    |          
|OTHER INCOME                                                |                                  |                                                   | 29,377          |           |                            |           | 107,012                  |           |         |           | 81,209     |           |           |           | 233,311   |          
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|INCOME (LOSS) BEFORE INCOME TAX                             |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|PROVISION (BENEFIT)                                         |                                  |                                                   | (750,899        | )         |                            |           | 131,267                  |           |         |           | (1,636,324 | )         |           |           | 256,114   |          
|INCOME TAX PROVISION (BENEFIT) (Note 6)                     |                                  |                                                   | (239,148        | )         |                            |           | 41,205                   |           |         |           | (562,957   | )         |           |           | 79,887    |          
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|NET INCOME (LOSS)                                           |                                  | $                                                 | (511,751        | )         |                            | $         | 90,062                   |           |         | $         | (1,073,367 | )         |           | $         | 176,227   |          
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          
|BASIC AND DILUTED EARNINGS (LOSS)
PER COMMON SHARE (Note 4) |                                  | $                                                 | (0.04           | )         |                            | $         | 0.01                     |           |         | $         | (0.09      | )         |           | $         | 0.01      |          
|                                                            |                                  |                                                   |                 |           |                            |           |                          |           |         |           |            |           |           |           |           |          

See notes to condensed financial statements and independent accountants report.

-3-



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##### 



CINTECH SOLUTIONS, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS EQUITY (UNAUDITED)
FOR THE SIX-MONTHS ENDED DECEMBER 31, 2001 AND 2000

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|                                       |  |              |           |             |  |          |         |             |  |               |        |   |  |   |            |       |  |   |            |  
|-------------------------------------- |  | ------------ | --------- | ----------- |  | -------- | ------- | ----------- |  | ------------- | ------ | - |  | - | ---------- | ----- |  | - | ---------- | -
|                                       |  | Common       |           |             |  |          |         |             |  |               |        |   |  |   |            | Total
|                                       |  | Stock        |           | Contributed |  | Treasury |         | Accumulated |  | Stockholders'
|                                       |  | No Par Value |           | Capital     |  | Stock    |         | Deficit     |  | Equity       
|                                       |  |              |           |             |  |          |         |             |  |              
|BALANCE AT JUNE 30, 2000               |  | $            | 9,005,433 |             |  | $        | 675,757 |             |  | $             | (2,290 | ) |  | $ | (353,174   | )     |  | $ | 9,325,726  |  
|STOCK OPTIONS EXERCISED (2,000 shares) |  |              | 580       |             |  |          |         |             |  |               |        |   |  |   |            |       |  |   | 580        |  
|NET INCOME                             |  |              |           |             |  |          |         |             |  |               |        |   |  |   | 176,227    |       |  |   | 176,227    |  
|                                       |  |              |           |             |  |          |         |             |  |               |        |   |  |   |            |       |  |   |            |  
|BALANCE AT DECEMBER 31, 2000           |  | $            | 9,006,013 |             |  | $        | 675,757 |             |  | $             | (2,290 | ) |  | $ | (176,947   | )     |  | $ | 9,502,533  |  
|                                       |  |              |           |             |  |          |         |             |  |               |        |   |  |   |            |       |  |   |            |  
|BALANCE AT JUNE 30, 2001               |  | $            | 9,008,289 |             |  | $        | 675,757 |             |  | $             | (2,290 | ) |  | $ | (1,027,577 | )     |  | $ | 8,654,179  |  
|NET LOSS                               |  |              |           |             |  |          |         |             |  |               |        |   |  |   | (1,073,367 | )     |  |   | (1,073,367 | )
|                                       |  |              |           |             |  |          |         |             |  |               |        |   |  |   |            |       |  |   |            |  
|BALANCE AT DECEMBER 31, 2001           |  | $            | 9,008,289 |             |  | $        | 675,757 |             |  | $             | (2,290 | ) |  | $ | (2,100,944 | )     |  | $ | 7,580,812  |  
|                                       |  |              |           |             |  |          |         |             |  |               |        |   |  |   |            |       |  |   |            |  

See notes to condensed financial statements and independent accountants report.

