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 June 30, 1996 Commission File Number 0-19875
DMI, INC.
---------
Exact name of registrant as specified in its charter
Colorado 93-3500183
-------- ----------
State or other jurisdiction (IRS employer identification number)
2501 West Fifth Street Santa Ana, Ca. 92703
- ------------------------------------- -----
Address of principal executive offices Zip Code
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 1(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 /X/ No / /
Number of shares outstanding as of June 30, 1996: Common stock, no par value,
8,728,343
- ---------
Exhibit 27. Financial Data Schedule included.
2
INDEX
Part I Financial Information Page
Item 1 Financial Statements
Balance Sheets as of June 30, 1996
and December 31, 1995 F-3
Statements of Operations for the Three Months
and six months ended June 30, 1996, and June 30, 1995 F-4
Statements of Cash Flows for the Six Months
Ended June 30, 1996, and June 30, 1995 F-5
Condensed Notes to Financial Statements F-6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operation 7
Signatures
2
3
DMI,INC.
BALANCE SHEETS
ASSETS LIABILITIES AND STOCKHOLDER'S
DEFICIT
June 30, Dec. 31, June 30, Dec. 31,
1996 1995 1996 1995
Unaudited Unaudited
CURRENT ASSETS CURRENT LIABILITIES
Cash and Cash $ 86,785 $164,338 Accounts Payable $ 10,000 $ 12,081
Equivalents Accrued Expenses 133,589 214,428
Accounts Receivable, Net 2,000 2,000 Loan from stockholder 6,000
Inventory 31,178 45,178 ---------- ----------
Other Assets 6,000 -- Total Current Liabilities 149,589 226,509
-------- -------- Deferred Revenue 51,134 51,134
Total Current Assets 125,963 211,516
Property and Equipment 1,134 11,134 STOCKHOLDER'S DEFICIT 4,110,183 4,053,887
Net of accumulated Common stock, no par value
depreciation of $90,798 Authorized 10,000,000 shares
at June 30, 1996, and Issued and outstanding
$80,798 at December 31, 8,728,343 and 8,503,736 shares
1995 at June 30, 1996 and
December 31, 1995 16,000
Committed and not issued shares
350,000 350,000
Paid in Capital (4,533,809) (4,474,880)
---------- ----------
Accumulated Deficit (73,626) (54,993)
-------- --------
TOTAL ASSETS $127,097 $222,650 TOTAL LIABILITIES AND DEFICIT $ 127,097 $ 222,650
======== ======== ========== ==========
See Accompanying Notes
F-3
4
DMI, INC.
STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED JUNE 30, 1996 AND JUNE 30, 1995
( Unaudited)
Three Months Ended June 30, Six months Ended June 30,
1996 1995 1996 1995
REVENUES $ 26,851 $ 132,345 $ 36,222 $ 147,645
COSTS AND EXPENSES
Cost of sales 6,000 113,342 12,000 131,034
Selling, General and
administrative expense 46,919 188,376 83,383 362,708
---------- ---------- ---------- ----------
OTHER INCOME
Interest (income)/expense,net (232) (6,036) (232) (2,954)
LOSS BEFORE
PROVISION FOR
INCOME TAXES (25,836) (163,337) (58,929) (343,143)
NET LOSS ($ 25,836) ($ 163,337) ($ 58,929) ($ 343,143)
========== ========== ========== ==========
LOSS PER COMMON ($ .003) ($ 0.02) ($ .007) ($ 0.04)
========== ========== ========= ==========
SHARE
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 8,728,343 8,483,736 8,705,269 8,483,736
========== ========== ========== ==========
See accompanying notes
F-4
5
DMI, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,1996 AND JUNE 30,1995
(Unaudited)
1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss ($ 58,929) ($343,143)
Depreciation and amortization 10,000 48,016
Stock issued for services rendered 56,296 0
Issuance of common stock previously (16,000) 0
committed
Changes in assets and liabilities
increase(decrease) in accounts receivable 0 (10,922)
increase(decrease) in inventories 14,000 26,670
increase(decrease) in prepaid expenses 0 (22,584)
increase(decrease) in other assets (6,000) 0
increase(decrease) in accounts payable (2,081) 18,370
increase(decrease) in accrued expenses (80,839) 183,786
increase(decrease) in other liabilities 0 (1,280)
--------- ---------
Net cash used in operating activities (83,553) (101,087)
CASH FLOWS FROM INVESTING
ACTIVITIES
(Increase)/Decrease in capitalized software 0 (41,207)
-------- ---------
Net cash used in investing activities 0 (41,207)
CASH FLOWS FROM FINANCING
ACTIVITIES
Increase/(decrease) in stockholder loans 6,000 0
-------- ---------
Net cash provided by financing activities 6,000 0
INCREASE(DECREASE) IN CASH (77,553) (142,294)
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, 164,338 804,243
BEGINNING OF PERIOD -------- ---------
CASH AND CASH EQUIVALENTS, $ 86,785 $ 661,949
END OF PERIOD ======== =========
SUPPLEMENTAL DISCLOSURE OF
NON-CASH
ACTIVITIES
Interest Paid $ 0 $ 24,268
See accompanying notes
F-5
6
DMI, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1996, AND MARCH 31, 1996
(UNAUDITED)
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, 1996 and 1995. The results of operations for the
three months ended June 30, 1996 and are not necessarily indicative of the
results of operations to be expected for the full year ending December 31,
1996. Reference is made to the Company's Form 10-KSB for the year ended
December 31, 1995, 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, 1995
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 it's
products. Presently, management is unaware of any potential liabilities or
contingencies resulting from product liability.
F-6
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three months ended June 30, 1996 and June 30,1995
Revenues
Revenues for the three months ended June 30, 1996 repreent the sale of inventory
items and payment for the preparation of a demonstration ARS system for a
potential licensee. The Company is actively pursuing additional licensing
agreements to bring the ARS technology successfully to market.
The Company is continuing to develop its relationship with Unicomp, Inc. as
reported in the Form 10-KSB report for December, 1995. During the three months
ended June 30, 1996, a joint venture agreement was completed with Unicomp, Inc.
to export Toshiba telecommunications systems, and reported with an Form 8K
filing. Active development of this program is proceeding, but revenues have not
yet been received.
During the three month period ended June 30, 1996, a letter of intent was signed
with Autologue Computer Systems, Inc. to form a business combination for the
marketing of business automation systems to the automotive market, including
Autologue's proprietary auto parts software and systems, and DMI's ARS system.
This agreement has also been reported with an 8K filing.
Cost of Sales
Cost of sales for the period represents the cost of printers sold from
inventory.
Operating Expenses
Operating expenses were $46,919 for the three months ended June 30, 1996,
compared to $88,376 for the comparable period in 1995. This decrease reflects
the layoff of all employees except for two officers, relocation of the Company's
offices to less expensive facilities and general cost containment activities.
Net Earnings
Net losses have been limited by reducing operating expenses, but are expected to
continue until revenues are received from the programs described.
Liquidity and Capital
Cash declined to $86,785 at the three months ended June 30, 1996, from $126,736
at the period ended March 31, 1996.
The Company is continuing to pursue sources of capital to finance its expansion
in all product areas. During the period, A.M. Razo & Company was engaged to seek
additional financing, primarily for use with the Autologue program.
7
8
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, hereunto duly authorized.
DMI, Inc.
- -----------
(Registrant)
8/12/96 /s/ Duncan Mac Donald
- -------------------------------- --------------------------------
Date By
Duncan Mac Donald
Secretary