<PAGE>
                                                                    Exhibit 99.1


CINTECH SOLUTIONS, INC.
Condensed Financial Statements for the
Three and Six-Months Ended
December 31, 2002 and 2001 and
Independent Accountants' Report
<PAGE>
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, 2002 and 2001, the related condensed
statements of operations for the three months and six months then ended, and the
condensed statements of stockholders' equity and cash flows for the 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, 2002, 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 23, 2002, 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, 2002 is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.

"/s/ Deloitte & Touche LLP"

January 17, 2003
<PAGE>
CINTECH SOLUTIONS, INC.

CONDENSED BALANCE SHEETS
DECEMBER 31, 2002, JUNE 30, 2002 AND DECEMBER 31, 2001

<TABLE>
<CAPTION>

                                                         DECEMBER 31,                            DECEMBER 31,
ASSETS                                                       2002              JUNE 30,             2001
                                                         (UNAUDITED)             2002            (UNAUDITED)
<S>                                                      <C>                 <C>                 <C>
CURRENT ASSETS:
  Cash and cash equivalents                              $   219,904         $   224,893         $   768,195
  Marketable securities held to maturity                   1,009,067           2,443,024           3,921,938
  Marketable securities available for sale                                       102,030
  Accounts receivable, trade -- (Net of allowance
    of $27,557, $4,824 and $68,152
    at December 31, 2002, June 30, 2002,
    and December 31, 2001, respectively)                     671,791             657,372             591,457
  Inventory                                                   18,611              19,976              11,067
  Prepaid expenses                                           144,002             133,451             126,408
  Income tax receivable                                                          144,000
  Deferred income taxes                                      416,470             418,712             388,753
                                                         -----------         -----------         -----------

            Total current assets                           2,479,845           4,143,458           5,807,818
                                                         -----------         -----------         -----------
FIXED ASSETS:
  Equipment                                                1,365,240           1,367,897           1,381,911
  Furniture and fixtures                                      19,424              19,424               4,198
                                                         -----------         -----------         -----------
            Total                                          1,384,664           1,387,321           1,386,109
  Less accumulated depreciation                           (1,093,949)         (1,042,997)           (948,262)
                                                         -----------         -----------         -----------
            Total fixed assets -- net                        290,715             344,324             437,847
                                                         -----------         -----------         -----------
SOFTWARE DEVELOPMENT COSTS -- Net                          1,754,300           1,927,993           1,931,261
DEFERRED INCOME TAXES                                      1,332,190           1,332,190             858,455
                                                         -----------         -----------         -----------
            Total other assets                             3,086,490           3,260,183           2,789,716
                                                         -----------         -----------         -----------
TOTAL                                                    $ 5,857,050         $ 7,747,965         $ 9,035,381
                                                         ===========         ===========         ===========
</TABLE>


<TABLE>
<CAPTION>
                                                 DECEMBER 31,                          DECEMBER 31,
LIABILITIES AND                                     2002               JUNE 30,            2001
STOCKHOLDERS' EQUITY                             (UNAUDITED)            2002           (UNAUDITED)
<S>                                             <C>                 <C>                <C>
CURRENT LIABILITIES:
  Accounts payable                              $    99,660         $   154,631         $   238,857
  Accrued liabilities:
    Accrued wages and compensation                  313,537             361,519             435,560
    Other                                           416,375             298,996             268,838
  Deferred maintenance revenue                      691,113             649,330             511,314
                                                -----------         -----------         -----------

Total current liabilities                         1,520,685           1,464,476           1,454,569
                                                -----------         -----------         -----------

STOCKHOLDERS' EQUITY:
  Common stock                                    9,008,724           9,008,724           9,008,289
  Contributed capital                               675,757             675,757             675,757
  Treasury stock                                     (2,290)             (2,290)             (2,290)
  Accumulated deficit                            (5,345,826)         (3,422,859)         (2,100,944)
  Accumulated other comprehensive income                                 24,157
                                                -----------         -----------         -----------
            Total stockholders' equity            4,336,365           6,283,489           7,580,812





