DCI TELECOMMUNICATIONS
611 Access Road
Stratford, CT 06615
(203) 380-0910
================================================================
November 19, 1999
Securities and Exchange Commission
Attn: Document Control
Judiciary Plaza
450 Fifth Street, N.W.
Room 1004 1-4
Washington, DC 20549
RE: DCI Telecommunications, Inc.
Dear Sir/Madam:
Enclosed is Form 10QSB for the period ending September 30, 1999
Sincerely,
/s/Joseph J. Murphy
- ----------------
Joseph J. Murphy
Chairman & CEO
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10 - QSB
QUARTERLY REPORT UNDER REGULATION SB OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number:
September 30, 1999 2-96976-D
- ----------------------- ------------------
DCI TELECOMMUNICATIONS, INC.
------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
COLORADO 84-1155041
--------------- -----------------------
(State or other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
611 Access Road, Stratford, Connecticut 06615
-------------------------------------------------------------
(Address and zip code of principal executive offices)
(203) 380-0910
-----------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
by Regulation SB of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to the filing requirements for at least the
past 90 days.
YES __X__ NO_____
Indicate the number of shares outstanding of each of the issuer/s classes of
common stock, as of the last practicable date:
Number of Shares Outstanding Class Date
- ---------------------------- ------- ----------
30,090,759 Common Stock, September 30, 1999
$.0001 par value
<PAGE>
DCI TELECOMMUNICATIONS, INC.
Index
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheet September 30, 1999 ................................... 3
Statements of Operations
Six Months Ended September 30, 1999 and 1998 ...................... 5
Three Months Ended September 30, 1999 and 1998 ..................... 5
Statements of Cash Flow
Six Months ended September 30, 1999 and 1998 ...................... 7
Notes to Unaudited Financial Statements
September 30, 1999 ................................................ 9
ITEM 2
Management's Discussion and Analysis or
Plan of Operations ................................................ 11
PART II
Other Information .................................................. 18
Signatures ......................................................... 20
2
<PAGE>
DCI Telecommunications, Inc.
Consolidated Balance Sheet
(unaudited)
September 30,
ASSETS 1999
----
Current assets:
Cash $ 1,276,272
Accounts receivable, net 3,308,026
Other current assets 221,917
Inventory 234,863
Due from shareholders 78,661
---------
Total Current Assets 5,119,739
Fixed assets 1,582,076
Less: Accumulated depreciation (188,035)
---------
Net Fixed Assets 1,394,041
Accounts receivable- long term 724,713
Deposits 172,865
Other assets 219,489
Cost in excess of assets acquired
Travel Source 86,379
Muller Media 1,634,436
Edge Communications 6,940,976
----------
8,661,791
Less: Accumulated amortization: (599,429)
----------
Net cost in excess of assets acquired 8,062,362
----------
Total Assets $15,693,209
===========
3
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY September 30
1999
Current Liabilities: ----
Accounts payable and accrued expenses $ 6,996,465
Preferred stock dividend 838,220
Due to shareholders 169,278
Deferred revenue-prepaid phone cards 175,950
Current portion of long term debt 75,997
Capital lease payable 289,828
Short term note payable 172,500
----------
Total Current Liabilities 8,718,238
Long-term debt 1,781,314
Accounts payable 927,767
Capital lease payable 558,031
Redeemable, convertible preferred stock,
$1,000 par and redemption
value, 2,000,000 shares authorized,
2202 shares issued & outstanding 2,202,500
----------
Total Liabilities 14,187,850
----------
Commitments and Contingencies
Common stock, $.0001 par value,
500,000,000 shares authorized,
30,090,759 shares issued and outstanding 3,009
Paid-in capital 33,095,113
Treasury stock (1,356,547 shares at cost) (1,127,439)
Accumulated deficit subsequent to 12/31/95,
date of quasi-reorganization (total
deficit eliminated $4,578,587) (30,465,324)
-----------
Total Shareholders' Equity 1,505,359
-----------
Total Liabilities and Shareholders' Equity $15,693,209
===========
See accompanying notes to consolidated
financial statements.
4
<PAGE>
DCI Telecommunications, Inc.
