<PAGE>   1
                                   FORM 10-QSB

    [As last amended in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]

                     U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-QSB

         (Mark One)

         [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
               EXCHANGE ACT OF 1934
               For the quarterly period ended December 31, 1999


         [  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
               For the transition period from __________________ to ____________



                      CINTECH TELE-MANAGEMENT SYSTEMS, INC.
                   ------------------------------------------
        (Exact name of small business issuer as specified in its charter)

              OHIO                                        31-1200684
              ------------------------------------------------------
 (State or other jurisdiction of         (I.R.S. Employer Identification Number)
 incorporation or organization)

                   2100 SHERMAN AVENUE, CINCINNATI, OHIO 45212
                   -------------------------------------------
                    (Address of principal executive offices)

                                 (513) 731-6000
                                 --------------
                           (Issuer's telephone number)

                                       N/A
                              --------------------
   (Former name, former address and former fiscal year, if changed since last
                                    report)


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
                                                                      ---   ---


                      APPLICABLE ONLY TO CORPORATE ISSUERS

<PAGE>   2



         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 12,310,016 Shares of Common
Stock as of December 31, 1999.

         Transitional Small Business Disclosure Format (check one):  Yes   No X
                                                                        ---  ---

                         PART I - FINANCIAL INFORMATION


Item 1.  FINANCIAL STATEMENTS.

         The condensed financial statements attached to the end of this
quarterly report are filed as part of this quarterly report. The financial
statements include all adjustments, which in the opinion of management are
necessary in order to make the financial statements not misleading.

Item 2.  MANAGEMENT'S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION.

         The following selected financial information set forth below has been
derived from the unaudited condensed financial statements of the Company. This
discussion and analysis should be read in conjunction with such financial
statements. All amounts are in US dollars.


RESULTS OF OPERATIONS

         FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THE THREE
MONTHS ENDED DECEMBER 31, 1998

         Sales for the three months ended December 31, 1999 were $3,835,000
compared to $2,225,000 for the same period last year. The $1,610,000 or 72%,
increase in sales is due to a 96% increase in ACD revenue and a 65% increase in
services revenue, offset by a 24% decrease in other CTI software revenue.

         Gross profit of $2,719,000 was $1,098,000, or 68%, higher than the
corresponding period of last year. This increase in gross profit is a direct
result of the increase in sales volume. Gross profit as a percentage of sales
was 71% or 2% lower than that experienced during the same period of the prior
year.

         Research and development costs of $158,000 were $65,000, or 69%, higher
than the comparable prior year period. Selling, general and administrative
expenses of $1,531,000 were $353,000, or 30%, higher than the comparable prior
year period.

         The Company realized income from operations of $1,030,000, or 27%, for
the three months ended December 31, 1999 compared to income from operations of
$350,000, or 16%, reported for the same period last year.

         Other income was $84,000 as compared to $27,000 for the comparable
prior year period.


         The income tax provision of $287,000 for the three months ended
December 31, 1999 as compared to $0 for the comparable prior year period is due
to taxable income exceeding net operating loss carryforwards available for
federal tax purposes.
                                        2


<PAGE>   3

         The Company realized Net Income of $828,000 for the three months ended
December 31, 1999 compared to Net Income of $377,000 reported for the same
period last year. Earnings Per Share, basic and diluted, were $0.07 and $0.06
respectively, versus a $0.03 Per Share, basic and diluted, reported for the
comparable prior year period.


         FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THE SIX MONTHS
ENDED DECEMBER 31, 1998

         Sales for the six months ended December 31, 1999 were $6,854,000
compared to $5,518,000 for the same period last year. The $1,336,000 or 24%,
increase in sales is due to a 28% increase in ACD revenue and a 39% increase in
services revenue, offset by an 18% decrease in other CTI software revenue.

         Gross profit of $4,923,000 was $1,071,000, or 28%, higher than the
corresponding period of last year. This increase in gross profit is a direct
result of the increase in sales volume. Gross profit as a percentage of sales
was 72% or 2% higher than that experienced during the same period of the prior
year.

         Research and development costs of $277,000 were $81,000, or 41%, higher
than the comparable prior year period. Selling, general and administrative
expenses of $2,780,000 were $462,000, or 20%, higher than the comparable prior
year period.

