UNITED STATES
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, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-31685
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MCC TECHNOLOGIES, INC.
----------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 88-045-4570
- ------ -----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
122 PILLING ROAD, GIBSONS, BRITISH COLUMBIA, CANADA V0N 1V3
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(Address of principal executive offices)
(604) 922-1972
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(Issuer's telephone number)
NOT APPLICABLE
--------------
(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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
3,000,000 common shares issued and outstanding, as of January 15, 2001
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Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
DISCLOSURE
To: The Shareholders of
MCC Technologies, Inc.
It is the opinion of management that the interim financial statements for the
quarter ended December 31, 2000 include all adjustments necessary in order to
ensure that the financial statements are not misleading.
Vancouver, British Columbia /s/ Lael Todesco
Date: February 7, 2001 Director of MCC Technologies, Inc.
MCC TECHNOLOGIES, INC.
(A Development Stage Company)
INTERIM BALANCE SHEET
(Unaudited)
December 31, 2000
(Expressed in U.S. dollars)
Dec. 31 March 31
2000 2000
ASSETS
Current
Cash in bank or on hand. . . . . . . . . . . . . . . . . . . . . $ 50 $ 6,730
Other
Licence agreement. . . . . . . . . . . . . . . . . . . . . . . . 5,000 5,000
-----------------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,050 $ 11,730
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 6,760 $ 750
Shareholder loan, without interest or stated terms of repayment. 25,425 5,832
-----------------------
32,185 6,582
Stockholders' Equity
Common stock
100,000,000 Common shares authorized with 001 par value
3,000,000 Shares issued and outstanding . . . . . . . . . . . 3,000 3,000
Additional paid in capital . . . . . . . . . . . . . . . . . . . 4,500 4,500
----------------------
7,500 7,500
Deficit accumulated during the development stage . . . . . . . . (34,635) (732)
----------------------
(27,135) 6,768
----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . $ 5,050 $ 13,350
======================
The accompanying notes are an integral part of the financial statements
MCC TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
For the period from Inception to December 31, 2000
(Expressed in U.S. dollars)
Additional
Paid-in Accumulated
Common Stock Capital Deficit
Shares Amount
Balance, February 26, 1998
(Date of inception). . . . . . . . . . - $ - $ - $ -
Issuance of stock at $.0025
per share for cash . . . . . . . . . . 3,000,000 3,000 4,500 -
Net loss for the year . . . . . . . . . - - - -
------------------------------------------------
Balance, March 31, 1998 . . . . . . . . 3,000,000 3,000 4,500 -
Net loss for the year . . . . . . . . . - - - (100)
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Balance, March 31, 1999 . . . . . . . . 3,000,000 3,000 4,500 (100)
Net loss for the year . . . . . . . . . - - - (632)
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Balance, March 31, 2000 . . . . . . . . 3,000,000 3,000 4,500 (732)
Net loss for the quarter. . . . . . . . - - - (33,803)
-------------------------------------------------
Balance Dec. 31, 2000 . . . . . . . . . 3,000,000 $ 3,000 $ 4,500 $(34,535)
=================================================
The accompanying notes are an integral part of the financial statements.
MCC TECHNOLOGIES, INC.