-4-



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##### 



CINTECH SOLUTIONS, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX-MONTHS ENDED DECEMBER 31, 2001 AND 2000

---

|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |           |         |          |           |  
|--------------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------ | ------------------------------------------- | ----------------------------------------- | -------- | -------- | ---------- | --------- | ------- | -------- | --------- | -
|                                              |                                                                                      |                                            |                                             |                                           |          | 2001     |            | 2000     
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|CASH FLOWS FROM OPERATING ACTIVITIES:         |                                                                                      |                                            |                                             |                                           |          |          |            |          
|                                              | Net income (loss)                                                                    |                                            | $                                           | (1,073,367                                | )        |          | $          | 176,227   |        
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|                                              | Adjustments to reconcile net income (loss) to net cash used in
operating activities: |                                            |                                             |                                           |          |          |            |           |        
|                                              |                                                                                      | Depreciation                               |                                             |                                           | 42,251   |          |            |           | 192,000 |         
|                                              |                                                                                      | Amortization of software development costs |                                             |                                           | 301,329  |          |            |           | 109,878 |         
|                                              |                                                                                      | Deferred income tax provision/(benefit)    |                                             |                                           | (562,957 | )        |            |           | 101,829 |         
|                                              |                                                                                      | Provision for doubtful accounts            |                                             |                                           | (26,806  | )        |            |           | 51,514  |         
|                                              |                                                                                      | Changes in assets and liabilities:         |                                             |                                           |          |          |            |           |         |         
|                                              |                                                                                      |                                            | Increase in accounts receivable             |                                           |          | (263,262 | )          |           |         | (126,134 | )        
|                                              |                                                                                      |                                            | Decrease in inventory                       |                                           |          | 10,320   |            |           |         | 21,202   |          
|                                              |                                                                                      |                                            | Increase in other assets                    |                                           |          | (52,563  | )          |           |         | (37,921  | )        
|                                              |                                                                                      |                                            | Increase (decrease) in accounts payable     |                                           |          | 103,938  |            |           |         | (173,091 | )        
|                                              |                                                                                      |                                            | Decrease in accrued expenses                |                                           |          | (112,274 | )          |           |         | (227,197 | )        
|                                              |                                                                                      |                                            | Increase in accrued lease termination costs |                                           |          | 113,365  |            |           |         |          |          
|                                              |                                                                                      |                                            | Decrease in deferred maintenance revenue    |                                           |          | (126,879 | )          |           |         | (147,791 | )        
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|                                              |                                                                                      |                                            |                                             | Total adjustments                         |          |          | (573,538   | )         |         |          | (235,711  | )
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|                                              |                                                                                      |                                            |                                             | Net cash used in operating activities     |          |          | (1,646,905 | )         |         |          | (59,484   | )
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|CASH FLOWS FROM INVESTING ACTIVITIES:         |                                                                                      |                                            |                                             |                                           |          |          |            |          
|                                              | Redemption of marketable securities                                                  |                                            |                                             | 2,362,203                                 |          |          |            | 2,537,516 |        
|                                              | Purchase of fixed assets                                                             |                                            |                                             | (198,753                                  | )        |          |            | (71,289   | )      
|                                              | Proceeds on disposal of fixed assets                                                 |                                            |                                             | 35,000                                    |          |          |            |           |        
|                                              | Expenditures for software development costs                                          |                                            |                                             | (425,233                                  | )        |          |            | (420,408  | )      
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|                                              |                                                                                      |                                            |                                             | Net cash provided by investing activities |          |          | 1,773,217  |           |         |          | 2,045,819 |  
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|CASH FLOWS FROM FINANCING ACTIVITIES -        |                                                                                      |                                            |                                             |                                           |          |          |            |          
|                                              | Proceeds from exercise of stock options                                              |                                            |                                             |                                           |          |          |            | 580       |        
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|NET INCREASE IN CASH AND CASH EQUIVALENTS     |                                                                                      |                                            | 126,312                                     |                                           |          |          | 1,986,915  |          
|CASH AND CASH EQUIVALENTS:                    |                                                                                      |                                            |                                             |                                           |          |          |            |          
|                                              | Beginning of period                                                                  |                                            |                                             | 641,883                                   |          |          |            | 2,521,039 |        
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|                                              | End of period                                                                        |                                            | $                                           | 768,195                                   |          |          | $          | 4,507,954 |        
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          
|SUPPLEMENTAL CASH FLOW INFORMATION-Taxes paid |                                                                                      | $                                          | 185                                         |                                           |          | $        | 1,100      |          
|                                              |                                                                                      |                                            |                                             |                                           |          |          |            |          