         The Company realized income from operations of $1,867,000, or 27%, for
the six months ended December 31, 1999 compared to income from operations of
$1,338,000, or 24%, reported for the same period last year.

         Other income was $126,000 as compared to $44,000 for the comparable
prior year period.

         The income tax provision of $465,000 for the six months ended December
31, 1999 as compared to $0 for the comparable prior year period is due to
taxable income exceeding net operating loss carryforwards available for federal
tax purposes.

         The Company realized Net Income of $1,528,000 for the six months ended
December 31, 1999 compared to Net Income of $1,382,000 reported for the same
period last year. Earnings Per Share, basic and diluted, were $0.12 versus a
$0.11 Per Share reported for the comparable prior year period.

LIQUIDITY AND CAPITAL RESOURCES

         Working Capital increased to $7.3 million as compared to $3.3 million
for the corresponding period of last year. The increase of $4.0 million is
primarily due to increases in cash and marketable securities of $3.5 million,
accounts receivable of $0.6 million and deferred income taxes of $0.4 million,
which were offset by increases in deferred maintenance revenue of $0.5 million
and accrued wages and compensation of $0.2 million. The increases in cash and
marketable securities reflect the increase in sales volume and profitability
experienced by the Company in fiscal 1999 and continued profitability to date in
fiscal 2000.


                                        3
<PAGE>   4

         As of December 31, 1999, Cintech held cash and marketable securities
totaling approximately $8.1 million and had no outstanding long-term debt
obligations.


         The Company's plan of operation is to continue distributing its contact
center solutions and development of services revenue. The Company has no
material commitments for capital expenditures. The Company feels that there are
no significant elements of income or loss that does not arise from the Company's
continuing operations.


YEAR 2000 COMPLIANCE

          The Company has not experienced and does not anticipate experiencing
any significant Year 2000 problems related to its internal operating systems.
The costs for Year 2000 problems, which was less than $20,000, was funded
through operating cash flows of prior periods. The Company believes that no
significant future costs will be incurred to address the Year 2000 issue.

          The Company has evaluated all of its products for Year 2000 readiness.
The evaluation included comprehensive testing of the capability of its products
to handle the transition to and operate in the Year 2000. The Company has not
experienced and does not anticipate experiencing any significant Year 2000
problems with its products. Additional information regarding the Year 2000
readiness of the Company's products or services is available through the
Company's website: www.cintech-cti.com.

          In addition, the Company has not experienced and does not anticipate
experiencing any significant Year 2000 problems related to its significant
suppliers and customers.



                                        4
<PAGE>   5


                           PART II - OTHER INFORMATION

<TABLE>
<CAPTION>

Item 6.           EXHIBITS AND REPORTS ON FORM 8-K

                  The following Exhibits are required by Item 601 of Regulation
S-B:
                                                                                                               PAGE
<S>                                                                                                             <C>
EXHIBIT NO. 2     -        Plan of Acquisition, Reorganization, Arrangement, Liquidation,
                           or Succession.....................................................................  N/A


EXHIBIT NO. 3  -           (I) Articles of Incorporation, (ii) By-laws ...................................... *

EXHIBIT NO. 4     -        Instruments Defining
                           Rights of Security Holders........................................................  N/A

EXHIBIT NO. 10 -           Material Contracts................................................................  *, **

EXHIBIT NO. 11  -          Statement re: Computation of Per Share Earnings ..................................  N/A

EXHIBIT NO. 15  -          Letter on Unaudited Interim Financial Information.................................  N/A

EXHIBIT NO. 18  -          Letter on Change in Accounting Principles.........................................  N/A

EXHIBIT NO. 19  -          Reports Furnished to Security-Holders............................................. N/A

EXHIBIT NO. 22  -          Published Report Regarding Matters Submitted to Vote..............................  N/A

EXHIBIT NO. 23  -          Consent of Experts and Counsel....................................................  N/A

EXHIBIT NO. 24  -          Power of Attorney.................................................................  N/A

EXHIBIT NO. 99  -          Additional Exhibits...............................................................  N/A
</TABLE>

*      Previously provided in original filing on Form 10-SB.
**    Previously provided in Amendment No. 2 to Form 10-SB.