TOTAL                                           $ 5,857,050         $ 7,747,965         $ 9,035,381
                                                ===========         ===========         ===========
</TABLE>

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


                                      -2-
<PAGE>
CINTECH SOLUTIONS, INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE-MONTHS AND SIX-MONTHS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                 FOR THE THREE-MONTHS ENDED         FOR THE SIX-MONTHS ENDED
                                                                         DECEMBER 31,                       DECEMBER 31,
                                                                         ------------                       ------------
                                                                   2002              2001             2002              2001
<S>                                                            <C>               <C>               <C>               <C>
NET SALES:
  Product sales                                                $   971,450       $ 1,405,630       $ 2,238,205       $ 2,619,737
  Services and other sales                                         364,980           358,143           703,497           757,194
                                                               -----------       -----------       -----------       -----------
        Total net sales                                          1,336,430         1,763,773         2,941,702         3,376,931
                                                               -----------       -----------       -----------       -----------
COST OF PRODUCTS SOLD AND
SERVICES PROVIDED:
  Cost of products sold                                            505,672           409,782         1,059,467           912,597
  Cost of services and other sales                                  34,260            57,853            77,769           135,133
                                                               -----------       -----------       -----------       -----------
        Total cost of products sold and services provided          539,932           467,635         1,137,236         1,047,730
                                                               -----------       -----------       -----------       -----------
GROSS PROFIT                                                       796,498         1,296,138         1,804,466         2,329,201

RESEARCH AND DEVELOPMENT                                           309,907           302,236           573,494           581,006

LEASE TERMINATION COSTS                                                              104,397                             104,397

SELLING, GENERAL AND ADMINISTRATIVE                              1,515,066         1,669,781         3,190,615         3,361,331
                                                               -----------       -----------       -----------       -----------
LOSS FROM OPERATIONS                                            (1,028,475)         (780,276)       (1,959,643)       (1,717,533)

OTHER INCOME                                                        30,216            29,377            36,676            81,209
                                                               -----------       -----------       -----------       -----------

LOSS BEFORE INCOME TAX BENEFIT                                    (998,259)         (750,899)       (1,922,967)       (1,636,324)

INCOME TAX BENEFIT                                                                  (239,148)                           (562,957)
                                                               -----------       -----------       -----------       -----------
NET LOSS                                                       $  (998,259)      $  (511,751)      $(1,922,967)      $(1,073,367)
                                                               ===========       ===========       ===========       ===========

BASIC AND DILUTED LOSS
  PER COMMON SHARE                                             $     (0.08)      $     (0.04)      $     (0.16)      $     (0.09)
                                                               ===========       ===========       ===========       ===========
</TABLE>


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


                                      -3-
<PAGE>
CINTECH SOLUTIONS, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX-MONTHS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                     ACCUMULATED
                                 COMMON                                                OTHER           TOTAL      COMPREHENSIVE
                                  STOCK     CONTRIBUTED  TREASURY    ACCUMULATED    COMPREHENSIVE  STOCKHOLDERS'    NET INCOME
                              NO PAR VALUE    CAPITAL      STOCK       DEFICIT         INCOME         EQUITY          (LOSS)
<S>                           <C>           <C>          <C>         <C>            <C>            <C>            <C>
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
                              ===========    =========    ========   ============                  ============

BALANCE AT JUNE 30, 2002      $ 9,008,724    $ 675,757    $ (2,290)  $ (3,422,859)     $ 24,157     $ 6,283,489

NET LOSS                                                               (1,922,967)                  (1,922,967)    $ (1,922,967)

SALE OF AVAILABLE FOR SALE
  SECURITIES                                                                           (24,157)        (24,157)         (24,157)
                              -----------    ---------    --------   ------------      -------     -----------     ------------
                                                                                                                   $ (1,947,124)
                                                                                                                   ============
BALANCE AT DECEMBER 31, 2002  $ 9,008,724    $ 675,757    $ (2,290)  $ (5,345,826)     $    --     $ 4,336,365
                              ===========    =========    ========   ============      =======     ===========
</TABLE>

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


                                      -4-
<PAGE>
CINTECH SOLUTIONS, INC.