See notes to condensed financial statements and independent accountants report.

-5-



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##### 



CINTECH SOLUTIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2001 AND AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE
THREE-MONTH AND SIX-MONTH PERIODS THEN ENDED (INFORMATION RELATED TO THE THREE
AND SIX-MONTHS ENDED DECEMBER 31, 2001 AND 2000 IS UNAUDITED)

---

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | Nature of Business- Cintech Solutions, Inc. (the Company) develops and
markets interaction management software to help businesses manage voice and
data contacts with their customers, partners, and associates. In concert
with the interaction management software, the Company also provides
services, such as installation, training, project management, consulting and
maintenance support.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | Basis of Presentation- The condensed financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB and Rule 10-01 of Regulation S-X and are
expressed in United States dollars. There are no significant differences in
accounting principles generally accepted in the United States of America and
Canada. The information disclosed in the notes to the financial statements
included in the Companys Annual Report on Form 10-KSB for the year ended
June 30, 2001 has not changed materially unless otherwise disclosed herein.
Financial information as of June 30, 2001 included in these condensed
financial statements has been derived from the audited financial statements
included in that report. In managements opinion all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation
of the interim periods have been made.
|  
|   |  | Results of operations are not necessarily indicative of the results that may
be expected for future interim periods or for the full year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Use of Estimates- The preparation of the financial statements in conformity
with accounting principles generally accepted in the United States of
America 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | Revenue- Generally, the Company records product and service revenue when
the product is shipped and the service is provided. Also, the Company
records an estimate of potential future returns of product sold at the time
of sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | Deferred Maintenance Revenue- The Company sells product maintenance
agreements which provide for no-cost upgrade of software. These agreements
normally cover periods ranging from 1-5 years with revenue being recognized
on a straight-line basis over the maintenance period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | Warranty Reserve- At the time of sale, the Company accrues for warranty
costs relating to software replacement or on site support to be provided
during the first twelve months following the sale. Costs associated with
supporting product under warranty are charged to the reserve instead of
current period cost. The reserve is adjusted periodically based upon actual
experience.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Depreciation- Fixed assets are carried at cost. Depreciation is computed
using a straight-line method over the following useful lives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

-6-



---



##### 



|                       |  |            |  | 
|---------------------- |  | ---------- |  | 
|Equipment              |  | 3-5 years 
|Furniture and Fixtures |  | 2-10 years

| |  |                                                                                                                                                                    
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company changed its method of accounting for depreciation from an
accelerated method. The effects of such change were not material to the
financial statements.
|
| |  | 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:          