                                        5
<PAGE>   6


                                   SIGNATURES


         In accordance with the requirements of the Securities Exchange Act of
1934, Cintech Tele-Management Systems, Inc., as Registrant, has caused this
Report on Form 10-QSB to be signed on its behalf by the undersigned, thereunto
duly authorized.


CINTECH TELE-MANAGEMENT SYSTEMS, INC.


By:    /s/ Diane M. Kamionka                            Date: February 14, 2000
       ---------------------------------
       Diane M. Kamionka
       President and Chief Executive Officer


By:    /s/ Michael E. Freese                            Date: February 14, 2000
       ----------------------------------
       Michael E. Freese
       Director of Finance and Administration




                                        6
<PAGE>   7

INDEPENDENT ACCOUNTANTS' REPORT


To the Directors of
  Cintech Tele-Management Systems, Inc.

We have reviewed the accompanying condensed balance sheets of Cintech
Tele-Management Systems, Inc. (the "Company") as of December 31, 1999 and 1998
and the related condensed statements of income, 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 generally accepted auditing standards, 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, 1999, and the related statement of income, stockholders' equity, and
cash flows for the year then ended (not presented herein); and in our report
dated August 20, 1999, 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, 1999 is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.

/s/    Deloitte & Touche  LLP

January 28, 2000



<PAGE>   8
<TABLE>
<CAPTION>


CINTECH TELE-MANAGEMENT SYSTEMS, INC.

CONDENSED BALANCE SHEETS
DECEMBER 31, 1999, JUNE 30, 1999 AND DECEMBER 31, 1998
------------------------------------------------------------------------------------------------
                                                    DECEMBER 31,                   DECEMBER 31,
ASSETS                                                  1999          June 30,         1998
                                                     (UNAUDITED)        1999       (UNAUDITED)

<S>                                                  <C>            <C>            <C>
CURRENT ASSETS:
  Cash and cash equivalents (Note 1)                  $  1,317,733    $ 1,500,081    $ 1,197,730
  Marketable securities (Note 2)                         6,733,299      4,864,847      3,318,562
  Accounts receivable, trade - (Net of
    allowance of $86,086, $50,601 and
    $92,468 at December 31, 1999, June 30, 1999,
     and December 31, 1998, respectively) (Note 1)       1,024,001      1,022,153        461,132
  Inventory (Note 1)                                        42,872         25,781         57,519

  Prepaid expenses                                          30,518         30,172         20,885

  Refundable income taxes (Note 6)                          43,284
  Deferred income taxes (Note 6)                           420,829        298,960
                                                       -----------    -----------    -----------
           Total current assets                          9,612,536      7,741,994      5,055,828
                                                       -----------    -----------    -----------

FIXED ASSETS (Note 1):
  Equipment                                                886,279        757,190        698,925
  Furniture and fixtures                                   151,433        151,433        146,592
                                                       -----------    -----------    -----------
           Total                                         1,037,712        908,623        845,517
  Less accumulated depreciation                           (864,988)      (786,988)      (752,594)
                                                       -----------    -----------    -----------
           Total fixed assets - net                        172,724        121,635         92,923
                                                       -----------    -----------    -----------

SOFTWARE DEVELOPMENT COSTS-Net (Note 1)                    763,341        578,156        482,151
DEFERRED INCOME TAXES (Note 6)                                            274,996
                                                       -----------    -----------    -----------
           Total other assets                              763,341        853,152        482,151
                                                       -----------    -----------    -----------

TOTAL                                                 $ 10,548,601    $ 8,716,781    $ 5,630,902
                                                      ============    ===========    ===========

</TABLE>


<TABLE>
<CAPTION>


CINTECH TELE-MANAGEMENT SYSTEMS, INC.

CONDENSED BALANCE SHEETS
DECEMBER 31, 1999, JUNE 30, 1999 AND DECEMBER 31, 1998
------------------------------------------------------------------------------------------
                                              DECEMBER 31,                    DECEMBER 31,
  LIABILITIES AND                               1999          June 30,          1998
  STOCKHOLDERS' EQUITY                       (UNAUDITED)        1999         (UNAUDITED)