Consolidated Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
Sales - travel $ 352,366 $ 286,760 $ 649,983 $ 617,822
Sales - products 2,126,633 10,687,898 8,318,475 15,287,674
--------- ---------- --------- ----------
Net sales 2,478,999 10,974,658 8,968,458 15,905,496
Cost of sales - travel 328,485 280,055 571,243 564,949
- product 2,293,264 9,564,454 9,145,131 13,670,437
--------- --------- --------- ----------
Cost of sales 2,621,749 9,844,509 9,716,374 14,235,386
Gross profit (loss) (142,750) 1,130,149 (747,916) 1,670,110
Selling, general and
administrative expenses 350,564 689,943 939,366 1,052,350
Salaries and
compensation 499,207 662,945 1,056,099 1,162,133
Professional and
consulting fees 752,930 102,431 1,089,286 424,316
Amortization and
Depreciation 925,767 206,195 1,859,181 431,417
--------- --------- --------- ----------
2,528 468 1,661,514 4,943,932 3,070,216
Loss before other (2,671,218) (531,365) (5,691,848) (1,400,106)
(expense) income
Other income and (expense):
Loss on master service
agreement (13,321,093) -- (13,321,093) --
Gain on dissolution -
Foreign subsidiary 1,446,399 -- 1,446,399 --
Investment income 72,700 24,746 151,629 42,933
Interest expense (1,409,181) (1,970) (1,414,890) (78,962)
----------- --------- ---------- ---------
(13,211,175) 22,776 (13,137,955) (36,029)
5
<PAGE>
Loss from continuing operations
before minority
interest (15,882,393) (508,589)(18,829,803) (1,436,135)
Minority interest -- 15,214 -- 12,001
------------ ------- ----------- ----------
Loss from continuing (15,882,393) (493,375)(18,829,803) (1,424,134)
operations
Discontinued operations
Loss from discontinued
CyberFax operations
(net of applicable income
tax benefit of $0 in 1998) -- (148,692) -- (232,852)
----------- -------- ---------- ----------
Net loss before (15,882,393) (642,067) (18,829,803)(1,656,986)
dividends on preferred
stock
Dividends on preferred
stock (44,070) (312,400) (90,120) (856,351)
---------- ------- ---------- ----------
Net loss applicable to
common shareholders $(15,926,463) $(954,467)$(18,919,923)$(2,513,337)
========== ======= ========== =========
Basic and diluted net loss per common shares:
Loss from continuing
operations $(0.53) $ (0.03) $ (0.63) $(0.12)
Loss from discontinued
operations -- $ (0.01) -- $(0.01)
------ ------- ------- -------
Net loss per common
share - basic and diluted $(0.53) $ (0.04) $ (0.63) $(0.13)
====== ======= ======= =======
Weighted average common
shares outstanding -
basic and diluted 29,950,166 21,563,583 29,870,015 19,550,438
See accompanying notes to consolidated
financial statements.
6
<PAGE>
DCI Telecommunications, Inc
Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended
September 30
1999 1998
---- ----
Reconciliation of net loss to
net cash used in operating activities:
Net loss from continuing operations $ (18,829,803) $(1,424,134)
---------- ----------
Adjustments to reconcile net loss from
continuing operations to net cash
used in operating activities:
Amortization and depreciation 1,859,181 431,701
Discontinued operations (232,852)
Minority interest -- 12,001
Loss on master service agreement 13,321,093 --
Gain on foreign subsidiary
dissolution (1,446,399) --
Accrued interest converted to note 1,348,605 --
Changes in assets and liabilities:
(Increase) Decrease in:
Restricted cash ---- 25,771
Accounts receivable (2,806,153) (1,682,884)
Inventory (115,030) (936,083)
Deposits 51,242 (27,344)
Prepaid expenses -- (434,561)
Other current assets 162,528 --
Increase (Decrease):
Accounts payable & accrued expenses 5,834,194 527,483
Deferred revenue (91,993) 440,109
Current portion of long term debt 3,405 --
----------- ---------
Total adjustments: 18,120,673 (1,876,659)
------------ ----------
Net cash used in operating activities ( 709,130) (3,300,793)
------------ ----------
Cash flows from investing activities:
Additions to fixed assets (152,276) (475,495)
Cash acquired with acquisitions ---- 1,548,947
Investment in Muller Media -- (2,000,000)
Increase in long term assets (61,377) --
---------- -----------
Net cash used in investing activities (213,653) (926,548)
---------- -----------
7
<PAGE>
Cash flows from financing activities:
Proceeds from stock
options exercised 51,275 432,007
Purchase of treasury stock -- (355,318)
Payment of notes payable (300,000) (4,938,942)
Increase in long term debt -- 101,320
Proceeds from sale of preferred
stock -- 2,750,000
Due to joint venture -- 677,076
Due to shareholders (26,027)
Advances from shareholders 8,775 (368,058)