|                                   |  |              |        |          |  |              |        |   |  |   |        |  
|---------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | - |  | - | ------ | -
|                                   |  | December 31, |        | June 30, |  | December 31,
|                                   |  | 2001         |        | 2001     |  | 2000        
|                                   |  |              |        |          |  |              |       
|Literature and other documentation |  | $            | 9,263  |          |  | $            | 13,195 |   |  | $ | 13,006 |  
|Computer hardware                  |  |              | 8,398  |          |  |              | 12,205 |   |  |   | 16,991 |  
|Allowance for obsolete inventory   |  |              | (6,594 | )        |  |              | (4,013 | ) |  |   | (5,230 | )
|                                   |  |              |        |          |  |              |        |   |  |   |        |  
|Total inventory                    |  | $            | 11,067 |          |  | $            | 21,387 |   |  | $ | 24,767 |  
|                                   |  |              |        |          |  |              |        |   |  |   |        |  

| |  |                                                                                                                                                                                    
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Significant
Customers - Most of the Companys sales are to distributors in
the voice-centric call center solutions market. The Company had sales to
major distributors, as follows:

|              |  |                                          |           |      |  |        |    |   |  |   |           |  |  |  |    |  
|------------- |  | ---------------------------------------- | --------- | ---- |  | ------ | -- | - |  | - | --------- |  |  |  | -- | -
|              |  | Sales for the Three-Months Ended Dec 31,
|              |  |                                         
|              |  | 2001                                     |           | 2000
|              |  |                                          |           |     
|              |  | Amount                                   |           | %    |  | Amount |    | %
|              |  |                                          |           |      |  |        |    |  
|Distributor A |  | $                                        | 1,304,935 |      |  |        | 74 | % |  | $ | 1,904,218 |  |  |  | 72 | %

|              |  |                                        |           |      |  |        |    |   |  |   |           |  |  |  |    |  
|------------- |  | -------------------------------------- | --------- | ---- |  | ------ | -- | - |  | - | --------- |  |  |  | -- | -
|              |  | Sales for the Six-Months Ended Dec 31,
|              |  |                                       
|              |  | 2001                                   |           | 2000
|              |  |                                        |           |     
|              |  | Amount                                 |           | %    |  | Amount |    | %
|              |  |                                        |           |      |  |        |    |  
|Distributor A |  | $                                      | 2,398,504 |      |  |        | 71 | % |  | $ | 3,735,490 |  |  |  | 71 | %

| |  |                                                                                                                                                              
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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:

|                  |  |              |   |            |  |            |    |  
|----------------- |  | ------------ | - | ---------- |  | ---------- | -- | -
|                  |  |              |   |            |  | Percent of
|                  |  |              |   |            |  | Gross     
|                  |  |              |   |            |  | Accounts  
|                  |  | Distributors |   | Receivable
|                  |  |              |   |           
|December 31, 2001 |  |              | 1 |            |  |            | 72 | %
|June 30, 2001     |  |              | 2 |            |  |            | 71 | %
|December 31, 2000 |  |              | 1 |            |  |            | 74 | %

|                                                                                                                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|International
Sales - The Companys international sales to Canada were
approximately 1% of total sales for the three-months ended December 31, 2001
and 2000, and approximately 2% of total sales for the six-months ended
December 31, 2001 and 2000, respectively.

