FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported) April 3, 1997.
DCI Telecommunications, Inc.
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(Exact name of registrant as specified in its charter)
Colorado 2-96976-D 84-1155-41
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
P.O. Box 320334, Fairfield, CT 06432
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(Address of principal executive offices)
Registrant's telephone number, including area code: (203) 259-7713
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(Former name or former address, if changed since last report.)
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
In connection with the acquisition of Muller Media Inc. (previously
reported on Form 8K), attached are the audited financial statements for the
years ending December 31, 1995 and 1994.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
DCI Telecommunications, Inc.
Joseph J. Murphy
__________________________
Joseph J. Murphy
President
Date: April 3, 1997
MULLER MEDIA, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1995 AND 1994
Schnitzer & Kondub Certified Public Accountants
575 White Plains Road
Eastchester, New York 10709
Telephone: (914) 779-0469
Facsimile: (914) 779-0489
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Muller Media, Inc.
We have audited the accompanying balance sheets of Muller Media, Inc. as of
December 31, 1995 and 1994 and the related statements of operations,
changes in shareholder's equity and cash flows for each of the two years in
the period ending December 31, 1995. These financial statements are the
responsibility of the Company's Management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly,
in all material respects, the financial position of Muller Media, Inc. as
of December 31, 1995 and 1994 and the results of its operations and its
cash flows for each of the two years in the period ended December 31, 1995,
in conformity with generally accepted accounting principles.
Schnitzer & Kondub
February 14, 1997
MULLER MEDIA, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
1995 1994
---- ----
Cash and cash equivalents $ 882,681 $ 569,001
Accounts receivable, net 1,271,315 1,650,762
Investments 49,070 49,070
Prepaid expenses and other current assets 850 66,270
Total current assets 2,203,916 2,335,103
Property and equipment, net 34,008 10,017
Accounts receivable, long term 279,479 903,253
Other assets 2,800 12,008
$2,520,203 $3,260,381
LIABILITIES AND SHAREHOLDER'S EQUITY
Amounts payable under contracts $1,050,288 $1,218,800
Note payable to bank -- 56,500
Accounts payable and accrued expenses 124,983 44,105
Taxes payable 6,390 14,130
Deferred revenue 109,050 --
Total current liabilities 1,290,711 1,333,535
Amounts payable under contracts 180,877 656,400
Deferred income taxes 259,620 365,800
Note payable to bank -- 3,189
Total liabilities 1,731,208 2,358,924
Shareholder's equity:
Common stock, no par value; authorized 1,000
shares, issued and outstanding 1,000 shares 1,000 1,000
Retained earnings 787,995 900,457
788,995 901,457
$2,520,203 $3,260,381
See accompanying notes to financial statements
MULLER MEDIA, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
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Net sales $1,164,861 $2,992,024
Cost of sales 709,083 1,913,439
455,778 1,078,585
Operating expenses:
Selling, general and administrative 314,733 295,744
Salaries and compensation 348,394 288,498
Interest expense 3,991 9,876
Depreciation 11,387 5,482
678,505 599,600
(Loss)income before investment income
and income taxes (222,727) 478,985
Investment income 38,605 14,084
(Loss)income before income taxes (184,122) 493,069
Income tax benefit (provision) 71,660 (223,000)
Net (loss) income $ (112,462) $ 270,069
See accompanying notes to financial statements.
MULLER MEDIA, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDING DECEMBER 1995 AND 1994
1995 1994
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Cash flows from operating activities
Net (loss) income $ (112,462) $ 270,069
Adjustments to reconcile net(loss) income
to net cash from operating activities:
Depreciation and amortization 11,387 5,482
Change in assets and liabilities
Accounts receivable 1,003,221 (943,661)
Amounts payable under contracts (644,035) 747,024
Prepaid expenses and other assets 65,420 71,881
Accounts payable and accrued expenses 80,878 12,748
Taxes payable (7,740) --
Deferred revenue 109,050 (45,000)
Deferred taxes (106,180) 212,765
Net cash from operating activities 399,539 331,308
Cash flows (used in) from investing activities:
Purchase of equipment, net (35,378) (959)
Other assets 9,208 --
Net cash (used in) investing activities (26,170) (959)
Cash flows (used in) financing activities:
Repayment of notes payable to bank (59,689) (45,311)
Net increase in cash and cash equivalents 313,680 285,038
Cash and cash equivalents, beginning of year 569,001 283,963
Cash and cash equivalents, end of year $ 882,681 $ 569,001
Cash paid for:
Interest $ 4,000 $ 10,000
Taxes $ 22,000 $ 10,000
See accompanying notes to financial statements.