Proceeds from issuance
of notes payable 872,500 --
Payment of long-term debt (38,654) --
Sale of equity securities -- 8,124,761
Common dividend -- (203,962)
--------- ----------
Net cash from financing activities 567,869 6,218,884
---------- ----------
Net (decrease) increase in cash (354,914) 1,991.543
Cash, beginning of period 1,631,186 704,991
--------- -----------
Cash, end of period $1,276,272 $ 2,696,534
--------- -----------
Supplemental disclosures of cash flow information:
Cash paid for interest $ 64,000 $ 91,000
========= ==========
Non-cash investing and financing transactions:
Acquisitions by stock
Edge Communications $ -- $ 6,823,586
====== =========
Preferred stock dividends $ 90,120 $ 856,351
====== =========
Stock issued for other assets $ 40,000 $ --
====== =========
Assets acquired by lease $705,757 $ --
======= =========
See accompanying notes to consolidated
financial statements.
8
<PAGE>
DCI Telecommunications, Inc.
Notes to Unaudited Consolidated Financial Statements September 30, 1999
NOTE 1.
- -------
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the provisions of Regulation SB. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Certain restatements of prior year
numbers have been made to conform to the current years presentations and to
account for discontinued operations.
The consolidated financial statements include the accounts of the Company and
its wholly and majority owned subsidiaries. Material inter-company balances and
transactions have been eliminated in consolidation.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. The accompanying
financial statements should be read in conjunction with the Company's form
10-KSB filed for the year ended March 31, 1999.
Loss per share was computed using the weighted average number of common shares
outstanding.
NOTE 2. Common and Preferred Stock
- -----------------------------------
In April 1998, the Company issued $3,000,000 of Series F 8% non-voting
convertible preferred shares. The shares were convertible to common stock 90
days from the issue date at the lesser of 75% of the average closing bid price
of the common stock for the ten days prior to conversion or $4 per share. The
securities were to be converted into common shares within two years of the issue
date. In connection with this offering 50,000 warrants exercisable at $1.56 for
a period of five years from the issue date were granted to these preferred
shareholders and 50,000 warrants, at the same terms, were granted to certain
individuals as finder fees for the placement of the preferred shares with the
investors.
During the six months ended September 30, 1999, $110,000 of preferred shares of
Series F Convertible Preferred Stock were converted to 246,777 common shares.
Interest and penalties associated with the Series F preferred stock, were
included in new notes issued in November 1999. (see Note 6-Subsequent Event-
Financing)
In addition, options to purchase 2,200 common shares were exercised.
9
<PAGE>
NOTE 3. Capital Lease
- ----------------------
In the quarter ended June 30, 1999 the Company entered into a commitment to
lease from Harris Digital Telephone Systems a debit card platform and switching
equipment valued at $806,287. The Company advanced $100,000. Monthly lease
payments of $24,152 are expected to commence in November 1999. The lease term is
thirty-six months after which DCI can buy the switch for $1. The lease has been
recorded as a capital lease.
NOTE 4. DCI Europe Limited
- --------------------------
On September 1, 1999, DCI Europe Limited (a subsidiary of DCI and since renamed
Gloucester Communications Limited) which had been served an Involuntary Winding
Up Order was placed in liquidation. At September 30, 1999, the remaining assets
and liabilities were written off, resulting in a $1,446,399 gain.
NOTE 5. Master Service Agreement Write Off
- ------------------------------------------
As more fully described in the footnotes to the financial statements in the
March 31, 1999 Form 10K, on December 3, 1998 the Company and IXC Communications
Inc, entered into a stock acquisition agreement whereby IXC received 3,750,000
shares of DCI common stock in return for a Master Service Agreement valued at $
15,671,875. The agreement was to provide DCI with most favorable rates, a credit
line and co-location of equipment and other shared facilities in addition DCI
was to receive switch equipment from a third party as part of a different but
related agreement.