-7-



---



##### 



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|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. The capitalized costs are amortized on a
straight-line basis over the estimated economic life of the product.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Costs capitalized were $199,885 and $172,326 and related amortization was
$112,329 and $90,331 for the three-months ended December 31, 2001 and 2000,
respectively. Costs capitalized were $425,233 and $420,408 and related
amortization was $301,329 and $109,878 for the six-months ended December 31,
2001 and 2000, respectively. The Company periodically evaluates the
capitalized cost relative to potential sales and accelerates the write-off
when appropriate.                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Licensing Fee- The Company has agreements with distributors which require
the payment of a license fee on certain software sales made by the
distributors. This license fee is for the distribution of the Companys
products. License fee expense was $249,501 and $396,625 for the
three-months ended December 31, 2001 and 2000, respectively. License fee
expense was $523,997 and $883,986 for the six-months ended December 31, 2001
and 2000, 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.                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Accounting Pronouncements- In June 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 141, Business Combinations. SFAS No. 141 requires the purchase method
of accounting for business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interests method. This statement will have no
impact on the Companys financial statements.                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. This statement applies to intangibles and goodwill acquired after
June 30, 2001, as well as goodwill and intangibles previously acquired.
Under this statement goodwill, as well as other intangibles determined to
have an indefinite life will no longer be amortized; however, these assets
will be reviewed for impairment on a periodic basis. This statement will
have no impact on the Companys financial statements.       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. This statement applies to legal obligations associated with
the retirement of tangible long-lived assets. SFAS No. 143 requires the
recognition of the fair value of a liability for an asset retirement
obligation in the period in which it is incurred if a reasonable estimate of
fair value can be made. This statement will have no impact on the Companys
financial statements.                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets
and applies to recognized long-lived assets of an entity to be held and used
or to be disposed of. This statement will have no impact on the Companys
financial statements.                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Cash and Cash Equivalents- For purposes of reporting cash flows, the
Company considers all money market instruments to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                             

-8-



---



##### 



|   |  |                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. |  | MARKETABLE SECURITIES                                                                                                                                                                                                                                                                                                                                           
|   |  | The Company maintains various investments in federal agency notes 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. The cost
and market value of the investments are summarized below:

|                                         |  |           |           |        |  |      |           |            |  |     |       | 
|---------------------------------------- |  | --------- | --------- | ------ |  | ---- | --------- | ---------- |  | --- | ----- | 
|                                         |  |           |           |        |  |      |           |            |  | Net
|                                         |  | Amortized |           |        |  |      |           | Unrealized
|Description                              |  | Cost      |           | Market |  | Gain
|                                         |  |           |           |        |  |     
|December 31, 2001 - Federal Agency Notes |  | $         | 3,921,938 |        |  | $    | 3,921,701 |            |  | $   | 237   | 
|                                         |  |           |           |        |  |      |           |            |  |     |       | 
|June 30, 2001 - Federal Agency Notes     |  | $         | 6,284,141 |        |  | $    | 6,284,163 |            |  | $   | 22    | 
|                                         |  |           |           |        |  |      |           |            |  |     |       | 
|December 31, 2000 - Federal Agency Notes |  | $         | 3,290,678 |        |  | $    | 3,295,080 |            |  | $   | 4,402 | 
|                                         |  |           |           |        |  |      |           |            |  |     |       | 

|   |  |                                                                                                                                                                                                                                                                                                                                          
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. |  | OPERATING LEASES                                                                                                                                                                                                                                                                                                                         
|  
|   |  | Operating Leases- During the second quarter of 2002, the Company accrued
for costs associated with terminating its Norwood, Ohio lease and relocating
its office facility.                                                                                                                                                               
|  
|   |  | In fiscal 2001, the Company signed a lease agreement for a new office
facility in Blue Ash, Ohio. This operating lease, which began in December
2001 and expires in November 2011, 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.
|  
|   |  | In fiscal 2001, the Company signed lease agreements for office equipment and
furniture. These operating leases began in December 2001 and expire in
November 2005 and November 2006, respectively.                                                                                                                                       
|  
|   |  | The annual minimum rent to be paid under the operating lease agreements is
as follows:                                                                                                                                                                                                                                                   

| |  |  |                            |  |  |             
| |  |  | -------------------------- |  |  | ------------
| |  |  | Period Ending December 31: |  |  |             
| |  |  | 2002                       |  |  | $  1,069,389
| |  |  | 2003                       |  |  | 1,069,389   
| |  |  | 2004                       |  |  | 1,069,389   
| |  |  | 2005                       |  |  | 1,069,389   
| |  |  | 2006                       |  |  | 899,747     
| |  |  | 2007 and after             |  |  | 4,140,272   

| |  |                                                                                                                                                                                                                                                                                                                                                                                                
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Rent expense for the leased office space was $141,744 and $71,211 for the
three-month periods ended December 31, 2001 and 2000. Rent expense for the
leased office space was $227,690 and $156,601 for the six-month periods
ended December 31, 2001 and 2000. The lease expense for the equipment and
furniture was $12,512 for the three-month and six-month periods ended
December 31, 2001.