   <S>                                        <C>             <C>             <C>
  CURRENT LIABILITIES:
    Accounts payable                             $ 268,518       $ 270,434       $ 476,650
    Accrued liabilities:
      Accrued wages and compensation               580,602         755,715         362,210
      Accrued income taxes                                          58,340
      Warranty reserve                             137,240         119,078         108,695
      Other                                        164,716         182,610         192,416
    Deferred maintenance revenue (Note 1)        1,116,828         728,678         567,323
                                                ----------      ----------      ----------
             Total current liabilities           2,267,904       2,114,855       1,707,294
                                                ----------      ----------      ----------



   DEFERRED INCOME TAXES (Note 6)                  145,490
                                                ----------      ----------      ----------

  STOCKHOLDERS' EQUITY (Notes 1, 4, 5):
    Common stock                                 8,999,210       8,993,777       8,986,122
    Contributed capital                            675,757         675,757         675,757

    Treasury stock                                  (2,290)         (2,290)         (2,290)
    Accumulated deficit                         (1,537,470)     (3,065,318)     (5,735,981)
                                                ----------      ----------      ----------
              Total stockholders' equity         8,135,207       6,601,926       3,923,608

                                                ----------      ----------      ----------

   TOTAL                                      $ 10,548,601     $ 8,716,781     $ 5,630,902
                                              ============     ===========     ===========

</TABLE>

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


                                       -2-
<PAGE>   9
<TABLE>
<CAPTION>

CINTECH TELE-MANAGEMENT SYSTEMS, INC.

CONDENSED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS AND SIX-MONTHS ENDED DECEMBER 31, 1999 AND 1998
------------------------------------------------------------------------------------------------------------------------------------

                                              FOR THE THREE-MONTHS ENDED                 FOR THE SIX-MONTHS ENDED
                                                     DECEMBER 31,                            DECEMBER 31,
                                              ---------------------------------------  ---------------------------------
                                               1999              1998                   1999               1998

<S>                                             <C>               <C>                   <C>                <C>
NET SALES (Note 1)                              $3,834,703        $2,225,468             $6,853,651         $5,517,560

COST OF PRODUCTS SOLD (Note 1)                     372,164           315,512                672,247            700,571

AMORTIZATION OF DEFERRED
  SOFTWARE DEVELOPMENT
  COSTS (Note 1)                                    60,000            36,000                106,249             72,000

LICENSING FEES (Note 1)                            683,452           253,185              1,152,094            892,508
                                                ----------        ----------             ----------         ----------

GROSS PROFIT                                     2,719,087         1,620,771              4,923,061          3,852,481

RESEARCH AND DEVELOPMENT                           157,840            93,312                276,639            195,983

SELLING, GENERAL AND
  ADMINISTRATIVE (Notes 1, 3)                    1,530,837         1,177,847              2,779,865          2,318,084
                                                ----------       -----------             ----------         ----------

INCOME FROM OPERATIONS                           1,030,410           349,612              1,866,557          1,338,414

OTHER INCOME                                        83,870            27,438                126,039             43,642
                                                ----------       -----------             ----------         ----------

INCOME BEFORE INCOME TAX
PROVISION                                        1,114,280           377,050              1,992,596          1,382,056

INCOME TAX PROVISION (Note 6)                      286,547                                  464,748
                                                ----------        ----------            -----------         ----------

NET INCOME                                      $  827,733        $  377,050             $1,527,848         $1,382,056
                                                ==========        ==========             ==========         ==========

BASIC EARNINGS
  PER COMMON SHARE (Note 4)                        $  0.07           $  0.03                $  0.12            $  0.11
                                                ==========        ==========             ==========         ==========

DILUTED EARNINGS
  PER COMMON SHARE (Note 4)                        $  0.06           $  0.03                $  0.12            $  0.11
                                                ==========        ==========             ==========         ==========
</TABLE>


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



                                       -3-
<PAGE>   10
<TABLE>
<CAPTION>

CINTECH TELE-MANAGEMENT SYSTEMS, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX-MONTHS ENDED DECEMBER 31, 1999 AND 1998
-----------------------------------------------------------------------------------------------------------------------------------

                                                    COMMON                                                                TOTAL
                                                    STOCK            CONTRIBUTED     TREASURY        ACCUMULATED       STOCKHOLDERS'
                                                  NO PAR VALUE         CAPITAL         STOCK           DEFICIT            EQUITY

<S>                                                <C>                 <C>            <C>            <C>                 <C>
BALANCE AT JUNE 30, 1998                           $8,982,842          $675,757        $(2,290)       $(7,118,037)       $2,538,272