CONDENSED STATEMENTS OF CASH FLOWS  (UNAUDITED)
FOR THE SIX-MONTHS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                             2002                2001
<S>                                                                                      <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                                           $(1,922,967)        $(1,073,367)
                                                                                         -----------         -----------
      Adjustments to reconcile net loss to net cash used in operating activities:
            Depreciation                                                                      79,842              42,251
            Amortization of software development costs                                       429,212             301,329
            Gain on sale of stock received in demutualization                                (28,323)
            Gain on disposal of fixed assets                                                  (2,983)
            Deferred income taxes                                                                               (562,957)
            Provision for doubtful accounts                                                   22,733             (26,806)
            Changes in assets and liabilities:
                  Increase in accounts receivable                                            (37,152)           (263,262)
                  Decrease in income tax receivable                                          144,000
                  Decrease in inventory                                                        1,365              10,320
                  Increase in other assets                                                   (10,551)            (52,563)
                  Increase (decrease) in accounts payable                                    (54,971)            103,938
                  Increase (decrease) in accrued expenses                                     69,397            (112,274)
                  Increase in accrued lease termination costs                                                    113,365
                  Increase (decrease) in deferred maintenance revenue                         41,783            (126,879)
                                                                                         -----------         -----------
                        Total adjustments                                                    654,352            (573,538)
                                                                                         -----------         -----------
                        Net cash used in operating activities                             (1,268,615)         (1,646,905)
                                                                                         -----------         -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
      Redemption of marketable securities                                                  1,542,395           2,362,203
      Expenditures for software development costs                                           (255,519)           (425,233)
      Proceeds on disposal of fixed assets                                                     2,983              35,000
      Purchase of fixed assets                                                               (26,233)           (198,753)
                                                                                         -----------         -----------
            Net cash provided by investing activities                                      1,263,626           1,773,217
                                                                                         -----------         -----------
NET (DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                                                            (4,989)            126,312

CASH AND CASH EQUIVALENTS:
      Beginning of period                                                                    224,893             641,883
                                                                                         -----------         -----------
      End of period                                                                      $   219,904         $   768,195
                                                                                         ===========         ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
      Taxes paid                                                                         $       220         $       185
                                                                                         ===========         ===========
      Tax refunds received                                                               $   149,442
                                                                                         ===========
</TABLE>


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


                                      -5-
<PAGE>
CINTECH SOLUTIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2002 AND AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE THREE-MONTH
AND SIX-MONTH PERIODS THEN ENDED (INFORMATION RELATED TO THE THREE AND
SIX-MONTHS ENDED DECEMBER 31, 2002 AND 2001 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, 2002 has not changed materially
        unless otherwise disclosed herein. Financial information as of June 30,
        2002 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.


                                      -6-
<PAGE>
        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.

        Warranty reserve at June 30, 2002                  $ 17,817
              Charges to the reserve                         (5,027)
              Adjustments based on experience                 4,626
                                                           --------

              Warranty reserve at December 31, 2002        $ 17,416
                                                           ========

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

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

        During 2002, 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:

<TABLE>
<CAPTION>
                                                 DECEMBER 31,       JUNE 30,        DECEMBER 31,
                                                     2002             2002             2001
<S>                                              <C>               <C>              <C>
        Literature and other documentation        $ 13,553         $ 13,563         $  9,263
        Computer hardware                            9,425           10,780            8,398
        Allowance for obsolete inventory            (4,367)          (4,367)          (6,594)
                                                  --------         --------         --------

        Total inventory                           $ 18,611         $ 19,976         $ 11,067
                                                  ========         ========         ========
</TABLE>


                                      -7-
<PAGE>
        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:


<TABLE>
<CAPTION>
                                   SALES FOR THE THREE-MONTHS ENDED DEC. 31,
                                      2002                         2001
                             ---------------------        ---------------------
                               AMOUNT           %           AMOUNT           %
<S>                          <C>               <C>        <C>               <C>
        Distributor A        $  911,258        68%        $1,304,935        74%
        Distributor B           156,288        12%
                             ----------        --         ----------        --
        Total                $1,067,546        80%        $1,304,935        74%
                             ==========        ==         ==========        ==
</TABLE>

<TABLE>
<CAPTION>
                                   SALES FOR THE SIX-MONTHS ENDED DEC. 31,
                                      2002                         2001
                             ---------------------        ---------------------
                               AMOUNT           %           AMOUNT           %
<S>                          <C>               <C>        <C>               <C>
        Distributor A        $2,016,517        69%        $2,398,504        71%
        Distributor B           285,434        10%
                             ----------        --         ----------        --
        Total                $2,301,951        79%        $2,398,504        71%
                             ==========        ==         ==========        ==
</TABLE>


        The Company had gross accounts receivable from a major distributor of
        76%, 75%, and 72% of total accounts receivable as of December 31, 2002,
        June 30, 2002, and December 31, 2001, respectively.

        INTERNATIONAL SALES -- The Company's international sales to Canada were
        approximately 2% and 1% of total sales for the three-months ended
        December 31, 2002 and 2001, respectively, and approximately 3% and 2% of
        total sales for the six-months ended December 31, 2002 and 2001,
        respectively.

        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 $102,752 and $199,885 and related amortization
        was $215,123 and $112,329 for the three-months ended December 31, 2002
        and 2001, respectively. Costs capitalized were $255,519 and $425,233 and
        related amortization was $429,212 and $301,329 for the six-months ended
        December 31, 2002 and 2001, 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 $253,746 and $249,501 for
        the three-months ended December 31, 2002 and 2001, respectively. License
        fee expense was $555,495 and $523,997 for the six-months ended December
        31, 2002 and 2001, 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.


                                      -8-
<PAGE>
        ACCOUNTING PRONOUNCEMENTS -- In August 2001, the Financial Accounting
        Standards Board ("FASB") issued Statement of Financial Accounting
        Standards ("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 had no impact on the Company's
        financial statements.

        In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
        Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and
        Technical Corrections." This Statement rescinds FASB Statement No. 4,
        "Reporting Gains and Losses from Extinguishment of Debt," and an
        amendment of that Statement, FASB Statement No. 64, "Extinguishments of
        Debt Made to Satisfy Sinking-Fund Requirements." This Statement also
        rescinds FASB Statement No. 44, "Accounting for Intangible Assets of
        Motor Carriers." This Statement amends FASB Statement No. 13,
        "Accounting for Leases," to eliminate an inconsistency between the
        required accounting for sale-leaseback transactions and the required
        accounting for certain lease modifications that have economic effects
        that are similar to sale-leaseback transactions. This Statement had no
        impact on the Company's financial statements.

        In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
        Associated with Exit or Disposal Activities." This Statement addresses
        financial accounting and reporting for costs associated with exit or
        disposal activities and nullifies EITF Issue No. 94-3, "Liability
        Recognition for Certain Employee Termination Benefits and Other Costs to
        Exit an Activity (including Certain Costs Incurred in a Restructuring)."
        This Statement requires recognition of a liability for a cost associated
        with an exit or disposal activity when the liability is incurred, as
        opposed to being recognized at the date an entity commits to an exit
        plan under EITF No. 94-3. This Statement also establishes that fair
        value is the objective for initial measurement of the liability. This
        statement is effective for exit or disposal activities that are
        initiated after December 31, 2002, with earlier application encouraged.
        This Statement had no impact on the Company's financial statements.