(A Development Stage Company)
INTERIM STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
For the Period from inception to December 31, 2000
(Expressed in U.S. dollars)
9 Months 9 Months Accumulated
Ended Ended Feb 26, 1998
Dec. 31 Dec. 31 To
2000 1999 Dec. 31, 2000
Revenue. . . . . . . . . . . . . . . . $ - $ - $ -
Expenses
Filing fees. . . . . . . . . . . . . . 500 632 1,132
Software development . . . . . . . . . 18,132 18,132
Professional fees. . . . . . . . . . . 15,171 15,171
-------------------------------------------
Net Loss . . . . . . . . . . . . . . . 33,803 632 34,635
Accumulated Deficit,
Beginning of Period. . . . . . . . . . 832 200 -
-------------------------------------------
Accumulated Deficit
End of Period. . . . . . . . . . . . . $ 34,635 $ 832 $ 34,635
===========================================
Net Loss Per Common Share. . . . . . . $ 0.0100 $ 0.0003 $ 0.0100
===========================================
Weighted Average Number of
Common Shares Outstanding. . . . . . . 3,000,000 3,000,000 3,000,000
===========================================
The accompanying notes are an integral part of the financial statements
MCC TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
For the period from Inception to December 31, 2000
(Expressed in U.S. dollars)
9 Months Year Accumulated
Ended Ended Feb 26, 1998
Dec. 31 March 31 To
2000 2000 Dec. 31, 2000
Cash Flows to Operating Activities
Net loss for the period. . . . . . . . $ (33,803) $ (632) $ (34,635)
Non-cash working capital items . . . . 26,975 32,465
---------------------------------------------
(6,828) (632) (2,170)
Cash Flows from Investing Activities
Licence agreement. . . . . . . . . . . - (5,000)
---------------------------------------------
Cash Flows from Financing Activities
Common Stock . . . . . . . . . . . . . - - 7,120
---------------------------------------------
Net Change In Cash . . . . . . . . . . (6,828) (632) (50)
Cash, Beginning of Period. . . . . . . 6,878 7,500 -
---------------------------------------------
Cash, End of Period. . . . . . . . . . $ 50 $ 6,878 $ (50)
=============================================
The accompanying notes are an integral part of the financial statements
MCC TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited)
December 31, 2000
1. Development Stage Company
MCC Technologies, Inc. herein "the Company" was incorporated on February 26,
1998 pursuant to the laws of the State of Nevada.
The Company is a development stage company specializing in software development
in interactive voice response (IVR) technology, targeted at public transit,
public paratransit and public utilities.
In a development stage company, management devotes most of its activities to
establishing a new business. Planned principal activities have not yet produced
significant revenue. The ability of the Company to emerge from the development
stage with respect to its planned principal business activity is dependent upon
its successful efforts to raise additional equity financing and to develop and
market its technology.
2. Summary of Significant Accounting Policies
(a) Year end
- --- ---------
The Company's fiscal year end in March 31.
(b) Use of estimates
- --- ------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenditures during the period. Actual
results may differ from those estimates.
(c) Financial instruments
- --- ----------------------
The Company's financial instruments consist of cash which approximates carrying
value.
(d) Foreign Exchange
- --- -----------------
All of the Company's transactions have been in U.S. currency. The Company's
anticipated market is the US. Therefore, the Company's exposure to foreign
currency exchange risks is currently considered minimal.
(e) Income Taxes
- --- -------------
Since the Company is in its development stage and has no income, no income tax
expense is reported on the financial statements.
MCC TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited)
December 31, 2000
3. Common Stock Transactions
The Company was incorporated with authorized capital of 25,000 shares of common
stock, no par value. On March 3, 1998 the Company issued 30,000 shares for
cash.
On February 28, 2000 the Company approved a forward split of 100 for 1 of the
issued and outstanding shares. At the same time the Articles of Incorporation
were amended to increase the authorized capital stock to 100,000,000 shares with
a par value of $.001. These financial statements give retroactive affect to the
stock split from date of inception.
4. Licence Agreement and related party transactions
On March 1, 2000 the Company entered into a software licencing agreement with a
shareholder whereby it was granted the non exclusive right to market within
Continental North America, IVR computer software. The Licensor will receive 15%
of gross annual sales of the product, which is the technology and intellectual
property necessary to promote, market, sell and supply the computer software.
The agreement may be terminated by the Company at any time after a 14 day notice
period. The agreement may be terminated by the Licensor under certain
conditions as stated in the licence agreement.
ITEM 2. PLAN OF OPERATION.
There have been no material developments since we filed our Form 10-SB
Registration Statement on October 4, 2000 and our Form 10-QSB Quarterly Report
on November 14, 2000.
General
Prior to February 28, 2000, we operated as a development stage company. On
February 28, 2000, we began operations (and continue to operate) as a software
company specializing in the development of interactive voice response ("IVR")
software and multimedia automated information software, primarily for the public
transit and utilities industries.
Under the terms of a licence and marketing agreement, dated March 1, 2000 (the
"Licence Agreement"), between MCC Technologies, Inc. and Peter Thompson, we
acquired a non-exclusive licence to develop, market, sell and support multimedia
automated traveller information ("ATIS") software used to provide information to
users of fixed route public transit systems (such as bus, ferry and commuter
rail) and of customer-scheduled transit systems (including paratransit, taxi
cab, ambulance, transportation shuttle and limousine service). We also provide
multi-modal information systems in metropolitan areas. Multi-modal information
systems combine the ATIS software applications with other operational data such
as traffic conditions, flow monitoring and real time parking information,
thereby delivering a complete "one-stop-shopping" source of traveller
information.
