NOTICE OF ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD
July 30, 1998
at
The Grand Floridian Beach Resort
Walt Disney World
Orlando, Florida
To The Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the shareholders of DCI
Telecommunications, Inc. (the "Company") will be held at the Grand
Floridian Beach Resort, Walt Disney World, Orlando, Florida on July 30,
1998 at 9:00 a.m. local time to hear a report on the condition of the
Company from the Chief Executive Officer of the Company and to vote on the
following proposals recommended by the Board of Directors for approval:
(1) To elect five directors to serve until the next Annual Meeting of
shareholders
(2) To ratify the selection of Schnitzer & Kondub, Certified Public
Accountants, as the Company's independent public accountants for the
coming year
(3) To transact such other business as may properly come before the
meeting
The Board of Directors has fixed the close of business on June 11, 1998 as
the record date for the determination of shareholders entitled to notice of
and to vote at the meeting. Only holders of the Company's common stock at
the close of business on the record date are entitled to vote at the
meeting.
Adoption of the proposals will require the affirmative vote of a majority
of the Common Stock voting on the proposal.
You are cordially invited to attend the meeting in person. However, whether
you plan to attend or not, we urge you to complete, date, sign, and return
the enclosed proxy promptly in order that as many shares as possible may be
represented at the meeting.
A copy of the Company's Annual Report to Shareholders is enclosed.
BY ORDER OF THE BOARD OF DIRECTORS
_______________________________________
Joseph J. Murphy, President
Stratford, Connecticut
June 30, 1998
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DCI Telecommunications
611 Access Road
Stratford, CT 06615
Annual Meeting - July 30, 1998
June 30, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of shareholders of
DCI Telecommunications, Inc. to be held on Thursday July 30, 1998 at 9:00
a.m., at the Grand Floridian Beach Resort, Walt Disney World, Orlando,
Florida.
In addition to the specific matters to be voted on at the meeting, there
will be a report on the Company's business and an opportunity for
shareholders to ask questions. I hope you will be able to join us. If you
are unable to attend, I strongly urge you to complete your enclosed proxy.
Your vote is very important.
Sincerely,
Joseph J. Murphy
President
<PAGE>
DCI Telecommunications, Inc.
Proxy Statement for Annual Meeting of Shareholders
Information concerning Solicitation and Voting
General
The enclosed Proxy is solicited on behalf of DCI Telecommunications, Inc.
(the "Company")for use at the Annual Meeting of shareholders to be held
Thursday, July 30, 1998 at 9:00a.m. local time for the purposes set forth
herein and in accompanying Notice of Annual Meeting of shareholders. The
Annual Meeting will be held at the Grand Floridian Beach Resort, Walt
Disney World, Orlando, Florida.
These proxy solicitation materials are being mailed on or about July 10,
1998 together with the Company's Annual Report to all shareholders entitled
to vote at the meeting.
Record Date and Principal Shareholders
Holders of record of Common Stock at the close of business on June 11, 1998
are entitled to notice of and to vote at the meeting. There are no other
outstanding voting securities of the Company. At the record date,
19,770,793 shares of the Company's Common Stock were issued and
outstanding. The following table sets forth, as of the most recent
practical date (June 11, 1998), those persons known to the Company to be
the beneficial owners of more than 5% of the Company's Common Stock:
Amount and Nature Percent of
Name of Beneficial Ownership Class
Joseph J. Murphy 2,771,836(1) 12.30%
Donald Gross 1,750,533 8.85%
Stephen Gross 1,750,533 8.85%
Whyteburg Limited 1,249,831 6.32%
(1) Includes 572,727 shares which the beneficial owner and 469,090 shares
which Grace Murphy, the beneficial owner's spouse, have the right to
acquire pursuant to options which are exerciseable within sixty days.
Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act")
requires the Company's officers and directors, and persons who own more
than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than 10%
shareholders are required by certain regulations to furnish the Company
with copies of all Section 16(a) forms they file.
<PAGE>
Based solely on its review of the copies of such forms received by it, the
Company believes that during its most recent fiscal year or prior fiscal
years, all filing requirements applicable to its officers, directors, and
greater than 10% beneficial owners were complied with.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or duly executed proxy bearing a later date or by
attending the meeting and voting in person.