        In November 2002, the FASB issued Interpretation No. 45 "Guarantor's
        Accounting and Disclosure Requirements for Guarantees, Including
        Indirect Guarantees of Indebtedness of Others." This Interpretation
        clarifies disclosure requirements and recording related to guarantees
        and indemnification agreements. This Interpretation is effective for
        guarantees issued or modified after December 31, 2002. The disclosure
        requirements are effective for financial statements of interim or annual
        periods ending after December 15, 2002, and apply to existing
        guarantees. This Interpretation resulted in expanded disclosure related
        to the Company's product warranty liability.

        In December 2002, the FASB issued SFAS No. 148, "Accounting for
        Stock-Based Compensation -- Transition and Disclosure." This Statement
        amends SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No.
        148 provides alternative methods of transition for a voluntary change to
        the fair value based method of accounting for stock-based employee
        compensation. In addition, SFAS No. 148 amends the disclosure
        requirements of SFAS No. 123 to require more prominent and more frequent
        disclosures in financial statements of the effects of stock-based
        compensation. The transition guidance and annual disclosure provisions
        of SFAS No. 148 are effective for fiscal years ending after December 31,
        2002, with earlier application permitted in certain circumstances. The
        interim disclosure provisions are effective for financial reports
        containing financial statements for interim periods beginning after
        December 15, 2002.

        CASH AND CASH EQUIVALENTS -- For purposes of reporting cash flows, the
        Company considers all money market instruments to be cash equivalents.


                                      -9-
<PAGE>
        RECLASSIFICATIONS -- Certain fiscal 2002 amounts have been reclassified
        to conform to fiscal 2003 presentations.

2.      MARKETABLE SECURITIES

        HELD TO MATURITY -- 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>
                                                          AMORTIZED                         UNREALIZED
        DESCRIPTION                                         COST             MARKET         GAIN (LOSS)
<S>                                                      <C>               <C>              <C>
        December 31, 2002 -- Federal Agency Notes        $1,009,067        $1,009,383        $    316
                                                         ==========        ==========        ========
        June 30, 2002 -- Federal Agency Notes            $2,443,024        $2,424,880        $(18,144)
                                                         ==========        ==========        ========
        December 31, 2001 -- Federal Agency Notes        $3,921,938        $3,921,701        $   (237)
                                                         ==========        ==========        ========
</TABLE>

        AVAILABLE FOR SALE -- During the second quarter of 2003, the Company
        sold its investment in common stock for approximately $108,000. A
        realized gain of approximately $28,000 has been recorded in other income
        in the accompanying statement of operations for the three-month period
        ended December 31, 2002.

3.      OPERATING LEASES

        OPERATING LEASES -- During the second quarter of fiscal 2002, the
        Company accrued $104,397 for costs associated with terminating its
        Norwood, Ohio lease and relocating its office facility. This operating
        lease expired during the fourth quarter of fiscal 2002.

        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 2002, the Company signed lease agreements for office equipment
        and furniture with a bank. These operating leases began in December 2001
        and expire in November 2005 and November 2006, respectively. Effective
        August 2002 and as amended in January 2003, the Company has agreed to
        maintain a compensating balance equal to amounts owed under these lease
        agreements throughout the term of the lease agreements. This
        compensating balance requirement was approximately $1.1 million at
        December 31, 2002. Compliance with the compensating balance requirement
        is calculated based on the sum of the Company's marketable securities
        and 85% of the Company's accounts receivable less than ninety days past
        due. In the event that the Company's marketable securities and 85% of
        the Company's accounts receivable less than ninety days past due were to
        decline below the compensating balance requirement, the lessor is
        entitled to exercise certain remedies as provided in the lease
        agreements and amendments. Such remedies include the lessor's right to
        take possession of cash, marketable securities and trade accounts
        receivable in the amount of the outstanding lease obligation. In such an
        event, the Company would seek to renegotiate the terms of the lease
        agreements and related compensating balance requirement, however, the
        lessor is under no obligation to modify the agreements.