We paid Mr. Thompson a cash payment of $5,000 and agreed to pay him a royalty of
15% of the gross annual sales of our ATIS software. Mr. Thompson agreed to
provide us with the ATIS software source code and operations
manuals and to actively participate in the further development and enhancement
of the software and the overall operation of our business.
IVR Software Generally
IVR software is used by businesses and other entities that have a need to
provide information to their customers on a continual basis. By implementing an
IVR software system, businesses and other enterprises can use a standard
telephone network to provide automated voice responses to repetitive and
standard questions from their customers and/or users. IVR software can also be
used in conjunction with customer service representatives, such that routine
questions and requests for information are performed by the automated voice
response of the IVR software system and unusual questions or requests are
handled by live operators or customer service representatives.
Businesses and other enterprises currently implement IVR software in order to:
- - increase capacity in handling routine questions and requests for
information;
- - decrease operating costs in providing responses to routine questions and
requests for information by reducing the amount of time live operators or
customer service representatives spend responding to such routine questions and
requests; and
- - improve customer service levels by providing prompt responses to such
routine questions and requests for information.
Industry Description
Interactive voice processing systems are designed to serve the needs of
organizations that require an efficient, cost-effective means of delivering and
communicating information, responding to standard requests or questions and
completing business transactions in a timely manner. Voice processing typically
utilizes a telephone system connected to an external computer which contains
data and information being requested by callers. These systems use specialized
computer hardware and software to store, retrieve and transmit digitized voice
messages and to access information on computer databases. Using speech
recognition software and touchtone or voice commands, along with a combination
of passwords, account numbers and codes, callers can search for or request
information from the computer's database and have information read back in voice
form over the telephone. Voice processing systems have recently evolved and are
now capable of providing information not only through voice messages via the
telephone but also by providing information via the Internet, fax, pagers and
Telecommunications Devices for the Deaf (TDD). Voice processing systems are
widely used for functions such as reporting account balances, confirming
schedule information, reserving appointments for various services, checking
inventory, determining delivery dates for products or otherwise obtaining
standard information, and range from small systems with basic features utilizing
a few phone lines to larger, more complex systems with hundreds of telephone
lines.
In an attempt to capture a segment of the IVR software market, telephone
service/equipment suppliers and computer manufacturers have entered into the
market. Telephone manufacturers have added more intelligent features to their
telephone equipment to automate more complex caller requirements like voice mail
and caller routing. Computer manufacturers have added telephone-based call
handling and switching capabilities to permit remote connectivity and access
between various telephone and computer networks. This convergence of computer
and telephone technology has led to the emergence of standards which are
intended to govern the design and functionality of both computer and telephone
switching hardware.
The market for simple IVR software applications will likely be dominated by
telephone service and equipment suppliers, who will include such simple IVR
systems with their telephone equipment. More complex applications, however,
will likely run on personal computing technology, which will be supplied by
software vendors such as MCC Technologies, Inc.
Our Software
Our ATIS software technology is used in both fixed route transit applications,
such as bus, ferry and commuter rail, as well as by service providers offering
customer scheduled trips, including paratransit operators, taxi cab, ambulance,
transportation shuttle and limousine service providers. We also provide
multi-modal information systems in metropolitan areas. Multi-modal information
systems combine the ATIS software applications with other operational data such
as traffic conditions, flow monitoring and real time parking information,
thereby delivering a complete "one-stop-shopping" source of traveller
information.
Our fixed route ATIS software permits travellers seeking transportation
information, such as route descriptions, stop locations, departure times and
other information regarding their travel plans to access this information via a
telephone, the Internet or other automated information technologies. The
information provided is current and up-to-the-minute (real time), as our ATIS
software is connected directly to the scheduling database which contains the
transportation provider's operating information.
Our ATIS software technology is designed to be compatible with and to connect to
other information technologies via Internet compliant standard interfaces and
open platform design. For example, where the transportation provider includes
global positioning satellite based automated vehicle location information, a
person seeking bus times will be advised when the bus will actually arrive at a
designated stop, rather than when it is scheduled to arrive at the stop.