As of September 30, 1999, the Company believes it has not received rates which
are competitive, has not received the switching equipment, and has suspended all
business with IXC. As a result, the company has written off the remaining
unamortized investment totaling $ 13,321,093.
Note 6. Subsequent Event - Financing
- -----------------------------------
On November 12, 1999, the Company received $1,000,000, as part of a new
financing package. An existing loan of $400,000, interest and penalties
associated with the Series F Preferred Stock totaling $ 1,348,605, and the new
$1,000,000 proceeds advanced, are all included in new five year notes with
interest at six percent per annum. The lenders have various methods of
redemption to choose from, including cash from VAT refunds from the United
Kingdom, proceeds from the sale of Muller Media if any, and conversion into DCI
common stock at $0.25 per share subject to certain conditions.
10
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview
- --------
The following discussion and analysis provides information that management
believes is relevant to an assessment and understanding of DCI
Telecommunications, Inc. and its subsidiaries (collectively, the Company),
consolidated results of operations and financial condition for the six months
ended September 30, 1999. The discussion should be read in conjunction with the
Company's consolidated financial statements and accompanying notes.
The Company, since its recent acquisitions, operates predominantly in the
telecommunications industry providing a broad range of communication service.
The Company's services include long distance telephone service, prepaid phone
cards, motion picture distribution and a travel agency. Through continued
investments and business acquisitions, the Company is expanding its business
into rapidly developing markets in Europe.
Recent Acquisitions and Dispositions
- ------------------------------------
CYBERFAX, INC.
- --------------
On March 30, 1999, DCI Telecommunications sold all of the outstanding shares of
common stock of its subsidiary CyberFax, Inc. to Carlyle Corporation, a Nevada
corporation. DCI received a $5,000,000 promissory note from Carlyle that was
payable on March 30, 2000, and bore interest at 9%, paid and compounded
quarterly.
In June 1999, with the agreement of DCI and some modifications of the agreement,
Carlyle assigned all its rights and obligations to SmartFax, Inc., a private
Canadian corporation. At the closing, SmartFax paid off its promissory note by
issuing 5,000,000 shares of its common stock to DCI. No value has been placed on
the SmartFax shares and no revenue or profit has been recorded. It is expected
that SmartFax will attempt an initial public offering in the future.
CyberFax had sales of $48,145 and operating losses of $404,010 in fiscal year
end March 31, 1999 before discontinuance of operations. A loss of $1,098,228 was
recorded on this transaction at March 31, 1999.
11
<PAGE>
DCI Europe Limited
- ------------------
On September 1, 1999, DCI Europe Limited (a subsidiary of DCI and since renamed
Gloucester Communications Limited) which had been served an Involuntary Winding
Up Order was placed in liquidation. At September 30, 1999, the remaining assets
and liabilities were written off, resulting in a $1,446,399 gain.
Master Service Agreement Write Off
- ----------------------------------
As more fully described in the footnotes to the financial statements in the
March 31, 1999 Form 10K, on December 3, 1998 the Company and IXC Communications
Inc, entered into a stock acquisition agreement whereby IXC received 3,750,000
shares of DCI common stock in return for a Master Service Agreement valued at $
15,671,875. The agreement was to provide DCI with most favorable rates, a credit
line and co-location of equipment and other shared facilities in addition DCI
was to receive switch equipment from a third party as part of a different but
related agreement.
As of September 30, 1999, the Company believes it has not received rates which
are competitive, has not received the switching equipment, and has suspended all
business with IXC. As a result, the company has written off the remaining
unamortized investment totaling $ 13,321,093.
Liquidity and Capital Resources
- -------------------------------
At September 30, 1999 the Company had unrestricted cash of approximately
$1,276,000. Net cash declined $355,000 during the last six months. Cash used in
operating activities approximated $710,000 and cash invested in fixed assets
totaled $152,000.
The Company supported those needs by raising $872,500 from the issuance of
notes, of which $300,000 was paid back by September 30.
The write off of the Master Service Agreement, of $13,321,000, the interest and
penalties on the Series F Preferred Stock and the $1,446,000 gain on dissolution
of DCI Europe were non-cash transactions and had no impact on liquidity.
In November 1999, the Company raised $1,000,000 in debt financing (See Note 6).