-9-



---



##### 



|   |  |                                                                              
|-- |  | -----------------------------------------------------------------------------
|4. |  | CAPITAL STOCK AND INCOME PER SHARE                                           
|  
|   |  | The following schedule is a summary of the Companys shares of capital
stock.

|                             |  |            |            |        |  |             |            |          |  |  |            |    |  |  |       | 
|---------------------------- |  | ---------- | ---------- | ------ |  | ----------- | ---------- | -------- |  |  | ---------- | -- |  |  | ----- | 
|                             |  |            |            |        |  | Common      |            |          |  |  |            | In
|                             |  | Authorized |            | Issued |  | Outstanding |            | Treasury
|                             |  |            |            |        |  |             |            |         
|Balance at December 31, 2001 |  |            | 15,000,000 |        |  |             | 12,327,727 |          |  |  | 12,325,727 |    |  |  | 2,000 | 
|                             |  |            |            |        |  |             |            |          |  |  |            |    |  |  |       | 
|Balance at June 30, 2001     |  |            | 15,000,000 |        |  |             | 12,327,727 |          |  |  | 12,325,727 |    |  |  | 2,000 | 
|                             |  |            |            |        |  |             |            |          |  |  |            |    |  |  |       | 
|Balance at December 31, 2000 |  |            | 15,000,000 |        |  |             | 12,325,328 |          |  |  | 12,323,328 |    |  |  | 2,000 | 
|                             |  |            |            |        |  |             |            |          |  |  |            |    |  |  |       | 

| |  |                                                                                                                                                                                                               
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Income (loss) per common share was based on the weighted average number of
common shares outstanding during each period. Accordingly, the sum of the
individual quarters may not equal the year to date total.
|
| |  | The Companys basic and diluted earnings (loss) per share were determined as follows:                                                                                                                         

|                                                                       |  |                    |          |                    |  |           |            |             |  |               |       |           |  |   |        |  |  |  |            |  |  |   |      | 
|---------------------------------------------------------------------- |  | ------------------ | -------- | ------------------ |  | --------- | ---------- | ----------- |  | ------------- | ----- | --------- |  | - | ------ |  |  |  | ---------- |  |  | - | ---- | 
|                                                                       |  | Three-Months Ended |          | Three-Months Ended
|                                                                       |  | December 31, 2001  |          | December 31, 2000 
|                                                                       |  |                    |          |                   
|                                                                       |  | Income             |          | Shares             |  | Per Share |            | Income      |  | Shares        |       | Per Share
|                                                                       |  | (Numerator)        |          | (Denominator)      |  | Amount    |            | (Numerator) |  | (Denominator) |       | Amount   
|                                                                       |  |                    |          |                    |  |           |            |             |  |               |       |          
|Basic
EPS                                                              |  |                    |          |                    |  |           |            |             |  |               |       |           |  |   |        |  |  |  |            |  |  |   |      | 
|Income (loss) available to
common stockholders                         |  | $                  | (511,751 | )                  |  |           | 12,325,727 |             |  | $             | (0.04 | )         |  | $ | 90,062 |  |  |  | 12,323,328 |  |  | $ | 0.01 | 
|Effect of Dilutive
Securities                                          |  |                    |          |                    |  |           |            |             |  |               |       |           |  |   |        |  |  |  |            |  |  |   |      | 
|Stock options                                                          |  |                    |          |                    |  |           |            |             |  |               |       |           |  |   |        |  |  |  | 358,047    |  |  |   |      | 
|                                                                       |  |                    |          |                    |  |           |            |             |  |               |       |           |  |   |        |  |  |  |            |  |  |   |      | 
|Diluted EPS                                                            |  |                    |          |                    |  |           |            |             |  |               |       |           |  |   |        |  |  |  |            |  |  |   |      | 
|Income (loss) available to
common stockholders
and assumed conversions |  | $                  | (511,751 | )                  |  |           | 12,325,727 |             |  | $             | (0.04 | )         |  | $ | 90,062 |  |  |  | 12,681,375 |  |  | $ | 0.01 | 
|                                                                       |  |                    |          |                    |  |           |            |             |  |               |       |           |  |   |        |  |  |  |            |  |  |   |      | 