For customer scheduled and demand applications, our ATIS software will permit a
customer to schedule a trip, confirm or cancel a scheduled trip or provide
notification of the arrival of the transit vehicle for the scheduled trip. All
of these functions can be performed automatically over the telephone, Internet
and/or fax without the need for human assistance.
Our ATIS software technology improves the service delivery of both fixed route
and customer scheduled transportation operators by enabling operators to offer
customer service 24 hours per day, 7 days per week and by automating most
customer inquiries. Superior customer service is delivered to users at a
fraction of the cost of human operators, one of the highest cost factors to
transit operators in delivering customer service. As a result, we estimate that
a transit operator will recover the cost of the ATIS software within six to
eight months of installation through savings made, for example, through the
automation of customer inquiries.
We have created "iEngine", a proprietary communications technology which permits
simultaneous public access to transportation information via whatever medium the
user selects. The media choices range from interactive media such as cellular
or fixed-line telephone, the Internet, email or a kiosk to one-way (passive)
media such as fax back, FM radio, TV or automated signage. We are in the
process of building proprietary interfaces with the four major suppliers of
scheduling databases in North America: Trapeze Software Group, GIRO,
Multisystems Inc. and Mantech Systems Inc.
We intend initially to market our ATIS software to the transit, paratransit and
utilities industries. However, enterprises such as brokerages, banks, airlines
and retailers use similar software platforms to provide interactive voice
responses for applications including stock quotes and trading, home banking,
travel planning and shopping, and are potential target markets for us in the
future.
We integrate state of the art innovations and advances in information and
computer technology into our ATIS software applications. Our technology is
designed to be "open" with respect to both its architecture, and existing and
anticipated standards. Our software applications are compatible with virtually
any DOS, Windows, OS/2 and UNIX operating system based-network, will run on most
personal computers and will connect with most standard- telephone switches.
This adaptability provides optimum flexibility and power to the customer and
ensures compatibility with changing hardware requirements. To achieve the
"open" structure of our products, we integrated the following three innovations
into our software products:
Compliance with Telephony Standards such as TAPI and TSAP
Telephony Applications Programming Interface ("TAPI") is Microsoft's application
for interfacing Windows-based computer applications with telephone systems.
Telephone Services Applications Programming Interface ("TSAPI") is Novell's
application for interfacing telephone systems to Novell networks.
Both TAPI and TSAPI are standards which define the criterion for integrating a
telephone with a personal computer within or outside of a computer network. In
short, the standard describes the interconnectivity of all types of computer and
telephony hardware that could be used in any of our current or future software
applications. We monitor all standards development in the computer telephony
sector to ensure that our software products remain compliant with such
standards. Our products are already compliant with TAPI and TSAPI, both of
which will likely govern future IVR software systems.
Network Connectivity
All of our software applications are intranet and internet compatible and can
easily plug into the existing communications capabilities of both Windows and
OS/2 operating systems. Once connected to a Windows or an OS/2 based computer
system, our software applications can emulate the terminal of the transportation
provider, thereby providing dynamic, real-time interactivity with the
transportation provider's host database. Through such terminal emulation, our
applications offer the following advantages over those of our existing
competitors:
- - transactions between our software and the transportation provider's host
software are in real time with no additional overhead in database management;
and
- - no modifications are required to the existing host software as our
software is able to emulate any other workstation on the computer network.
JAVA Scripting
JAVA is a software language which permits programs to be developed that will run
on virtually any operating system platform including Windows, OS/2 or UNIX.
JAVA software can also operate with software code written in other software
languages such as "C" and "C++". Additionally, JAVA-based applications allow
distributed processes to be run independently over a network, further permitting
the Internet to be used as a medium to connect geographically separated
components of our software applications. Specifically, voice and
telephone-based information can be more readily accessed from information
sources located virtually anywhere in the world.
Upgrades and Support of Our IVR Software
Our existing management team supports and services all of our IVR software
products. If an existing customer has a support contract with us, that customer
will receive any upgrades to the IVR software application running on that
operating system as part of that support contract. If there is no support
contract, the customer will continue to receive support for its IVR software but
will be charged on a per hour basis for all repairs and custom upgrades or
enhancements.
