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DCI TELECOMMUNICATIONS
611 Access Road
Stratford, CT 06615
(203) 380-0910
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August 21, 2000
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 June 30, 2000
Sincerely,
John J /Adams
----------------
President
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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:
June 30, 2000 2-96976-D
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DCI TELECOMMUNICATIONS, INC.
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(Exact Name of Registrant as specified in its charter)
COLORADO 84-1155041
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(State or other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
611 Access Road, Stratford, Connecticut 06615
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(Address and zip code of principal executive offices)
(203) 380-0910
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(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
---------------------------- ------- ----------
30,775,644 Common Stock, June 30, 2000
$.0001 par value
1
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DCI TELECOMMUNICATIONS, INC.
Index
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheet June 30, 2000 3
Statements of Operations
Three Months Ended June 30, 2000 and 1999 5
Statements of Cash Flow
Three Months Ended June 30, 2000 and 1999 7
Notes to Unaudited Financial Statements
June 30, 2000 9
ITEM 2.
Management's Discussion and Analysis or
Plan of Operations 10
PART II
Other Information 15
Signatures 15
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2
DCI Telecommunications, Inc.
Consolidated Balance Sheet
(unaudited)
June 30,
2000
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ASSETS
Current assets:
Cash $ 1,225,959
Accounts receivable, net 2,008,883
Other current assets 55,364
---------
Total Current Assets 3,290,206
Fixed Assets 746,030
Less: Accumulated depreciation (250,350)
---------
Net Fixed Assets 495,680
Accounts receivable-long term 1,271,135
Deposits 15,356
Cost in excess of assets acquired:
Travel Source 89,379
Muller Media 1,634,436
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1,723,815
Less: Accumulated amortization: (177,689)
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Net cost in excess of assets acquired 1,546,126
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Total Assets $ 6,618 503
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(continued)
3
See accompanying notes to consolidated financial statements.
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June 30,
2000
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses $ 7,487,626
Preferred stock dividend 378,470
Due to shareholders 81,686
Current portion of long term debt 71,661
Deferred revenue 111,750
Short term note payable 80,000
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Total Current Liabilities 8,211,193
Long-term debt 1,150,448
Accounts payable 1,321,729
Redeemable, convertible preferred stock,
$1,000 par and redemption
value, 2,000,000 shares authorized,
282.45 shares issued & outstanding 282,453
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Total Liabilities 10,965,823
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Common stock, $.0001 par value,
500,000,000 shares authorized,
30,775,644 shares issued and outstanding 3,077
Paid-in capital 37,277,637
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) (40,500,595)
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Total Shareholders' Deficit (4,347,320)
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Total Liabilities and Shareholders' Deficit $ 6,618,503
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See accompanying notes to consolidated financial statements.
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DCI Telecommunications, Inc.
Consolidated Statement of Operations
(unaudited)
Three Months Ended
June 30
2000 1999
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Net sales $ 966,189 $ 747,090
Cost of sales 648,182 425,541
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Gross profit 318,007 321,549
Selling, general and
administrative expenses 148,581 210,432
Salaries and compensation 225,360 305,124
Professional and consulting fees 125,707 185,177
Amortization and depreciation 56,824 50,024
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556,472 750,757
Loss before other income and (expense) (238,465) (429,208)
Other income and (expense):
Investment income 99,271 78,929
Interest expense (5,922) (2,527)
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93,349 76,402
(continued)
5
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Loss from continuing operations (145,116) (352,806)
Loss from discontinued operations (96,981) (2,594,604)
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Net loss before
dividends on preferred
stock (242,097) (2,947,410)
Dividends on preferred
Stock (31,000) (46,050)
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Net loss applicable to
common shareholders $ (273,097) $ (2,993,460)
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Basic and diluted net loss per common shares:
Loss from continuing
operations $(0.01) $ (0.01)
Loss from discontinued
operations $ -- $ (0.09)
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Net loss per common
share - basic and diluted $(0.01) $ (0.10)
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Weighted average common
shares outstanding -
basic and diluted 30,775,644 29,850,199
See Accompanying Notes to Consolidated Financial Statements
6
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DCI Telecommunications, Inc
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
June 30,
2000 1999
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Reconciliation of net loss to net
cash used in operating activities:
Net loss from continuing operations $ (145,116) $ (352,806)
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Adjustments to reconcile net loss from
continuing operations to net cash
used in operating activities:
Amortization and depreciation 56,824 50,024
Discontinued operations (96,981) (3,477,994)
Changes in assets and liabilities:
(Increase) Decrease in:
Accounts receivable (127,186) (1,180,692)
Inventory - 3,364
Deposits - (46,258)
Other current assets 6,415 (368,878)
Increase (Decrease):
Accounts payable & accrued expenses 299,718 3,335,864
Deferred revenue 4,534 (67,490)
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Net Cash used in operating activities (1,792) (338,086)
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Cash flows from investing activities:
Additions to fixed assets (6,622) (65,113)
Decrease in long term assets - 79,951
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Net cash from (used in) investing
activities (6,622) 14,838
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(continued)
Cash flows from financing activities:
Proceeds from stock
options exercised - 51,275
Proceeds from line of credit 80,000 -
Net (payments)/advances to shareholders (452) 47,491
Payment of long-term debt - (17,323)
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Net cash from financing activities 79,548 81,443
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Net (decrease) increase in cash 71,134 (241,805)
Cash, beginning of period 1,154,825 1,631,186
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Cash, end of period $ 1,225,959 $1,389,381
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8
See accompanying notes to consolidated financial statements.