MULLER MEDIA, INC.
STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1994
Common Stock
Shares Dollars Retained Earnings
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Balance, January 1, 199 1,000 $1,000 $ 630,388
Net income -- -- 270,069
Balance, December 31, 1994 1,000 1,000 900,457
Net loss -- -- (112,462)
Balance, December 31, 1995 1,000 $1,000 $ 787,995
See Accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 1. Significant Accounting Policies
Organization:
The Company is organized under the laws of New York and is engaged in the
business of packaging motion pictures and other entertainment events for
distribution to United States television and cable stations.
Revenue Recognition:
Revenues from the distribution of motion pictures and other entertainment
events is recognized upon the commencement of the television and cable
station's license period. The related expense incurred in the distribution
of motion pictures and other entertainment events is recognized as revenue
as earned. The primary expense (cost of sales) incurred in the distribution
of motion pictures and other entertainment events is the amount due the
producers of the motion pictures. Accounts receivable are presented net of
an allowance for doubtful accounts of $-O-, at December 31, 1995 and 1994.
Fixed Assets
Fixed assets are stated at cost. Depreciation is calculated on the
straight line methods over the lives of the related assets (3 to 5 years).
Income Taxes
The Company accounts for income taxes under Statement of Financial
Accounting Standards Number 109. For income tax reporting, the Company uses
the installment method. This method recognizes revenue and the related
expense over the installments paid by the television stations to the
company, usually over twenty four to thirty six months. Deferred income
taxes have been recorded for the excess of financial statement income over
taxable income.
Investments
Investments are recorded at cost, which approximates market.
Concentration of credit risk
Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of cash in financial institutions
exceeding Federally insured limits amounting to approximately $683,000.
Cash and cash equivalents
For purposes of the cash flow statement, cash includes cash and cash
equivalents with maturities of 90 days or less.
NOTE 2. Note payable bank
In August, 1995 the Company paid off its term loan to the bank and
established a $150,000 line of credit with interest at one percent over the
bank's prime rate. The term loan was bearing interest at one and three
quarters percent over the bank's prime rate. The bank also had a security
interest in all of the company's personal assets under the term loan.
As of December 31, 1995, the Company has a $150,000 line of credit
available from the bank. Borrowings under the credit facility are
guaranteed by the shareholder of the Company. The bank also has a security
interest in all of the company's personal assets under the line of credit.
NOTE 3. Fixed Assets
Fixed asset consists of:
1995 1994
Office equipment $ 66,551 $ 62,066
Automobiles 30,893 --
97,444 62,066
Accumulated Depreciation (63,436) (52,049)
$34,008 $10,017
NOTE 4. Deferred Revenue
Deferred revenue consists of $ 109,050 of down payments on contracts whose
license period begins after December 31, 1995.
NOTE 5. Profit Sharing Plan
The Company has a profit sharing plan where it can contribute up to 15% of
an employees compensation(as defined by the Internal Revenue Service). The
Company's contributions for 1995 and 1994 were $42,000 and $25,000,
respectively.
NOTE 6. Operating Lease Commitments
The Company leased its office space under a lease which expired in April,
1996. Rent expense was $33,600 for each of the years ended 1995 and 1994.
In 1996, the company entered into a new lease with annual rental payments
of approximately $45,000 per year through June 30, 1999.
NOTE 7. Subsequent Event
Effective November 30, 1996, the Company entered into a purchase agreement
with DCI Telecommunications Inc.(ODCIO). Under this agreement The
shareholders of Muller Media Inc. will exchange 100 percent of their stock
for $3,000,000 of DCI stock. No adjustments have been made to the
accompanying financing statements to reflect the purchase by DCI.