STOCK OPTIONS EXERCISED (11,312 shares)                 3,280                                                                 3,280

NET INCOME                                                                                              1,382,056         1,382,056
                                                   -----------         ---------       ---------      -----------        ----------

BALANCE AT DECEMBER 31, 1998                       $8,986,122          $675,757        $(2,290)       $(5,735,981)       $3,923,608
                                                   ===========         =========       =========      =============      ==========


BALANCE AT JUNE 30, 1999                           $8,993,777          $675,757        $(2,290)       $(3,065,318)       $6,601,926

STOCK OPTIONS EXERCISED (8,831 shares)                  5,433                                                                 5,433

NET INCOME                                                                                              1,527,848         1,527,848
                                                   -----------         ---------       ---------      -----------        ----------

BALANCE AT DECEMBER 31, 1999                       $8,999,210          $675,757        $(2,290)       $(1,537,470)       $8,135,207
                                                   ===========         =========       =========      =============      ==========
</TABLE>

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



                                       -4-
<PAGE>   11

<TABLE>
<CAPTION>

CINTECH TELE-MANAGEMENT SYSTEMS, INC.

CONDENSED STATEMENTS OF CASH FLOWS  (UNAUDITED)
FOR THE SIX-MONTHS ENDED DECEMBER 31, 1999 AND 1998
---------------------------------------------------------------------------------------------------------------------------

                                                                                            1999               1998

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                         <C>               <C>
  Net income                                                                                $ 1,527,848       $ 1,382,056
                                                                                            ------------      -----------
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation                                                                                 78,000            48,790
    Amortization of software development costs                                                  106,249            72,000
    Deferred income taxes                                                                       298,617
    Provision for doubtful accounts                                                              35,485            64,071
    Changes in assets and liabilities:
      (Increase) decrease in accounts receivable                                                (37,333)          997,855
      (Increase) decrease in inventory                                                          (17,091)           29,953
      (Increase) decrease in other assets                                                       (43,630)            7,565
      (Decrease) increase in accounts payable                                                    (1,916)          275,358
      (Decrease) increase in accrued expenses                                                  (233,185)           40,015
      Increase in deferred maintenance revenue                                                  388,150           124,712
                                                                                            ------------      -----------
           Total adjustments                                                                    573,346         1,660,319
                                                                                            ------------      -----------
           Net cash provided by operating activities                                          2,101,194         3,042,375
                                                                                            ------------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of marketable securities                                                          (1,868,452)       (2,401,730)
  Purchase of fixed assets                                                                     (129,089)          (30,860)
  Expenditures for software development costs                                                  (291,434)         (329,034)
                                                                                            ------------      -----------
           Net cash used in investing activities                                             (2,288,975)       (2,761,624)
                                                                                            ------------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from exercise of stock options                                                         5,433             3,280
                                                                                            ------------      -----------

NET (DECREASE) INCREASE IN CASH AND CASH
  EQUIVALENTS                                                                                  (182,348)          284,031

CASH AND CASH EQUIVALENTS:
  Beginning of period                                                                         1,500,081           913,699
                                                                                            ------------      -----------

  End of period                                                                             $ 1,317,733       $ 1,197,730
                                                                                            ============      ===========

SUPPLEMENTAL CASH FLOW INFORMATION-Taxes paid                                                 $ 267,755
                                                                                            ============
</TABLE>

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


                                       -5-
<PAGE>   12


CINTECH TELE-MANAGEMENT SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999 AND AS OF DECEMBER 31, 1999 AND 1998 AND FOR THE THREE-MONTH
AND SIX-MONTH PERIODS THEN ENDED (INFORMATION RELATED TO THE THREE AND
SIX-MONTHS ENDED DECEMBER 31, 1999 AND 1998 IS UNAUDITED)
--------------------------------------------------------------------------------

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      NATURE OF BUSINESS - The Company develops and markets contact center
      solutions for small- to mid-size entities, such as departments, branch
      offices and workgroups, within global enterprises as well as small- to
      mid-size businesses. In addition to the contact center solutions, 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. The differences in accounting
      principles generally accepted in the United States of America and Canada
      are described in Note 7. 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, 1999 has not changed materially unless
      otherwise disclosed herein. Financial information as of June 30, 1999
      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 generally accepted accounting principles requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the reporting period. Actual
      results could differ from those estimates.