The Company is planning on further expansion in Europe and the ability of the
Company to finance all new and existing operations will be heavily dependent on
external sources. No assurance can be given that additional financing will be
available or, if available, will be on acceptable terms.
12
<PAGE>
Year 2000 Issues
- ----------------
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Date-sensitive software
may recognize a date using "00" as the year 1900 rather than the Year 2000. This
could result in system failures or miscalculations causing disruptions of
operations, including, among others, a temporary inability to process
transactions, send invoices or engage in similar normal business activities.
COMPANY'S STATE OF READINESS
- ------------------------------------------------------------
One of the Company's critical internal areas is its information technology
systems, including general ledger, accounts receivable, payable, inventory and
related packages for DCI and each of its subsidiaries. In this regard, the
parent Company has installed new software and has installed or upgraded the
financial systems in each of its subsidiaries to be Year 2000 compliant.
All of the Company-owned switches, used to direct and monitor long distance
telephone traffic, currently are Year 2000 compliant according to the
manufacturer.
The Company also has relationships with outside third parties that could impact
its business. The most important are the carriers that process and monitor the
Company's long distance and prepaid phone card calls. All the carriers expect to
be Year 2000 compliant and are in various stages of readiness. The Company's
travel business is partially dependent on an outside reservation system
representing many airlines which is Year 2000 compliant.
COSTS
- ----------
The Company has addressed Year 2000 issues in-house and, at the present time,
there are no other anticipated costs. Total costs were approximately $ 45,000.
RISK
- ----
The Company believes that its most reasonable likely worst-case Year 2000
scenario would be if any of its third party long distance telephone carriers
were unable to properly monitor or admit authorized personal identification
numbered prepaid phone card calls through their systems.
13
<PAGE>
The time frame for the carrier to fix the problem, or the ability of the Company
to recall prepaid phone cards and switch to another carrier with competitive
rates, could cause a material business interruption.
The risks associated with the failure of the Company's financial software, or
third party payroll preparation and stock transfer system, are considered less
severe in that the Company believes switching to other vendors or using other
methods would be relatively easy.
The risk of failure of the third party airline reservation system is that the
Company would have to secure its travel arrangements by methods that would be
more cumbersome and time-consuming than the current automated system.
CONTINGENCY PLAN
- ----------------
The Company, based upon a survey conducted with major suppliers, especially for
financial reporting and telecommunication services, is satisfied that these
suppliers are able to meet all Year 2000 requirements and therefore will not be
preparing a contingency plan.
The Company has upgraded its internal accounting systems to meet these
requirements.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
- -------------------------------------------------------------------------
This report contains or incorporates by reference forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such forward-looking statement, the Company cautions that
assumed facts or bases almost always vary from the actual results, and the
differences between assumed facts or bases and actual results can be material,
depending upon the circumstances. Where, in any forward-looking statement, the
Company or its management expresses an expectation or belief as to future
results, there can be no assurance that the statement of expectation or belief
will result or be achieved or accomplished. The words "believe", "expect",
"estimate", "anticipate", "project" and similar expressions may identify
forward-looking statements.
14
<PAGE>
Consolidated Results of Operations
- ----------------------------------
Six months Ended
September 30,
1999 1998
---- ----
Net Sales $8,968,458 $15,905,496
- --------
Net sales declined $ 6,937,000 in the six months ending September 30,
1999, compared to the same period a year ago. Sales of Edge Communications
declined $ 7,104,000 during this period, principally as a carryover result of
the shutdown of prepaid phone cards during the last fiscal year. Due to this
shutdown, Edge encountered difficulties in rebuilding its business, and
therefore it incurred a loss at the gross margin level in its efforts to regain
market share. Sales also declined $ 2,500,000 due to the absence of the joint
venture Phoneline, which was written off on March 31, 1999, but this was more
than offset by increased sales in Europe, principally in England.
1999 1998
---- ----
Cost of Sales $ 9,716,374 $14,235,386
- -------------
Cost of sales declined $4,519,000 in the first six months compared to a
year ago. Edge's cost of sales dropped $4,987,000 due to the situation described
above. However, the cost of sales Edge did incur was higher than the original
sales price and resulted in a negative gross margin for the company as a whole.
Higher cost of sales in Europe, associated with higher sales, principally
accounts for the reminder of the variance.
