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 June 30, 2001
Commission File Number: 2-96976-D
DCI TELECOMMUNICATIONS, INC.
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(Name of Small Business Issue as specified in its charter)
Colorado 84-1155041
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(State or other Jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
488 Schooley's Mountain Road, Hackettstown, NJ 07840
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(Address of principle executive offices, including zip code)
Issuer's telephone number, including area code: (908) 684-8233
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.0001 par value)
Indicate by check mark whether the company (1) has filed all reports to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Company was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Number of Shares Outstanding Class Date
- ---------------------------- ----------------- -----------------
33,020,644 Common Stock, June 30, 2001
$.0001 par value
DCI TELECOMMUNICATIONS, INC.
Index
PART I FINANCIAL INFORMATION
ITEM 1. - Financial Statements
Balance Sheet June 30, 2001
Statement of Operations
Three Months Ended June 30, 2001 and 2000
Statements of Cash Flow
Three Months Ended June 30, 2001 and 2000
Notes to Unaudited Financial Statements
June 30, 2991
ITEM 2. - Management's Discussion and Analysis or
Plan of Operations
PART II
Other Information
Signatures
2
DCI Telecommunications, Inc.
Consolidated Balance Sheet
(unaudited)
June 30
2001
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ASSETS
Current assets:
Cash $ 1,378,557
Marketable securities 289,228
Accounts Receivable, net 2,651,191
Other current assets 180,151
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Total Current Assets 4,499,127
Accounts receivable-long term 963,291
Deposits 10,906
Cost in excess of assets acquired:
Muller Media 1,634,436
Less: Accumulated amortization (249,695)
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Net cost in excess of assets acquired 1,384,741
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Total Assets $ 6,858,065
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(continued)
See accompanying notes to consolidated financial statements
3
June 30,
2001
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses 4,337,049
Preferred stock dividend 394,970
Due to shareholders 96,001
Notes Payable 1,150,448
Deferred revenue 3,902,022
Line of Credit 80,000
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Total Current Liabilities 9,960,490
Redeemable, convertible preferred stock 275,000
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Total Liabilities 10,235,490
Common Stock, $.0001 par value
500,000,000 shares authorized,
33,020,644 shares issued and outstanding 3,227
Paid in capital 37,609,424
Treasury Stock (1,356,547 shares at cost) (1,127,439)
Accumulated deficit (40,112,637)
Other comprehensive gain 250,000
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Total Shareholders' Deficit (3,377,425)
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Total Liabilities and Shareholders' Deficit $ 6,858,065
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See accompanying notes to consolidated financial statements.
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DCI TELECOMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended
June 30
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2001 2000
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Net sales $ 2,080,101 $ 939,850
Cost of sales 1,466,789 648,182
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Gross profit 613,312 291,668
Operating expenses:
Selling general and administrative 118,939 140,785
Salaries and compensation 187,639 219,149
Professional and consulting fees 108,953 125,277
Amortization and depreciation 20,430 56,776
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435,961 541,987
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Income (loss)before other income and
(expense) 177,351 (250,319)
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Other income and (expense):
Investment income 120,019 99,268
Interest expense (2,018) (5,922)
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118,001 93,346
Income (loss) from continuing operations 295,352 (156,973)
Loss from discontinuing operations -- (85,124)
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Net Income(loss) before dividends on
Preferred stock 295,352 (242,097)
Dividends on preferred stock -- (31,000)
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Net Income (loss) applicable to common
shareholders 295,352 $ (273,097)
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Basic and diluted net income (loss)
Per common shares:
Continuing operations $ .01 $ (0.01)
Discontinued operations -- --
$ .01 $ (0.01)
============ ============
Weighted average common shares
outstanding - basic and diluted 33,020,644 30,775,644
============ ============
See notes to consolidated financial statements
5
DCI TELECOMMUNICATIONS, INC
Consolidated Statements of Cash Flows
(unaudited)
Three months ended
June 30
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2001 2000
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Reconciliation of net loss to net
Cash used in operating activities:
Net Income (loss)from continuing