      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 repair of hardware and 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 hardware or 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.


                                       -6-
<PAGE>   13



      DEPRECIATION - Fixed assets are carried at cost. Depreciation is computed
      using an accelerated method over the following useful lives:

         Equipment                         5 years
         Furniture and fixtures            7 years
         Computer equipment                3 years


      INVENTORY - Inventories are valued at the lower of cost or market, with
      cost being computed using the first-in, first-out method. Inventories
      consist of:

<TABLE>
<CAPTION>

                                                                      DECEMBER 31,     JUNE 30,      DECEMBER 31,
                                                                         1999           1999             1998

<S>                                                                    <C>             <C>            <C>
Literature and other documentation                                     $ 29,175        $ 14,309       $ 18,650
Computer hardware                                                        27,378          21,621         70,308
Allowance for obsolete inventory                                        (13,681)        (10,149)       (31,439)
                                                                       --------        --------       --------

Total inventory                                                        $ 42,872        $ 25,781       $ 57,519
                                                                       ========        ========       ========
</TABLE>



      SIGNIFICANT CUSTOMERS - Most of the Company's sales are to distributors in
      the telephony industry. The Company had sales to major distributors, as
      follows:

<TABLE>
<CAPTION>

                             SALES FOR THE THREE-MONTHS ENDED DEC 31,     SALES FOR THE SIX-MONTHS ENDED DEC 31,
                                    1999                 1998                  1999                  1998
                             -------------------- --------------------  -------------------  --------------------
                                Amount      %        Amount      %         Amount      %        Amount      %

<S>                            <C>            <C>  <C>            <C>     <C>          <C>     <C>           <C>
Distributor A                  $2,689,022     70 % $ 1,277,103    57 %    $4,732,682   69 %    $3,594,144    65 %
Distributor B                     483,807     13 %     234,010    11 %       840,332   12 %       479,765     9 %
                               ----------     ---- -----------    ----    ----------   ----    ----------    ----

Total                          $3,172,829     83 %  $1,511,113    68 %    $5,573,014   81 %    $4,073,909    74 %
                               ==========     ==== ===========    ====    ==========   ====    ==========    ====
</TABLE>



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, 1999                                      2         71 %
June 30, 1999                                          2         83 %
December 31, 1998                                      2         65 %



                                       -7-
<PAGE>   14

      INTERNATIONAL SALES - The Company had international sales as follows:

<TABLE>
<CAPTION>

                SALES FOR THE THREE-MONTHS                           SALES FOR THE SIX-MONTHS
                     Ended December 31,                                  Ended December 31,
           -------------------------------------------------   ---------------------------------------------------
                    1999                      1998                      1999                       1998
           ------------------------  -----------------------   ------------------------  -------------------------
            AMOUNT          %           AMOUNT        %           AMOUNT         %          AMOUNT         %

<S>           <C>           <C>         <C>           <C>        <C>             <C>       <C>             <C>
Canada        $ 44,083      1 %         $ 16,008      1 %        $ 90,273        1 %       $ 31,363        1 %
Other                                      1,519        %                          %          1,519          %
              --------      ---         --------      ---        --------        ----      --------        ----

Total         $ 44,083      1 %         $ 17,527      1 %        $ 90,273        1 %       $ 32,882        1 %
              ========      ===         ========      ===        ========        ===       ========        ====
</TABLE>



      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 $164,185 and $252,691 and related amortization was
      $60,000 and $36,000 for the three-months ended December 31, 1999 and 1998,
      respectively. Costs capitalized were $291,434 and $329,034 and related
      amortization was $106,249 and $72,000 for the six-months ended December
      31, 1999 and 1998, 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.

      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 CHANGES - In 1998, the Financial Accounting Standards Board
      (FASB) issued Statement No. 133, "Accounting for Derivative Instruments
      and Hedging Activities." This statement, as amended, which is effective
      for fiscal year 2001, will have no impact on the Company's reported
      financial position, result of operations or cash flows.

      The Company adopted FASB Statement No. 131, "Disclosures about Segments of
      an Enterprise and Related Information," during 1999. There was 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.

      RECLASSIFICATION - Certain fiscal 1999 amounts have been reclassified in
      order to conform to fiscal 2000 presentation.