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DCI Telecommunications, Inc.
Notes to Unaudited Financial Statements June 30, 2000
NOTE 1.
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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, 2000.
Loss per share was computed using the weighted average number of common shares
outstanding.
NOTE 2. Sale of Fone.com
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Effective May 31, 2000, (closing date June 2, 2000) The Company sold all of the
Common stock of Fone to Tanners Restaurant Group, Inc. ("Tanners") in exchange
for 40,000,000 shares of Tanners and the assumption by Tanners of $3,453,652 of
debt of the Company. The debt assumed was a $ 1,348,605 note, $1,905,047 of
redeemable convertible preferred stock and $ 200,000 of notes payable to Triton
Private Equities Fund, Ltd. After the transaction DCI owned 62.67% of the
outstanding shares of Tanners.
NOTE 3. Bankruptcy
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On July 27, 2000, EDGE and Coast to Coast, were placed in Bankruptcy under
Chapter 7.
9
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Management's Discussion and Analysis or
Plan 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 three months
ended June 30, 2000. The discussion should be read in conjunction with the
Company's consolidated financial statements and accompanying notes.
The Company currently operates predominantly in the motion picture distribution
Industry. The Company's services also include a travel agency.
Recent Dispositions
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Fone. Com
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Effective May 31, 2000, (closing date June 2, 2000) The Company sold all of the
common stock of Fone to Tanners Restaurant Group, Inc. ("Tanners") in exchange
for 40,000,000 shares of Tanners and the assumption by Tanners of $3,453,652 of
debt of the Company. The debt assumed was a $1,348,605 note, $1,905,047 of
redeemable convertible preferred stock, and $200,000 of notes payable to Triton
Private Equities Fund, Ltd. After the transaction DCI owned 62.67% of the
outstanding shares of Tanners.
10
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Liquidity and Capital Resources
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At June 30, 2000 the Company had unrestricted cash of approximately $1,225,000.
Net cash increased $ 71,000 during the last three months. Cash used in operating
activities was about $2,000 and cash invested in fixed assets totaled $ 7,000
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, that it will be on acceptable
terms.
11
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Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
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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.
Consolidated Results of Operations
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Three months Ended
June 30
2000 1999
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Net Sales $ 966,189 $ 747,090
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Net Sales from continuing operations increased approximately $ 219,000 in the
three months ending June 30, 2000, compared to the same period a year ago. Sales
increased $ 248,000 at Muller due to the implementation of more movie contracts.
Travel sales are down approximately $ 29,000 in the three months due to less
agent time and lower travel volume.
2000 1999
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Cost of Sales $ 648,182 $ 425,541
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Cost of Sales increased $ 223,000 in the first three months compared to a year
ago. Cost of Sales for Muller rose $ 223,000, corresponding to their sales
growth.
12
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2000 1999
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Selling, General & Administration
Expense $ 148,581 $ 210,432
Selling, General & Administration declined $ 62,000 in the current period
compared to last year three months period principally as a result of the higher
activity and more employees at the corporate level in the 1999 quarter ended
June 30.
2000 1999
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Salaries and Compensation $ 225,360 $ 305,124
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Salaries declined $ 80,000 in the current period compared to last year three
months period principally as a result of fewer employees at the corporate level
1999 1998
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Professional and Consulting Fees $ 125,707 $ 185,177
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Professional fees declined $ 59,000 in the first three months principally since
last year included heavy professional fees as a result of the SEC investigation.
2000 1999
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Amortization and Depreciation $ 56,824 $ 50,024
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Amortization and depreciation increased $ 7,000 over the prior year three months
period due an increase of depreciation expense related to the purchase of
furniture and computers, during the prior year.
13
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1999 1998
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Investment Income $ ( 98,548) $ (78,929)
Interest Expense $ 5,922 $ 2,527
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The entire investment income in both periods is from Muller Media which earned
$ 20,000 more in the current quarter on higher investments at higher yields.
Interest expense also rose approximately $ 3,000 due to higher average debt at
the corporate level.
14
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2,- CHANGES IN SECURITIES
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.
1.-June 15, 2000 Resignation of Larry Shatsoff 2.-June 19, 2000 Sale of
Fon.com to Tanner Restaurant.
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: August 21, 2000 By: /s/John J. Adams
--------------------
John J. Adams
President
15