                                      -10-
<PAGE>
         The annual minimum rent to be paid under the operating lease agreements
         is as follows:

<TABLE>
<S>                                                                  <C>
          Period ending December 31:
            2003                                                     $ 1,069,389
            2004                                                       1,069,389
            2005                                                       1,055,252
            2006                                                         893,778
            2007                                                         828,055
            2008 and after                                             3,243,235
</TABLE>

         Rent expense for the leased office space was $163,400 and $141,744 for
         the three-month periods ended December 31, 2002 and 2001, respectively.
         Rent expense for the leased office space was $389,119 and $227,690 for
         the six-month periods ended December 31, 2002 and 2001, respectively.
         The lease expense for the equipment and furniture was $83,365 and
         $12,512 for the three-month periods ended December 31, 2002 and 2001,
         respectively. The lease expense for the equipment and furniture was
         $166,730 and $12,512 for the six-month periods ended December 31, 2002
         and 2001, respectively.

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, 2002     15,000,000            12,329,227      12,327,227      2,000
                                 ==========            ==========      ==========      =====

Balance at June 30, 2002         15,000,000            12,329,227      12,327,227      2,000
                                 ==========            ==========      ==========      =====

Balance at December 31, 2001     15,000,000            12,327,727      12,325,727      2,000
                                 ==========            ==========      ==========      =====
</TABLE>

         Income 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 loss per share were determined as
         follows:

<TABLE>
<CAPTION>
                                        THREE-MONTHS ENDED                                THREE-MONTHS ENDED
                                        DECEMBER 31, 2002                                 DECEMBER 31, 2001
                        -----------------------------------------------  ------------------------------------------------
                            LOSS               SHARES         PER SHARE      LOSS                SHARES         PER SHARE
                         (NUMERATOR)       (DENOMINATOR)        AMOUNT    (NUMERATOR)        (DENOMINATOR)       AMOUNT
<S>                     <C>                <C>                <C>        <C>                 <C>                <C>
BASIC AND DILUTED EPS
Loss available to
  common stockholders    $ (998,259)         12,327,227        $ (0.08)   $ (511,751)          12,325,727       $ (0.04)
</TABLE>

<TABLE>
<CAPTION>
                                         SIX-MONTHS ENDED                                  SIX-MONTHS ENDED
                                         DECEMBER 31, 2002                                 DECEMBER 31, 2001
                        -----------------------------------------------  ------------------------------------------------
                            LOSS               SHARES         PER SHARE      LOSS                SHARES         PER SHARE
                         (NUMERATOR)       (DENOMINATOR)        AMOUNT    (NUMERATOR)        (DENOMINATOR)       AMOUNT
<S>                     <C>                <C>                <C>        <C>                 <C>                <C>
BASIC AND DILUTED EPS
Loss available to
  common stockholders   $ (1,922,967)        12,327,227        $ (0.16)  $ (1,073,367)         12,325,727       $ (0.09)
</TABLE>

         Stock options representing 1,652,673 shares in 2002 and 1,515,412
         shares in 2001 were not included in computing diluted earnings per
         share because their effects were antidilutive.


                                      -11-
<PAGE>
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 2002 and 2001,
         determined using the fair value method consistent with SFAS No. 123,
         were presented in the footnotes to the 2002 annual report.

         During the quarter ended September 30, 2002, 166,450 options were
         granted under the Plan. No options were granted during the quarter
         ended December 31, 2002.

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.


                                      -12-
<PAGE>
         Deferred taxes consist of the following:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,     JUNE 30,        DECEMBER 31,
                                                       2002             2002             2001
<S>                                                 <C>              <C>              <C>
Current deferred tax asset--Deferred revenue
  and other                                         $   469,982      $   418,712      $   388,753
Less valuation allowance                                (53,512)
                                                    -----------      -----------      -----------

Net current deferred tax asset                      $   416,470      $   418,712      $   388,753
                                                    ===========      ===========      ===========

Non-current deferred tax asset--Carryforwards
  and credits                                       $ 2,882,315      $ 2,116,395      $ 1,630,960
Non-current deferred tax liability--Deferred
  software development costs and other                 (716,970)        (784,205)        (772,505)
                                                    -----------      -----------      -----------