1999 1998
-------- --------
Selling, General & Administration Expense $ 939,366 1,052,350
- -----------------------------------------
Selling, general and administrative expenses declined $113,000, in the current
period compared to last years six month period. Administrative expenses in the
expanded European operations were approximately $144,000 less than the prior
years Phoneline Joint Venture and European costs.
15
<PAGE>
1999 1998
---- ----
Salaries and Compensation $ 1,056,099 $ 1,162,133
- -------------------------
Salaries declined $106,000 in the 6 months ended September 1999. The absence of
the Phoneline Joint Venture resulted in a $164,000 decline. Modest increases in
other companies partially offset this decline.
1999 1998
---- ----
Professional and Consulting Fees $1,089,286 $424,316
- --------------------------------
Professional fees increased $665,000 in the current six month period. A legal
matter involving Edge's carrier service and switching equipment, the successful
defense of two lawsuits against DCI, and legal and accounting costs associated
with the Securities and Exchange Commission investigation of the Company and
corresponding restatements of financial statements, are the main reasons for
this unfavorable variance.
1999 1998
---- -----
Amortization and Depreciation $1,859,181 $431,417
- -----------------------------
Amortization and depreciation increased $1,428,000 over the prior years six
month period. Amortization of the Master Service Agreement through September 30,
1999 totaled $1,567,188 ($0 in the prior year). Partially offsetting this is the
absence of amortization of goodwill associated with the now closed Canadian
Operations totaling $100,000.
1999 1998
---- ----
Loss on Master Service Agreement $(13,321,093) $ 0
This represents the write off of the remaining net value assigned to the Master
Service Agreement purchased with DCI common stock in the last fiscal year. The
Company never received the favorable carrier rates it expected or certain
switching equipment, and has suspended operations with the carrier.
16
<PAGE>
1999 1998
----- ------
Gain on Dissolution - Foreign
Subsidiary $1,446,399 $ 0
A petition for issuance of an Involuntary Winding Up Order was issued against
one of the Company's subsidiaries in Great Britain. The gain is the result of
the write off of the remaining liabilities exceeding the write off of the
remaining assets due to the large bad debt provision on March 31, 1999.
1999 1998
----- ----
Investment Income $151,629 $42,933
Interest Expense ($1,414,890) ($78,962)
The entire investment income of $ 151,629 in 1999 is the result of higher income
for Muller Media which was included for six months in 1999 and only four months
in 1998.
The increase in interest expense of $1,336,000 is the result of interest and
penalties associated with the inability of Series F Preferred holders to convert
to common shares and was converted to a note in November 1999.
1999 1998
---- ----
Discontinued operations - CyberFax $ 0 ($232,852)
- -----------------------
Since CyberFax was sold on March 30, 1999 and classified as discontinued
operations, the $232,000 loss in 1998 June six months has been reclassified as
discontinued operations.
17
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Page 19
18
<PAGE>
ITEM 6 - Exhibits and Reports on Form 8K
1. Changes in Registrant's Certifying Accountant as filed on Form 8K, Oct 11,
1999, and as amended on Form 8K/A, October 26, 1999, and further amended on
November 8, 1999
2. Changes in Registrant's Certifying Accountant as filed on form 8K, November
15, 1999.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DCI TELECOMMUNICATIONS, INC.
(Registrant)
Dated: November 19, 1999 By: /s/Joseph J. Murphy
-----------------------
Joseph J. Murphy
Chairman & CEO
By: /s/Russell B. Hintz
-----------------------
Russell B. Hintz
Chief Financial Officer
20
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 1276
<SECURITIES> 0
<RECEIVABLES> 3609
<ALLOWANCES> 0
<INVENTORY> 235
<CURRENT-ASSETS> 5120
<PP&E> 11360
<DEPRECIATION> (787)
<TOTAL-ASSETS> 15693
<CURRENT-LIABILITIES> 8718
<BONDS> 3267
2203
0
<COMMON> 3
<OTHER-SE> 1502
<TOTAL-LIABILITY-AND-EQUITY> 15693
<SALES> 8968
<TOTAL-REVENUES> 8968
<CGS> 9716
<TOTAL-COSTS> 9716
<OTHER-EXPENSES> 16667
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1415
<INCOME-PRETAX> (18830)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18830)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18830)
<EPS-BASIC> (.63)
<EPS-DILUTED> (.63)
</TABLE>