                                       -8-
<PAGE>   15


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:

<TABLE>
<CAPTION>

                                                                                                      NET
                                                                AMORTIZED                          UNREALIZED
DESCRIPTION                                                       COST             MARKET          GAIN (LOSS)

<S>                                                            <C>               <C>                 <C>
December 31, 1999 - Federal Agency Notes                       $ 6,733,299       $ 6,730,870         $(2,429)
                                                               ===========       ===========        ========

June 30, 1999 - Federal Agency Notes                           $ 4,864,847       $ 4,858,395         $(6,452)
                                                               ===========       ===========        ========

December 31, 1998 - Federal Agency Notes                       $ 3,318,562       $ 3,318,155          $ (407)
                                                               ===========       ===========         =======
</TABLE>

3.    OPERATING LEASES

      OPERATING LEASES - The Company leases its office facility in Norwood,
      Ohio. This operating lease, which began in March 1995 and expires in April
      2002, calls for escalating lease payments over the term of the lease. The
      Company records lease expense on a straight-line basis over the life of
      the lease.

      The annual minimum rent to be paid under the operating lease agreement for
      the facility in Norwood, Ohio is as follows:

<TABLE>
<CAPTION>
<S>                                                                                               <C>

Period Ending December 31:
  2000                                                                                             217,500
  2001                                                                                             220,000
  2002                                                                                              73,332
</TABLE>

      Rent expense for the leased office space was $73,277 in each of the
      three-month periods ended December 31, 1999 and 1998. Rent expense for the
      leased office space was $146,553 in each of the six-month periods ended
      December 31, 1999 and 1998.

4.    CAPITAL STOCK AND INCOME PER SHARE

      The following schedule is a summary of the Company's shares of capital
      stock.

<TABLE>
<CAPTION>

                                                                            COMMON                              IN
                                                        AUTHORIZED          ISSUED          OUTSTANDING      TREASURY

<S>                                                     <C>               <C>               <C>               <C>
Balance at December 31, 1999                            15,000,000        12,312,016        12,310,016        2,000
                                                        ===========       ===========       ===========       =====

Balance at June 30, 1999                                15,000,000        12,303,185        12,301,185        2,000
                                                        ===========       ===========       ===========       =====

Balance at December 31, 1998                            15,000,000        12,293,063        12,291,063        2,000
                                                        ===========       ===========       ===========       =====
</TABLE>


                                       -9-
<PAGE>   16

      Income per common share was based on the weighted average number of common
      shares outstanding during each period.

      The Company's basic and diluted earning per share were determined as
      follows:
<TABLE>
<CAPTION>

                                           THREE-MONTHS ENDED                      THREE-MONTHS ENDED
                                            DECEMBER 31, 1999                       DECEMBER 31, 1998
                                 --------------------------------------  --------------------------------------
                                    INCOME        SHARES     PER SHARE      INCOME        SHARES     PER SHARE
                                  (NUMERATOR)  (DENOMINATOR)  AMOUNT      (NUMERATOR)  (DENOMINATOR)  AMOUNT
<S>                                  <C>          <C>           <C>          <C>          <C>           <C>

BASIC EPS

Income available to
  common stockholders                $ 827,733    12,305,712    $ 0.07       $ 377,050    12,291,063    $ 0.03

EFFECT OF DILUTIVE SECURITIES

Stock options                                        708,966                                 318,650
                                     ----------   ----------    -------      ---------    ----------    ------

DILUTED EPS

Income available to
  common stockholders
  and assumed conversions            $ 827,733    13,014,678    $ 0.06       $ 377,050    12,609,713    $ 0.03
                                     ==========   ===========   =======      ==========   ===========   ======
</TABLE>

<TABLE>
<CAPTION>

                                           SIX-MONTHS ENDED                        SIX-MONTHS ENDED
                                           DECEMBER 31, 1999                       DECEMBER 31, 1998
                                 --------------------------------------  --------------------------------------
                                    INCOME        SHARES     PER SHARE      INCOME        SHARES     PER SHARE
                                  (NUMERATOR)  (DENOMINATOR)  AMOUNT      (NUMERATOR)  (DENOMINATOR)  AMOUNT
<S>                                <C>            <C>           <C>        <C>            <C>           <C>