Voting and Solicitation
In accordance with the Company's by-laws, directors shall be elected by the
affirmative vote a plurality of the votes cast in person or by proxy by the
holders of shares entitled to vote in election at the Annual Meeting of
shareholders, and the ratification of Schnitzer and Kondub as independent
auditors shall be by the affirmative vote of the majority of the shares
voting on the proposal in person or by proxy at the Annual Meeting; in each
case, provided a quorum is present. Thus, abstentions and broker non-votes
will not be included in vote totals and will have no effect on the outcome
of the vote. No shareholder shall be entitled to cumulate votes.
The cost of soliciting proxies will be borne by the Company. Proxies may
be solicited by certain of the Company's directors, officers and regular
employees, without additional compensation, personally or by telephone,
telegram or letter. Also, the Company has engaged Morrow & Co. to provide
certain services in connection with the solicitation of the proxies.
Deadline for Receipt of Shareholder Proposals
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at next year's Annual Meeting must be received by the
Company by no later than March 24, 1999 in order that they may be
considered for inclusion in the proxy statement and form of proxy relating
to that meeting.
<PAGE>
PROPOSAL NO. 1
NOMINATIONS FOR ELECTION AS DIRECTORS
Nominees
A Board of five directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by
them for the Company's five nominees named below. In the event that any
nominee of the Company is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the present Board of directors to fill the vacancy.
The Company is not aware of any nominee who will be unable or decline to
serve as a director. The term of office of each person elected as a
director will continue until the next Annual Meeting of shareholders or
until a successor has been elected and qualified.
The names of the nominees, and certain information about them, are set
forth below.
Director Amount and Nature Percent of
Name Age Since of Beneficial Ownership(a)* Class
John J. Adams 59 1995 253,840 1.3%
Vice President Marketing DCI Telecommunications, Inc. In addition, Mr.
Adams is Vice President for R&D Scientific Corp. and founder and President
of Validation Services Corp. These companies are providers of computerized
regulatory compliance devices and services to the pharmaceutical industry.
Mr. Adams was previously President of Prevent Chemicals, Ltd., a publicly
traded manufacturer of specialty chemicals.
Carter H. Hills 67 1995 187,167 1.0%
Retired diplomat. Extensive experience in economic development and
management planning under auspices of Department of State and major
international organizations. Directed such programs in countries of Near
East and Vietnam. Served as financial adviser and delegate for U.S. at key
international conferences.
Joseph J. Murphy 59 1995 2,771,836 12.3%
President and CEO of DCI Telecommunications. Prior to that he was executive
vice president, member of the Board of Directors, and chief financial
officer for Aquarion, a New York Stock Exchange Company. Formerly, he was
an officer in the United States Marine Corps (1961-64), a member of Price
Waterhouse and chief financial officer for Connecticut Energy Corp. He was
a member of the Board of Directors of Boys/Girls Club of Bridgeport and
served on the Economic advisory board for Fairfield University and Sudden
Death Syndrome (SIDS) for Fairfield County. Presently, he is a member of
the FBI/Marine Corps Association.
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Larry Shatsoff 44 1995 526,545 2.6%
Vice President and Chief Operations Officer of DCI Telecommunications.
Within the past five years he has been vice president and chief operations
officer for Alpha Products. Prior to that, he was executive vice president
of Kalon Systems (a data processing services company), manager of
information systems for Aquarion, a New York Stock Exchange Company.
Expertise in required tariffs, telecommunications and computer systems
software.
Lois S. Morris 47 1997 21,336 .001%
Lois S. Morris is Chief Executive Officer of The Travel Source Limited. She
has 25 years experience in the travel industry in direct sales, conference
planning, incentive groups, special interest groups and direct marketing.
Ms. Morris in on the Board of Directors of the Ocean State Business School,
a member of the Town of Richmond, Rhode Island Economic Development
commission and a volunteer for the Educational Mentor Program in Rhode
Island.
All directors and executive
officers as a group 4,439,359(a) 19.9%
Notes:
(a) Included in shares owned above are shares which the beneficial owner
has the right to acquire from options within sixty days as follows: J.
Murphy, 572,727 shares; L. Shatsoff, 454,545 shares; J. Adams, 224,090
shares; C. Hills, 152,272 shares
* Shares beneficially owned directly or indirectly
The Board of directors urges shareholders to vote "FOR" each of the
nominees for directors set forth above.
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Schnitzer & Kondub, 550
Mamaroneck Avenue, Suite 102A, Harrison, NY 10528 as its independent public
accountants for 1999. In accordance with a resolution of the Board of
Directors, this selection is being presented to shareholders for
ratification at the Annual Meeting.