|                                                                       |  |                   |            |                   |  |           |            |             |  |               |       |           |  |   |         |  |  |  |            |  |  |   |      | 
|---------------------------------------------------------------------- |  | ----------------- | ---------- | ----------------- |  | --------- | ---------- | ----------- |  | ------------- | ----- | --------- |  | - | ------- |  |  |  | ---------- |  |  | - | ---- | 
|                                                                       |  | Six-Months Ended  |            | Six-Months Ended 
|                                                                       |  | December 31, 2001 |            | December 31, 2000
|                                                                       |  |                   |            |                  
|                                                                       |  | Income            |            | Shares            |  | Per Share |            | Income      |  | Shares        |       | Per Share
|                                                                       |  | (Numerator)       |            | (Denominator)     |  | Amount    |            | (Numerator) |  | (Denominator) |       | Amount   
|                                                                       |  |                   |            |                   |  |           |            |             |  |               |       |          
|Basic EPS                                                              |  |                   |            |                   |  |           |            |             |  |               |       |           |  |   |         |  |  |  |            |  |  |   |      | 
|Income (loss) available to
common stockholders                         |  | $                 | (1,073,367 | )                 |  |           | 12,325,727 |             |  | $             | (0.09 | )         |  | $ | 176,227 |  |  |  | 12,323,328 |  |  | $ | 0.01 | 
|Effect of Dilutive
Securities                                          |  |                   |            |                   |  |           |            |             |  |               |       |           |  |   |         |  |  |  |            |  |  |   |      | 
|Stock options                                                          |  |                   |            |                   |  |           |            |             |  |               |       |           |  |   |         |  |  |  | 543,286    |  |  |   |      | 
|                                                                       |  |                   |            |                   |  |           |            |             |  |               |       |           |  |   |         |  |  |  |            |  |  |   |      | 
|Diluted EPS                                                            |  |                   |            |                   |  |           |            |             |  |               |       |           |  |   |         |  |  |  |            |  |  |   |      | 
|Income (loss) available to
common stockholders
and assumed conversions |  | $                 | (1,073,367 | )                 |  |           | 12,325,727 |             |  | $             | (0.09 | )         |  | $ | 176,227 |  |  |  | 12,866,614 |  |  | $ | 0.01 | 
|                                                                       |  |                   |            |                   |  |           |            |             |  |               |       |           |  |   |         |  |  |  |            |  |  |   |      | 

| |  |                                                                                                                                                                                              
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Stock options representing 1,515,412 shares and 660,525 shares for the
three-months ended December 31, 2001 and 2000, respectively, were not
included in computing diluted earnings per share