BASIC EPS

Income available to
  common stockholders              $ 1,527,848    12,304,303    $ 0.12     $ 1,382,056    12,291,063    $ 0.11

EFFECT OF DILUTIVE SECURITIES

Stock options                                        595,034                                 233,466
                                     ----------   ----------    -------      ---------    ----------    ------

DILUTED EPS

Income available to
  common stockholders
  and assumed conversions          $ 1,527,848    12,899,337    $ 0.12     $ 1,382,056    12,524,529    $ 0.11
                                   ============   ===========   =======    ============   ===========   ======
</TABLE>


        Stock options representing 150,000 shares and 369,015 shares for the
        three-months ended December 31, 1998 and the six-months ended December
        31, 1998, 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


                                      -10-
<PAGE>   17



      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 1999 and 1998, determined using the
      fair value method consistent with SFAS No. 123, were presented in the
      footnotes to the 1999 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:

<TABLE>
<CAPTION>

                                                                DECEMBER 31,         JUNE 30,         DECEMBER 31,
                                                                   1999                1999               1998
<S>                                                              <C>                 <C>                <C>

Current deferred tax asset - Deferred revenue
  and other                                                      $ 420,829          $  298,960         $  548,002
  Less valuation allowance                                                                               (548,002)
                                                                 ---------          ----------         ----------

Net                                                              $ 420,829          $  298,960         $        -
                                                                 =========          ==========         ==========

Non-current deferred tax asset - Carryforwards
  and credits                                                    $ 458,436          $1,080,683         $1,731,112
Non-current deferred tax liability - Deferred
  software development costs and other                            (388,496)           (196,573)          (129,931)
                                                                 ---------          ----------         ----------
  Net non-current deferred tax asset                                69,940             884,110          1,601,181
  Less valuation allowance                                        (215,430)           (609,114)        (1,601,181)
                                                                 ---------          ----------         ----------

Net                                                              $(145,490)         $  274,996         $        -
                                                                 =========          ==========         ==========

</TABLE>


                                      -11-
<PAGE>   18


      The provision for income taxes for the three-months and six-months ended
      December 31, 1999 and 1998 consists of the following:
<TABLE>
<CAPTION>

                                                         FOR THE THREE-MONTHS                FOR THE SIX-MONTHS
                                                          ENDED DECEMBER 31,                 ENDED DECEMBER 31,
                                                      ---------------------------       --------------------------
                                                         1999             1998             1999              1998

<S>                                                    <C>               <C>            <C>               <C>
Current provision                                      $ 130,216         $      -       $ 166,131        $       -
Deferred provision                                       404,028          125,385         692,301          472,915
                                                       ---------         --------       ---------        ---------

           Total                                         534,244          125,385         858,432          472,915
Decrease in the valuation allowance                     (247,697)        (125,385)       (393,684)        (472,915)
                                                       ---------         --------       ---------        ---------

Income tax expense                                     $ 286,547         $      -       $ 464,748        $       -
                                                       =========         ========       =========        =========
</TABLE>


      The primary differences between the statutory rate for federal income tax
      and the effective income tax rate are the utilization of net operating
      losses to offset current income and the change in the valuation allowance.
      At December 31, 1999, the Company has state net operating loss
      carryforwards, research and development credit carryforwards and
      alternative minimum tax credits available to offset future income taxes.

7.    RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES ("CANADIAN GAAP AND U.S. GAAP")

      These condensed financial statements have been prepared in accordance with
      accounting principles generally accepted in the United States.

      During the periods ended December 31, 1999 and 1998, differences between
      Canadian GAAP and U.S. GAAP arose as a result of depreciation. For U.S.
      GAAP purposes, furniture and fixtures, equipment, and computer equipment
      are depreciated over useful lives of seven, five, and three years,
      respectively, using an accelerated method. For Canadian GAAP purposes,
      furniture and fixtures, equipment, and computer equipment are to be
      depreciated over useful lives of five, three, and three years,
      respectively, using a straight-line method. The difference in methodology
      results in a reported U.S. GAAP net income in excess of Canadian GAAP of
      $23,839 and $11,417 for the periods ended December 31, 1999 and 1998,
      respectively. The difference does not have a material effect on the
      earnings per share calculation for either period.



                                   * * * * * *


                                      -12-