Target Markets
The target market for our IVR software are primarily the public transit and
utilities industries. Public transit and utilities companies generally purchase
and utilize IVR software for two reasons:
- - to reduce operating costs involved in providing responses to standard
questions and requests for information; and
- - to improve customer service by providing such standard or routine
information in a timely and efficient manner.
IVR software technology automates repetitive and standard questions and requests
for information, which represent the majority of calls to public transit and
utility companies. The versatility of the technology permits full integration
with operators so that routine calls are handled automatically using IVR
software and the more difficult calls are transferred to human operators, who
are usually available during business hours.
RISK FACTORS
Much of the information included in this Quarterly Report includes or is based
upon estimates, projections or other "forward-looking statements". Such
forward-looking statements include any projections or estimates that are made by
us and by our management in connection with our business operations. While
these forward-looking statements, and any assumptions upon which they are based,
are made in good faith and reflect our current judgment regarding the direction
of our business, actual results will almost always vary, sometimes materially,
from any estimates, predictions, projections, assumptions, or other future
performance suggested herein. We undertake no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.
Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. We caution readers that
important factors in some cases have affected and, in the future, could
materially affect actual results and cause actual results to differ materially
from the results expressed in any such estimates, projections or other
"forward-looking statements". In evaluating us, our business and any investment
in our business, readers should carefully consider the following factors.
History of Losses
We have had a history of losses and expect to continue to incur losses, and may
never achieve or maintain profitability. We have incurred losses since we began
operations as an IVR software development company, including a loss of
approximately $2,352 through the year ended March 31, 2000. As of March 31,
2000, we had an accumulated deficit of approximately $2,152. We expect to have
net losses and negative cash flow at least through March 31, 2002, and expect to
spend significant amounts of capital to enhance our products and technologies,
develop international sales and operations, and fund research and development.
As a result, we will need to generate significant revenue to break even or
achieve profitability. Even if we do achieve profitability, we may not be able
to sustain or increase profitability on a quarterly or annual basis. If we do
not achieve and maintain profitability, the market price for our common stock
may decline, perhaps substantially.
Limited Operating History
Due to our limited operating history, there is little information upon which to
base an evaluation of our business and prospects. Our prospects must be
considered in light of the risks, uncertainties, expenses and difficulties
frequently encountered by companies in their early stages of development. Some
of these risks and uncertainties relate to our ability to develop, market, sell
and support our IVR software, and to attract, retain and motivate qualified
personnel. We cannot be sure that we will be successful in addressing these
risks and uncertainties, and our failure to do so could have a materially
adverse effect on our financial condition and continued operations. In
addition, our operating results are dependent to a large degree upon factors
outside our control, including among other things, increased competition and the
acceptance and continued use of IVR technology. There are no assurances that we
will be successful in addressing these risks, and failure to do so may adversely
affect our business and financial condition.
Difficulties Associated With Growth Management
We may encounter difficulties in managing our growth, which could prevent us
from executing our business strategy. Our ability to achieve our planned growth
is dependent upon a number of factors including, but not limited to, our ability
to hire and retain suitable employees, the adequacy of our financial resources
and our ability to develop, market, sell and support our IVR software. Our
anticipated growth will likely place a significant strain on our resources. To
accommodate this growth, we must implement or upgrade a variety of operational
and financial systems, procedures and controls, including the improvement of our
accounting and other internal management systems. There can be no assurance
that we will be able to achieve our anticipated goals or that we will be able to
successfully manage our operations. Our systems, procedures and controls may
not be adequate to support our future operations. If we fail to improve our
operational, financial and management information systems, or to hire,
train, motivate or manage our employees, our business may be adversely affected.
Failure to manage anticipated growth effectively and efficiently could have a
materially adverse effect on us.
Acceptance of IVR Software
IVR software may not achieve widespread acceptance by businesses in general,
public transit and utility companies in particular or telecommunications
carriers, which could limit our ability to expand our business. The market for
IVR software is relatively new and is rapidly evolving. Our ability to generate
revenue in the future depends on the acceptance by both our customers and their
end users of our IVR software and IVR technology in general. The adoption of
IVR software could be hindered by the perceived costs of this new technology, as
well as the reluctance of enterprises that have invested substantial resources
in existing call centers to replace their current systems with this new
technology. Accordingly, in order to achieve commercial acceptance, we will
have to educate prospective customers, including large, established
telecommunications companies, about the uses and benefits of IVR software in
general and our IVR software in particular. If these efforts fail, or if IVR
software does not achieve commercial acceptance, our business could be harmed.