Operations: 295,352 (156,973)
Adjustments to reconcile net loss from
Continuing operations to net cash
used in operating activities:
Amortization and depreciation 20,430 56,824
Discontinued operations -- (85,124)
Changes in assets and liabilities:
(Increase) Decrease in:
Contracts receivable 611,228 (127,186)
Prepaid producers payments 870,102 --
Other current assets 8,066 6,415
Increase (Decrease)
Accounts payable & accrued expenses 90,404 299,718
Deferred revenue (1,848,672) 4,534
Other current liabilities (66,334) --
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Net Cash used in operating activities (19,424) (1,792)
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Cash flows from investing activities:
Additions to fixed assets -- (6,622)
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Net Cash from (used in) investing
activities -- (6,622)
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Cash flows from financing activities
Proceeds from line of credit -- 80,000
Net (payments)/advances to
Shareholders 31,100 (452)
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Net Cash from financing activities 31,100 79,548
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Net (decrease) increase in cash 11,676 71,134
Cash beginning of period 1,366,881 1,154,825
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Cash end of period 1,378,557 1,225,959
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See accompanying notes to consolidated financial statements
6
DCI Telecommunications, Inc.
Notes to Unaudited Financial Statements June 30, 2001
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, 2001.
Income or 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.Com 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.
NOTE 3. Bankruptcy
- ------------------
On July 27,2000, Edge and Coast to Coast, were placed in Bankruptcy under
Chapter 7.
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Management's Discussion and Analysis or
Plan of Operations
Overview
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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, 2001. The discussion should be read in conjunction with the
Company's consolidated financial statements and accompanying notes.
Liquidity and Capital Resources
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At June 30, 2001 the Company had restricted cash of approximately $1,378,000.
Net cash increased $ 12,000 during the last three months. Cash used in operating
activities was about $ 19,000.
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.
Consolidated Results of Operations
Three months Ended
June 30
2001 2000
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Net Sales $ 2,080,101 $ 939,850
Net Sales from continuing operations increases approximately $ 1,140,000
in the three months ending June 30, 2001, compared to the same period a
year ago. Sales increased at Muller due to the implementation of a change
in the accounting method at 3/31/01.
2001 2000
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Cost of Sales $ 1,466,789 $ 648,182
- --------------
Cost of Sales increased $ 819,000 in the first three months compared to a year
ago. Cost of sales for Muller rose corresponding to their higher sales under the
new method of accounting.
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2001 2000
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Selling, General & Administration
Expense $ 118,939 $ 140,785
Selling, General & Administration declined $ 22,000 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
2001 2000
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Salaries and Compensation $ 187,639 $ 219,149
Salaries declined $ 32,000 in the current period compared to last years
three month period principally as a result of fewer employees at the
corporate level
2001 2000
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Professional and Consulting Fees $ 108,983 $ 125,277
Professional fees declined $ 16,000 in the first three months principally
since last year included heavy professional fees as a result of the SEC
investigation
2001 2000
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Amortization and Depreciation $ 20,430 $ 56,776
Amortization and Depreciation decreased $ 36,000 over the prior year three
months period due to a decrease of depreciation expense related to the disposal
and write off of furniture and computers during the prior year.
2001 2000
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Investment Income $ (120,019) $ (99,268)
Interest Expense $ 2,018 $ 5,922
The entire investment income in both periods is Muller Media which
earned $ 21,000 more in the current quarter on higher yields.
Interest expense declined approximately $ 4,000 due to the lower debt
at the corporate level
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING
Not applicable
ITEM 2.- CHANGES IN SECURITIES
Not applicable
ITEM 3.- DEFAULTS UPOPN 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
10
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
Registrant has duly caused this report to the signed on its behalf by the
Undersigned thereunto duly authorized.
DCI TELECOMMUNICATIONS, INC
Dated: February 21, 2002 By /s/ John J. Adams
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John J. Adams
President
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