-10-



---



##### 



|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | because their effects were
antidilutive. Stock options representing 1,515,412 shares and 211,650
shares for the six-months ended December 31, 2001 and 2000, respectively,
were not included in computing diluted earnings per share because their
effects were antidilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|5. |  | 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 1996, the plan was amended to provide for
non-employee eligibility. In 1999, the plan was amended and restated to
include in one document all previous amendments and other non-material
changes designed to improve the operation of the plan and to reserve an
additional 1,000,000 shares for issuance under the plan. Excluding the
options granted in February 1994, all options have been granted at an
exercise price equal to the fair market value at the date of grant and
become exercisable equally over a period ranging from one to four years.
The February 1994 options were granted at a price below fair market value at
the date of grant and were subsequently adjusted to market. The 1994
options granted became exercisable equally over a two-year period. All
options expire at the end of ten years from the date of grant or are subject
to the performance provisions of specific grants.
|  
|   |  | The Company has adopted the disclosure only provision of SFAS No. 123 and
applies APB Opinion No. 25 in accounting for its stock options. Proforma
disclosure reflecting the financial impact of compensation cost for stock
option grants made in fiscal years 2001 and 2000, determined using the fair
value method consistent with SFAS No. 123, were presented in the footnotes
to the 2001 annual report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|6. |  | 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 consist of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                                                                   |  |              |           |          |  |              |          |   |  |   |          |  
|---------------------------------------------------------------------------------- |  | ------------ | --------- | -------- |  | ------------ | -------- | - |  | - | -------- | -
|                                                                                   |  | December 31, |           | June 30, |  | December 31,
|                                                                                   |  | 2001         |           | 2001     |  | 2000        
|                                                                                   |  |              |           |          |  |             
|Current deferred tax asset  Deferred revenue
and other                            |  | $            | 388,753   |          |  | $            | 497,671  |   |  | $ | 544,183  |  
|                                                                                   |  |              |           |          |  |              |          |   |  |   |          |  
|Non-current deferred tax asset  Carryforwards
and credits                         |  | $            | 1,630,960 |          |  | $            | 909,523  |   |  | $ | 478,504  |  
|Non-current deferred tax liability  Deferred
software development costs and other |  |              | (772,505  | )        |  |              | (722,943 | ) |  |   | (624,271 | )
|                                                                                   |  |              |           |          |  |              |          |   |  |   |          |  
|Net non-current deferred tax asset/(liability)                                     |  | $            | 858,455   |          |  | $            | 186,580  |   |  | $ | (145,767 | )
|                                                                                   |  |              |           |          |  |              |          |   |  |   |          |  

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---



##### 



|                                                                                                                                        
|----------------------------------------------------------------------------------------------------------------------------------------
|The provision (benefit) for income taxes for the three-months and six-months
ended December 31, 2001 and 2000 consists of the following:

|                                       |  |                      |          |                    |  |      |         |      |  |   |          |   |  |   |         |  
|-------------------------------------- |  | -------------------- | -------- | ------------------ |  | ---- | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                       |  | For the Three-Months |          | For the Six-Months
|                                       |  | Ended December 31,   |          | Ended December 31,
|                                       |  |                      |          |                   
|                                       |  | 2001                 |          | 2000               |  | 2001 |         | 2000
|                                       |  |                      |          |                    |  |      |         |     
|Current benefit                        |  | $                    |         |                    |  | $    | (12,922 | )    |  | $ |         |   |  | $ | (21,942 | )
|Deferred provision (benefit)           |  |                      | (239,148 | )                  |  |      | 54,127  |      |  |   | (562,957 | ) |  |   | 101,829 |  
|                                       |  |                      |          |                    |  |      |         |      |  |   |          |   |  |   |         |  
|Income tax expense provision (benefit) |  | $                    | (239,148 | )                  |  | $    | 41,205  |      |  | $ | (562,957 | ) |  | $ | 79,887  |  
|                                       |  |                      |          |                    |  |      |         |      |  |   |          |   |  |   |         |  

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The primary differences between the statutory rate for federal income tax
and the effective income tax rate are the benefits from research and
development credits and state tax losses generated during the current
year. At December 31, 2001, the Company has available net operating loss
carryforwards for U.S. Federal tax purposes of approximately $3,614,000
that will expire in 2021. Also at December 31, 2001, for U.S. Federal tax
purposes, the Company has research and development credit carryforwards
available to offset future income taxes of approximately $249,000 which
will begin to expire in 2017.

* * * * *

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