The continued and future development of the market for our IVR software is also
dependent upon:
- - the widespread deployment of IVR applications by third parties, which is
driven by consumer demand for services having an IVR component;
- - the demand for new uses and applications of IVR technology;
- - the adoption of industry standards for IVR and related technologies; and
- - continuing improvements in hardware technology that may reduce the costs
of IVR software solutions.
Technological Changes
The IVR and communications industry within which we operate is characterized by
rapid technological change. The development of new technology by our
competitors may render our IVR software technology obsolete. Competition in the
IVR technology industry is based largely upon technological superiority.
Accordingly, our success will depend upon our ability to continually enhance our
current IVR software products, to develop and introduce new products that keep
pace with technological developments and to address the changing needs of the
marketplace. Although we expect to devote significant resources to research and
development activities, there can be no assurance that these activities will
result in the successful development of new IVR technologies and IVR software
products or the enhancement of existing technologies and products. In addition,
there can be no assurance that the introduction of products, services or
technological developments by others will not have a materially adverse effect
on our operations.
Fluctuation of Quarterly Results
Our ability to accurately forecast our quarterly sales is limited, as a result
of which, our quarterly operating results may fluctuate significantly. We
expect that our results will vary significantly from quarter to quarter in the
future. These quarterly variations may be caused by a number of factors,
including:
- - delays in customer orders due to the complex nature of large telephony
systems and the associated implementation projects;
- - timing of product deployment and completion of project phases,
particularly for large orders;
- - delays in recognition of software license revenue in accordance with
applicable accounting principles;
- - our ability to develop, introduce, ship and support new and enhanced
products, such as new versions of our IVR software in response to changing
technology trends, in a timely manner, as well as our ability to manage product
transitions; and
- - the amount and timing of increases in expenses associated with our growth.
Due to these and other factors, and because the market for IVR software is new
and rapidly evolving, our ability to accurately forecast our quarterly sales is
limited. In addition, in the near future, most of our costs will be related to
personnel, facilities and research and development, which are relatively fixed
in the short term. If we do not generate significant revenue in relation to our
expenses, we may be unable to reduce our expenses quickly enough to avoid lower
quarterly operating results. We do not know whether our business will grow
rapidly enough to absorb the costs of our future employees and facilities. As a
result, our quarterly operating results could fluctuate and this fluctuation
could adversely affect the market price of our common stock in the future.
In addition, we expect to experience seasonality in the sales of our products.
For example, we anticipate that sales may be lower in the first quarter of each
year due to patterns in the capital budgeting and purchasing cycles of our
current and prospective customers. We also expect that sales may decline during
summer months, particularly in Asian and European markets. These seasonal
variations in our sales may lead to fluctuations in our quarterly operating
results. Because we have limited operating results, it is difficult to evaluate
the degree to which this seasonality may affect our business.
Effect of Lengthy Sales and Implementation Cycles
Our products often have long sales and implementation cycles and, as a result,
our quarterly operating results and our stock price may fluctuate. The sales
cycles for our IVR software products will likely range from three to eighteen
months, depending on the size and complexity of the order and the services that
we are to provide.
The purchase of our products requires a significant expenditure by a potential
customer; accordingly, the decision to purchase our products typically requires
significant pre-purchase evaluation. We may spend significant time educating
and providing information to prospective customers regarding the use and
benefits of our IVR software products. During this evaluation period, we may
expend substantial sales, marketing and management resources.
After purchase, the expenditure of substantial time and resources to implement
our software and to integrate it with the customer's existing systems may be
required. If we are performing significant professional services in connection
with the implementation of our software, we will not recognize software revenue
until after system acceptance or deployment. In cases where the contract
specifies milestones or acceptance criteria, we may not recognize services
revenue until these conditions are met. We may in the future experience
unexpected delays in recognizing revenue. Consequently, the length of the sales
and implementation cycles with respect to our IVR software and the varying order
amounts for our products make it difficult to predict the quarter in which
revenue recognition may occur and may cause license and services revenue and
operating results to vary significantly from period to period. These factors
could cause our stock price to be volatile or to decline.