If the foregoing proposal is not approved by the shareholders or if, prior
to the 1998 Meeting, Schnitzer & Kondub shall decline to act or otherwise
become incapable of acting, or if its employment shall be otherwise
discontinued by the Board of Directors, then the Board of Directors will
appoint other independent public accountants whose employment for any
period subsequent to the 1998 Annual Meeting will be subject to
ratification by the shareholders at the meeting.
The Company has been advised that representatives of Schnitzer & Kondub
will be present at the meeting with the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate
questions. Schnitzer & Kondub audited the Company's financial statements
for the years ended March 31, 1996, 1997 and 1998.
The Board of Directors recommends a vote "FOR" ratification of the
selection of Schnitzer & Kondub as independent accountants.
Board Meetings and Committees
The Board of Directors of the Company held 14 meetings during the period
April 1, 1997 to March 31, 1998. All of the then incumbent directors
attended all such meetings except for Paul Bettencourt and Lois Morris.
Mr. Bettencourt missed ten meetings and Ms. Morris missed three during the
period which they were appointed a director.
In January, 1995 the Board of Directors established a Compensation
Committee, a Nomination Committee and a Finance Committee. In July, 1997
an Executive Committee was formed. Larry Shatsoff, an executive officer of
the Company, is chairman of the Compensation Committee, Joseph J. Murphy is
the chairman of the Nomination and Executive Committees and the Finance
Committee chairman is Carter H. Hills. All three committees met once
during the year ended March 31, 1998.
Employment Agreements
The Company entered into an employment agreement dated as of June 10, 1998
with Joseph J. Murphy pursuant to which Mr. Murphy renders services to the
Company as its President and Chief Executive Officer for an annual base
salary of $150,000. The agreement carries a severance package worth a
minimum of two years salary.
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The Company also entered into an employment agreement dated June 10, 1998
with Larry Shatsoff pursuant to which Mr. Shatsoff renders services to the
Company as its Vice President and Chief Operating Officer, for an annual
base salary of $100,000. The agreement carries a severance package worth a
minimum of two years salary.
The Company also entered into an employment agreement dated March 25, 1997
with Lois S. Morris pursuant to which Ms. Morris renders services to The
Travel Source, a subsidiary of the Company, as its CEO, for an annual base
salary of $39,000.
Executive Compensation and Compensation of Directors
The following tables set forth for the fiscal year ended March 31, 1998,
certain information regarding the total remuneration paid and grants of
options/SARs made to the chief executive officer and each of the executive
officers of the Company and its subsidiaries and who received total cash
compensation in excess of $100,000 during the period. These amounts
reflect total cash compensation paid by the Company and its subsidiaries to
these individuals during the fiscal years March 31, 1998, 1997, and 1996.
Summary Compensation Table
Long-Term Compensation
Awards Payouts
Securities
Annual Compensation Underlying All Other
Name and Salary Other Annual Options/SARs Compensation
Principal Positions Year ($) Compensation (#) ($)
- ------------------- ---- ------- ------------ ------------ ------------
Joseph J. Murphy 1996 100,000 5,872
President, CEO, 1997 100,000 600,000
Chairman and 1998 115,000 172,727
Director
Aggregated Options /SAR Exercised in Last Fiscal Year
and FY-End Option/SAR Values
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
at FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- -------- -------------- ------------ ------------- -------------
Joseph J.
Murphy - - 772,727 $1,156,091
<PAGE>
Option/SAR Grants in Last Fiscal Year
% of Total
Options/SARs Exercise or
Options/SARs Granted to Employees Base
Name Granted (#) in Fiscal Year Price ($/Sh) Exp Date
- ---------------- --------- -------------------- ------------ --------
Joseph J. Murphy 72,727 4.7 $1.375 6/16/02
100,000 10.1 $1.75 9/08/02
The Company's current policy is to pay outside directors (non-executive
officers) who are not contractually entitled to be nominated to serve as
directors, annual fees of 70 shares of Common Stock.
Other Matters
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed proxy to vote the shares they represent
as the Board of Directors may recommend.
It is important that your shares be represented at the meeting, regardless
of the number of shares you hold. You are, therefore, urged to execute and
return, at your earliest convenience, the accompanying proxy card in the
stamped, self-addressed envelope which has been enclosed.
By Order of the Board of Directors
Dated: June 30, 1998