           Total non-current deferred tax asset       2,165,345        1,332,190          858,455
  Less valuation allowance                             (833,155)
                                                    -----------      -----------      -----------

Net non-current deferred tax asset                  $ 1,332,190      $ 1,332,190      $   858,455
                                                    ===========      ===========      ===========
</TABLE>

         The benefit for income taxes for the three-months and six-months ended
         December 31, 2002 and 2001 consists of the following:

<TABLE>
<CAPTION>
                                          FOR THE THREE-MONTHS           FOR THE SIX-MONTHS
                                           ENDED DECEMBER 31,            ENDED DECEMBER 31,
                                        -------------------------     -------------------------
                                          2002           2001            2002          2001
<S>                                     <C>            <C>            <C>            <C>
Deferred benefit                        $(417,447)     $(239,148)     $ (886,667)    $(562,957)
Increase in the valuation allowance       417,447                        886,667
                                        ---------      ---------      ----------     ---------

Total                                   $      --      $(239,148)     $       --     $(562,957)
                                        =========      =========      ==========     =========
</TABLE>

         The primary differences between the statutory rate for federal income
         tax and the effective income tax rate for the three and six months
         ended December 31, 2002 is the establishment of a valuation allowance.
         For the prior year, the difference is the result of the benefits from
         research and development credits and state tax losses generated during
         the period. At December 31, 2002, the Company has available net
         operating loss carryforwards for U.S. Federal tax purposes of
         approximately $6,663,000 that will expire in 2021. Also at December 31,
         2002, for U.S. Federal tax purposes, the Company has research and
         development credit carryforwards available to offset future income
         taxes of approximately $522,000 which will expire in 2017.

         The Company's federal income tax return for the year ended June 30,
         2000 is currently under audit by the Internal Revenue Service ("IRS").
         As of December 31, 2002, no adjustments have been proposed by the IRS.
         Management believes that adequate provision for income taxes has been
         made for the open year.


                                      -13-
<PAGE>
7.       BUSINESS CONDITION

         The Company has experienced net losses of $1.9 million and $1.1 million
         for the six-month periods ended December 31, 2002 and 2001,
         respectively. Restrictions under certain of the Company's operating
         lease financing arrangements require the maintenance of a compensating
         balance equivalent to $1.1 million in marketable securities and trade
         accounts receivable. Additionally, current economic conditions have
         delayed the anticipated contribution to operations of the Company's
         recently introduced product lines. The Company's continued existence is
         dependent upon several factors including the ability to generate
         sufficient cash flow from operations to satisfy existing creditors and
         sustain normal operations. At this time it is not possible to predict
         the ultimate resolution of these matters.

         It is reasonably possible, however, that the Company may be required to
         obtain waivers under its operating lease financing arrangements for
         future periods and the lender is under no obligations to provide such
         waivers. It is also possible that the current economic downturn may be
         sustained beyond initial forecasts. During the months ahead, the
         Company will be forced to make difficult decisions regarding, among
         other things, the future direction of the Company. The Company's
         management and Board have been reviewing the financial and operational
         alternatives available to the Company.

         The Company's near and long term strategies have focused on
         aggressively pursuing cost cutting programs which are expected to
         significantly reduce overall operating expense on an annualized basis.
         Many of these reductions were implemented in fiscal year 2002, the
         effect of which is expected in fiscal 2003 and future years. The
         current cost cutting programs through the six-month period ended
         December 31, 2002 has resulted in an overall reduction in operating
         expenses of 7%. These reductions have included an 18% reduction in
         payroll costs. Furthermore, the Company has recently engaged a
         financial advisor to explore the possibility of raising additional
         funding sources.

         Management believes that, despite the financial hurdles and
         uncertainties going forward, it has under development a business plan
         that, if successfully executed, can significantly improve operating
         results. The support of the Company's vendors, customers, and employees
         will continue to be the key to the Company's future success.

         See independent accountants' report.

                                     ******

                                       14