Response to Rapid Changes in the IVR Software Market
In the event that we fail to respond to rapid changes in the market for IVR
software, we may experience a loss of revenues. The IVR software industry is
relatively new and rapidly evolving. Our success will depend substantially upon
our ability to enhance our existing products and to develop and introduce, on a
timely and cost-effective basis, new products and features that meet changing
end-user requirements and incorporate technological advancements. If we are
unable to develop new products and enhanced functions or technologies to adapt
to these changes, or if we cannot offset a decline in revenue from existing
products with sales of new products, our business would likely suffer.
Among other things, commercial acceptance of our products and technologies will
depend on:
- - the ability of our products and technologies to meet and adapt to the
needs of our target markets;
- - the performance and price of our products as compared to our competitors'
products; and
- - our ability to deliver customer service directly and through our
resellers.
Possibility of Software Defects
Any software defects in our products could harm our business and result in
litigation. Complex software products, such as the products that we offer, may
contain errors, defects and bugs. With the planned release of any product, we
may discover such errors, defects and bugs and, as a result, our products may
take longer than expected to develop. In addition, we may discover that
remedies for errors or bugs may not be technologically feasible. Delivery of
products with undetected production defects or reliability, quality, or
compatibility problems could damage our reputation. Errors, defects or bugs
could also cause interruptions, delays or a cessation of sales to our customers.
We may be required to expend significant capital and other resources to remedy
these types of problems. In addition, customers whose businesses are disrupted
by these errors, defects and bugs may bring claims against us which, even if
unsuccessful, would likely be time-consuming and could result in costly
litigation and the payment of damages.
Dependence on a Limited Number of Customers
We anticipate that we will depend on a limited number of customer orders for a
substantial portion of our revenue during any given period. Loss of, or delays
in, a key order could substantially reduce our revenue in any given period and
harm our business. Generally, customers who make large purchases are not
expected to make subsequent equally large purchases in the short term. As a
result, if we do not acquire a major customer, if a contract is delayed,
cancelled or deferred, or if an anticipated sale is not made, our ability to
generate revenue could be adversely affected.
International Operations
Sales to customers outside the United States and Canada may account for a
significant portion of our revenues in the future, which would expose us to
risks inherent in international operations. We would be subject to a variety of
risks associated with conducting business internationally, any of which could
have a materially adverse effect on our business. These risks include:
- - difficulties and associated with staffing and managing foreign operations;
- - difficulties in establishing and maintaining an effective international
reseller network;
- - the burden of complying with a wide variety of foreign laws, particularly
with respect to intellectual property and license requirements;
- - political and economic instability outside the United States;
- - import or export licensing and product certification requirements;
- - tariffs, duties, price controls or other restrictions on foreign
currencies or trade barriers imposed by foreign countries;
- - potential adverse tax consequences, including higher marginal rates;
- - unfavorable fluctuations in currency exchange rates; and
- - limited ability to enforce agreements, intellectual property rights and
other rights in some foreign countries.
In order to increase our international sales, we must develop localized versions
of our products. If we are unable to do so, we may be unable to increase our
revenue and execute our business strategy.
We intend to expand our international sales, which will require the investment
of significant resources to create and refine different language models for each
particular language or dialect. These language models are required to create
versions of our products that allow end users to speak the local language or
dialect and be understood and authenticated. If we fail to develop localized
versions of our products, our ability to address international market
opportunities and to develop our international business will be limited.
Industry Standards
If the standards that we employ are not adopted as the standards for IVR
software, businesses might not use our IVR software for delivery of applications
and services. The market for IVR software is new and emerging and industry
standards have not yet been firmly established. We may not be competitive
unless our products support changing industry standards. The emergence of
industry standards, whether through adoption by official standards committees or
widespread usage, could require costly and time consuming redesign of our
products. If these standards become widespread and our products do not support
them, our customers and potential customers may not purchase our products.
Multiple standards in the marketplace could also make it difficult for us to
insure that our products will support all applicable standards, which could in
turn result in decreased sales of our products.
