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This interview is a small excerpt from a comprehensive interview published in The Wall Street Transcript as part of the Technology Sector, available at (001-212-952-7433) or http://www.twst.com/sectors/techno.html

TWST: Can you begin with a brief overview and historical sketch of the company?

Mr. Gehlert: The Company was founded in 1984, and is listed on the stock market "Neuer Markt" in Germany. Our headquarters is in Alsdorf near Aachen and we have subsidiaries in Waldorf, right next to the headquarter of SAP. We have a subsidiary in France right around the corner of Alcatel and NextiraOne. Moreover, we have a subsidiary in Stuttgart very close to NextiraOne Germany and we also have a small development department in the US. We are currently employ about 177 employees. Our targeted revenue for this year is approximately €14 million up from €10.8 million last year. Our targeted EBIT for this year will be approximately minus €2 million. However, we are going to be profitable in the fourth quarter of this year, that's for sure. The product we sell is a unified communication product suite. We are the number one supplier in Europe. Unified communication means that you basically have one software platform that provides you with all applications for your communication needs. That means we deliver on one single CD one software platform that can be installed on one single server in order to cover everything from simple unified messaging and short message service over CTI to call center (incl. Skill based routing functionality). The same platform can also be used as communication middleware for customer relationship management systems, like mySAP.com CRM module from SAP. The key differentiator of our software is the fact that midsize and large enterprise customers just need to buy one single software platform. The total cost of ownership for such a software application is extremely low. Just one single point of administration for Unified Messaging, Computer Telephony and the Call Center applications and just one supplier for support issues. We are focusing on the midsize to the fortune 100 companies. References are DaimlerChrysler, BMW, the German government, the European government in Bruxelles, the United Nations, and of course, SAP. The SAP headquarters and various subsidiaries use our application. It is not just an application in one minor subsidiary; our software is in the core, in the heart of the communication infrastructure of our customers. SAP's unified voice mail is a Cycos product, their unified fax service is a Cycos product, their CTI functionality for Outlook is a Cycos product and the SMS functionality is a Cycos product; it's all on the same server platform. In the sales channel we are focusing mostly on the PBX vendors; PBX vendors of the telecommunication infrastructure to corporate customers. Our direct customers therefore are Siemens, Alcatel, NextiraOne, Philips, Tenovis, Deutsche Telekom, Nortel and Lucent. So these renowned companies resell our products to their corporate customers. Siemens for example is selling our product worldwide under the brand Xpressions as a Unified Messaging System and under the brand AllServe as a call center and unified communication suite. Both products are developed in our laboratory. Another sales channel is the SAP CRM consultants. Between the SAP CRM module and the PBX you need to have a communication middleware which links both applications. The Cycos product is the only product worldwide that is certified by SAP and the PBX vendors and is able to deliver a Multichannel Communication Middleware as well as CTI and Unified Messaging on one single software platform. Of course we are also selling to call center vendors, to specialized value added re-sellers that are in the field of unified communication.

TWST: Can you identify some highlights from your balance sheet?

Mr. Gehlert: First of all the recession in the telecommunication infrastructure market has impacted us pretty badly; we had not achieved any significant growth last year in our core markets. However, we have signed significant sales contracts with big OEM partners. Subsequently we have built up our R&D department. Since the sales have been lacking behind a little bit, mainly due to the recession, this has led to an unsatisfying EBIT situation today. We started a program that has been focusing on cost reduction by centralizing our organization and streamlining our sales organization. Profitability will be the objective for the fourth quarter. If you look at our key financial figures you see that we have a shareholders' equity of more than €37 million, that equals a share price of 4,9 € and we have a cash position of €27 million, which equals a share price of 3,5 €. Now compare this with our current stock market capitalization of less than € 25 million. With the profitability in the fourth quarter I expect our share price to rise significantly. We have sufficient liquidity in our bank accounts in order to bridge this recession, which is still prevalent in the European market place. We will be strengthened after the recession is over.

TWST: Do you feel that the investment community has any misconceptions about Cycos?

Mr. Gehlert: I think one of the misconceptions is that the financial community today does not really understand why we have still not adapted our cost structure to our actual sales-revenue volume. One of the major reasons is the excellent OEM contract with Siemens, with an expected revenue of € 50 million within the next 5 years. This contract requires a major investment into our technology platform. This has impacted our EBIT and we did communicate this last year very clearly. The investor needs to understand that this is an investment into the future of Cycos. After the recession is over we will be the technology supplier in Europe for unified communication technology.

TWST: What is the essential message of the company you would like to communicate to potential investors?

Mr. Gehlert: It's very simple. Firstly, we are traded at around 3.0 Euro per share today, although our cash positioning equals 3.5 Euro per share. Secondly, our shareholders capital equals 4.9 Euro per share, and last but not least, our technology is an enabling technology for Siemens, for SAP and for many others, such as Alcatel and NextiraOne. For these players our technology will be worth at least 40 million Euro when the recession is over, because it's an enabling technology. Without such a technology you are not able to sell PBX in the future. The target price for our share will be € 10. Since we are going to be profitable in the fourth quarter of this year, you will see that our stock will rise very much into this region.

TWST: Thank-you (SM).

Tickers included in this excerpt: 770020.DE

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This interview is a small excerpt from a comprehensive interview published in The Wall Street Transcript on 06/26/02. For more information call (212) 952 7400. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.

Copyright 2002, Wall Street Transcript Corp.

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