<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For The Period Ended March 31, 1997 Commission File Number 0-19875
DMI, INC.
---------
Exact Name of Registrant as specified in its charter
Colorado
(State or other jurisdiction of incorporation or organization
2501 West Fifth Street
Santa Ana, California 92703
(Address of principal Executive Offices)
95-3500183
(I.R.S. Employer Identification No.)
Registrant's telephone number, including area code (714)-571-1900
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceeding 12 months (or 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 No X
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Number of shares outstanding as of March 31, 1997:
Common Stock, no par value 8,862,843
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INDEX
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<TABLE>
<CAPTION>
Page
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<S> <C>
Part 1 Financial Information
Item 1 Financial Statements
Balance Sheets as of March 31, 1997
and December 31, 1996 F-3
Statements of Operations for the Three Months
Ended March 31, 1997 and March 31, 1996 F-4
Statements of Cash Flows for the Three Months
Ended March 31, 1997 and March 31, 1996 F-5
Condensed Notes to Financial Statements F-6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Signatures
</TABLE>
2
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DMI, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS LIABILITIES
March 31, Dec. 31, March 31, Dec. 31,
1997 1996 1997 1996
----------- -------- ----------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash Accounts Payable $ 4,965 $ 6,216
equivalents $10,500 $9,302 Accrued Expenses 154,724 119,101
Accounts Loan from Shareholder 16,000 16,000
Receivable, Net -- -- ---------- ----------
Inventory -- -- Total Current Liabilities 175,689 141,317
Other Assets 10,500 9,302 Deferred Revenue 34,658 38,509
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Total 10,500 9,302 STOCKHOLDER'S DEFICIT
Common Stock, no par
value. 1,000,000,000
shares authorized.
8,862,843 shares issued
and outstanding 4,120,083 4,117,083
Paid-in capital 350,000 350,000
Accumulated Deficit (4,669,930) (4,637,607)
Total Stockholder's
Equity (Deficit) (199,847) (170,524)
------- ---------- ----------
TOTAL ASSETS $10,500 TOTAL LIABILITIES AND DEFICIT $ 10,500 $ 9,302
======= ========== ==========
</TABLE>
F-3
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DMI, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1997 and March 31, 1996
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
REVENUES $ 3,851 $ 9,371
COSTS AND EXPENSES
Cost of Sales 0 6,000
Selling, General and Administrative Expense 36,486 36,464
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LOSS FROM OPERATIONS (32,635) (33,093)
OTHER INCOME
Interest income (expense), net 312 0
NET LOSS $ (32,323) $ (33,093)
--------- ---------
Loss Per Common Share $ (0.004) $ (0.004)
Weighted Average Common Shares Outstanding 8,762,843 8,682,196
</TABLE>
F-4
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DMI, INC.
STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31, 1997, and March 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(32,323) $(33,093)
Depreciation and Amortization -- 5,000
Stock Issued For Services Rendered 3,000 40,296
Changes in assets and liabilities
Increase (decrease) in accounts receivable -- --
Increase (decrease) in inventories -- 6,000
Increase (decrease) in prepaid expenses -- --
Increase (decrease) in other assets -- --
Increase (decrease) in accounts payable (1,251) (2,081)
Increase (decrease) in accrued expenses 35,623 (53,724)
Increase (decrease) in other liabilities (3,851) --
-------- --------
Net cash provided for (used by) operating activities 1,198 (37,602)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,198 (37,602)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,302 164,338
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,500 $126,736
======== ========
</TABLE>
See accompanying notes
F-5
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DMI, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1. Unaudited Interim Financial Information
- ------------------------------------------
The interim financial statements are unaudited, but in the opinion of management
of DMI, Inc. (the Company), contain all adjustments consisting of normal
recurring accruals, necessary to present fairly the financial position of the
Company as of March 31, 1997 and 1996. The results of operations for the three
months ended March 31, 1997 are not necessarily indicative of the results of
operations to be expected for the full year ending December 31, 1997. Reference
is made to the Company's Form 10-KSB for the year ended December 31, 1996, as
filed with the Securities and Exchange Commission.
2. Accounting Policies
- ----------------------
The Company's accounting policies are as stated in its annual report on Form
10-KSB for the year ended December 31, 1996.
3. Contingencies
- ----------------
The Company does not have product liability insurance. Thus, the Company can be
held liable for all damages or other losses resulting from the use of its
products. Presently, management is unaware of any potential liabilities or
contingencies resulting from product liability.
F-6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Three months ended March 31, 1997, and March 31, 1996
GENERAL
Recorded revenues were due to recognition of a portion of a deferred revenue
accrual associated with a prior service obligation. Selling, general and
administrative expense reflects salary accruals to the two employees of the
Company. In a subsequent event, these accruals were forgiven in July of 1997 in
conjunction with the purchase of DTI Technology, Inc. (dba Dega Technology).
As discussed in the Company's Form 10KSB for fiscal year 1996, the Company
entered into a purchase agreement on January 31, 1997 to acquire DTI Technology,
Inc. (doing business as Dega Technology) in exchange for 57 million shares of
DMI, Inc. common stock. In an event subsequent to the period of this report, the
agreement became effective July 21, 1997.
In May of 1996, the Company entered into a joint venture agreement with Unicomp,
Inc. to establish a distribution channel for remanufactured Toshiba telephone
systems in Vietnam, Laos, and Cambodia. The terms were amended on February 4,
1997 to rescind the agreement in favor of a $250,000 cash settlement. In a
subsequent event, the Company accepted a promissory note for $250,000 on July
21, 1997, due October 21, 1997, with interest at 8% per annum.
Due to the above, and because the results for the period do not include the
operations of DTI Technology, Inc., the results of operations for the three
months ended March 31, 1997 are not an indication of any future results of
operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27 Financial Data Schedule.
7
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DMI, INC.
(Registrant)
8/25/97 By: /s/ DUNCAN MAC DONALD
- ------------------------------- ---------------------------
Date Duncan Mac Donald
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,500
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,500
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,500
<CURRENT-LIABILITIES> 175,689
<BONDS> 0
0
0
<COMMON> 8,862,843
<OTHER-SE> 199,847
<TOTAL-LIABILITY-AND-EQUITY> 10,500
<SALES> 3,851
<TOTAL-REVENUES> 3,851
<CGS> 0
<TOTAL-COSTS> 36,486
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 312
<INCOME-PRETAX> (32,635)
<INCOME-TAX> 0
<INCOME-CONTINUING> 32,323
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,323)
<EPS-PRIMARY> (0.004)
<EPS-DILUTED> (0.004)
</TABLE>