Protection of Proprietary Technology
Any inability to adequately protect our proprietary technology could harm our
ability to compete. Our future success and ability to compete depends in part
upon our proprietary technology and our trademarks, which we attempt to protect
with a combination of patent, copyright, trademark and trade secret laws, as
well as with our confidentiality procedures and contractual provisions. These
legal protections afford only limited protection and may be time-consuming and
expensive to obtain and/or maintain. Further, despite our efforts, we may be
unable to prevent third parties from infringing upon or misappropriating our
intellectual property. Although we intend to file U.S. and Canadian patent
applications, we do not currently have any issued patents. There is no
guarantee that patents will be issued with respect to our current or future
patent applications. Any patents that are issued could be invalidated,
circumvented or challenged. If challenged, our patents might not be upheld or
their claims could be narrowed. Our intellectual property may not be adequate
to provide a competitive advantage or to prevent competitors from entering the
markets for our products. Additionally, our competitors could independently
develop non-infringing technologies that are competitive with, equivalent to,
and/or superior to our technology. Monitoring infringement and/or
misappropriation of intellectual property can be difficult, and there is no
guarantee that we would detect any infringement or misappropriation of our
proprietary rights. Even if we did detect infringement or misappropriation of
our proprietary rights, litigation to enforce these rights could cause us to
divert financial and other resources away from our business operations.
Further, we license our products internationally, and the laws of some foreign
countries do not protect our proprietary rights to the same extent as do the
laws of the United States and Canada.
Infringement by Us on Other Intellectual Property
Our products may inadvertently infringe upon the intellectual property rights of
others, and resulting claims against us could be costly and require that we
enter into disadvantageous license or royalty arrangements. The software
industry is characterized by the existence of a large number of patents and
frequent litigation based on allegations of patent infringement and the
violation of intellectual property rights. Although we attempt to avoid
infringing known proprietary rights of third parties, we may be subject to legal
proceedings and claims for alleged infringement of third-party proprietary
rights, such as patents, trade secrets, trademarks or copyrights, from time to
time in the ordinary course of business. Any claims relating to the
infringement of third-party proprietary rights, even if not successful or
meritorious, could result in costly litigation, divert resources and
management's attention or require that we enter into royalty or license
agreements which are not advantageous to us. In addition, parties making these
claims may be able to obtain injunctions, which could prevent us from selling
our products.
Cash Requirements
Our cash requirements for the period ending December 31, 2001 are estimated at
$1,000,000, in order to finance the continue research and development of our
ATIS software, and to finance an advertising and marketing campaign. We
currently have limited funds available, and anticipate that we will raise
additional capital through a private placement of our equity securities and/or
debt financing.
Research and Development
To date, we have not expended significant funds on research and development. We
anticipate that we will spend approximately $350,000 on research and development
(including the continued development of our ATIS software) through December 31,
2001.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment through December 31,
2001.
Employees
Over the twelve months ending December 31, 2001, we anticipate an increase in
the number of employees we retains, as we intends to hire one qualified
accountant, one person to perform clerical and administrative tasks, two
software engineers and two sales and marketing personnel.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We know of no material, active or pending legal proceedings against us, nor are
we involved as a plaintiff in any material proceedings or pending litigation.
There are no proceedings in which any of our directors, officers or affiliates,
or any registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our interest.
ITEM 2. CHANGES IN SECURITIES.
We did not issue any securities during the quarter ended December 31, 2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Reports on Form 8-K
We did not file any reports on Form 8-K during the quarter ended December 31,
2000.
Financial Statements Filed as a Part of the Quarterly Report
Our unaudited financial statements include:
Balance sheet
Statement of Operations and Accumulated Deficit
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to the Financial Statements
Exhibits Required by Item 601 of Regulation S-B
Exhibit Description
Number
(3) Articles of Incorporation and By-laws:
3.1 Articles of Incorporation effective February 26, 1998 (incorporated
by reference from the Company's Form 10-SB, filed on October 4, 2000)
3.2 By-Laws effective February 26, 1998 (incorporated by reference from
the Company's Form 10-SB, filed on October 4, 2000)
3.3 Certificate of Amendment of Articles of Incorporation, filed March
27, 2000 (incorporated by reference from the Company's Form 10-SB, filed on
October 4, 2000)
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MCC TECHNOLOGIES, INC.
By: /s/ Lael Todesco
Lael Todesco, President/Director
Date: February 6, 2001
By: /s/ Peter Thompson
Peter Thompson, Secretary/Treasurer/Director
Date: February 8, 2001