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CTIG |
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CTI Group (CTIG - OTC Bulletin Board) sells software and services used in telephone billing and the management of telecommunications systems.
CTIG's shares are currently depressed at $0.31 asked compared to the 52 week high of $1.19. The company had earnings of 4 cents in the fiscal year ended 3/31/96 but lost 1 cent in the 9 months ended 12/31/96. The loss was due to the loss of a major customer during the year as well as product obsolescence.
The company's balance sheet is in reasonably good shape compared to some that I have seen for companies this size. There is a small amount of debt (about $8,000 short term and $30,000 long term), and cash as of 12/31/96 was $66,510. In the 10-Q for the quarter ended 12/31/96 the company stated, "The Company's bank has extended the maturity of the Company's $200,000 revolving line of credit to July 31, 1997. The bank has also provided the Company with a $50,000 line of credit for equipment purchases. As a result of the availability of these funds, the new sales being generated and the Company's current operating position, management believes its working capital is adequate to fund its operations for the foreseeable future."
The key to the company's future is 2 new products that it has recently begun marketing. The first of these is the "Neptune" billing software. CTIG performs billing services (data processing, subscriber invoicing and mailing services) for companies that provide long distance telephone, cellular telephone, and other telecommunications services. In addition to telecom service providers, CTIG also markets its services to the cable TV industry for combined billing to subscribers of joint cable/telephony delivery systems. In its latest 10-K CTIG stated "The new Neptune product...has met with good response from the marketplace and should enable the Company to further penetrate this market." In its latest 10-Q CTIG stated "The Company commenced marketing its Neptune billing software during the nine months ended December 31, 1996 and has received several orders for the product during this period. The Company has installed and has begun generating revenue from some of the smaller customers during the quarter ended December 31, 1996. The remainder of the orders from small customers will be installed in the normal course of business. The Company has also received orders from larger customers. The Company anticipates...generating revenue from these larger customers from the beginning (4/1/97) of the Company's next fiscal year."
CTIG's other new product is its "Unity" telemanagment software. This product is used by corporate, institutional, and government clients to control costs associated with operating private telecommunications networks. CTIG's account managers work with clients as necessary to help interpret reports, answer questions about telecommunications systems and providers, and make recommendations when improvements to clients' systems are sought. Clients achieve the intended purposes of routine telemanagment asks with minimal responsibilities.
CTIG obtained Unity when it acquired Soft-Com Inc. in December 1996 for stock. According to CTIG's news release, the acquisition more than doubles CTIG's client base. The CEO stated "We pursued this merger because Soft-Com's Unity product fills a gap with a state of the art product offering." CTIG has been making sales of Unity in the current quarter and is now marketing Unity to its existing customer base.
In summary, CTIG has a very large potential market and good opportunity for growth with its new products. The company is currently fairly cheap on a valuation basis. If you annualize revenues in the December 31, 1996 quarter and add in Soft-Com's revenues the company's price sales ratio is about 0.5. It's also worth noting that officers and directors hold 38% of the 6.4 million shares outstanding as of 1/31/97.
CTIG's SEC filings are available on Edgar. The company has a web site at www.ctigroup.com. The investor relations contact is Mark Daugherty, the CFO. He can be reached at (610) 666-1700 or e-mail group@ctigroup.com.
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