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 September 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
- - ------------------------------- ----------------------------
(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, September 30, 2001
$.0001 par value
DCI TELECOMMUNICATIONS, INC.
Index
PART I FINANCIAL INFORMATION
ITEM 1.- Financial Statements
Balance Sheet September 30, 2001
Statement of Operations
Six Months Ended September 30, 2001 and 2000
Statements of Cash Flow
Six Months Ended September 30, 2001 and 2000
Notes to Unaudited Financial Statements
September 30, 2991
ITEM 2.-Management's Discussion and Analysis or
Plan of Operations
PART II
Other Information
Signatures
1
DCI Telecommunications, Inc.
Consolidated Balance Sheet
(unaudited)
September 30
2001
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ASSETS
Current assets:
Cash $ 1,213,362
Marketable securities 289,858
Accounts Receivable, net 2,301,025
Other current assets 306,231
-----------
Total Current Assets 4,110,476
Accounts receivable-long term 590,870
Deposits 10,906
Prepayments 76,558
Cost in excess of assets acquired:
Muller Media 1,634,436
Less: Accumulated amortization (270,125)
-----------
Net cost in excess of assets acquired 1,364,311
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Total Assets $ 6,153,121
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(continued)
See accompanying notes to consolidated financial statements
2
September 30
2001
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses 4,257,159
Preferred stock dividend 394,970
Due to shareholders 100,778
Notes Payable 1,150,448
Deferred revenue 2,534,351
line of Credit 80,000
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Total Current Liabilities 8,517,706
Deferred Revenue 859,016
Redeemable, convertible preferred stock 275,000
------------
Total Liabilitites 9,651,722
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 (40,233,813)
Other comprehensive gain 250,000
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Total Shareholders' Deficit (3,498,601)
------------
Total Liabilities and Shareholders' Deficit $ 6,153,121
============
See accompanying notes to consolidated financial statements.
3
DCI TELECOMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended Six Months Ended
September 30 September 30
------------------------------------------------
2001 2000 2001 2000
----------- ---------- ------------ -----------
Net sales $ 613,952 $ 1,214,326 $ 2,694,053 $ 2,154,176
Cost of sales 445,321 828,157 1,912,110 1,476,339
------------ ------------ ------------ ------------
Gross profit 168,631 386,169 781,943 677,837
Selling, general and
Admin expenses (49,851) 115,917 69,088 256,702
Salaries and compens 223,865 169,334 411,504 388,483
Professional fees 169,737 112,970 278,690 238,247
Amortiz; and deprec; 20,430 51,306 40,860 108,082
------------ ------------ ------------ ------------
364,181 449,527 800,142 991,514
Loss before other income and
Expense (195,550) (63,358) (18,199) (313,677)
Other income and (expense):
Investment income 77,092 79,324 197,111 178,592
Interest expense (2,718) (4,517) (4,736) (10,439)
------------ ------------ ------------ ------------
74,374 74,807 192,375 168,153
Gain (loss) from continuing
Operations (121,176) 11,449 174,176 (145,524)
Loss from discontinuing
Operations -- (200) -- (85,324)
------------ ------------ ------------ ------------
Net Gain (loss before
Dividends on preferred
Stock (121,176) 11,249 174,176 (230,848)
Dividends on preferred
stock -- 11,249 -- (31,000)
------------ ------------ ------------ ------------
Net gain (loss) applicable
To common shareholders (121,176) 11,249 174,176 (261,848)
============ ============ ============ ============
Loss from continuing
Operations $ (0.01) $ .01 $ .01 $ (0.01)
Loss from discontinuing
Operations -- (0.01) -- (0.01)
------------ ------------ ------------ ------------
$ (0.01) $ -- $ .01 $ (0.02)
============ ============ ============ ============
Weighted average common
Shares outstanding
Basic and diluted 33,020,644 30,775,644 33,020,644 30,775,644
============ ============ ============ ============
See notes to consolidated financial statements
4
DCI TELECOMMUNICATIONS, INC
Consolidated Statements of Cash Flows
(unaudited)
Six months ended
June 30
2001 2000
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Reconciliation of net loss to net
Cash used in operating activities:
Net Income (loss)from continuing
Operations: 174,176 (145,524)
Adjustments to reconcile net loss from
Continuing operations to net cash
used in operating activities:
Amortization and depreciation 40,860 108,130
Discontinued operations -- (85,324)
Changes in assets and liabilitied:
(Increase) Decrease in:
Contracts receivable 1,334,655 (454,406)
Prepaid producers payments 667,464 --
Other current assets 6,596 13,360
Increase (Decrease)
Accounts payable & accrued expenses 10,514 584,877
Deferred revenue (2,357,327) (61,466)
Other current liabilities (66,334) --
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Net Cash used in operating activities (189,396) (40,353)
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Cash flows from investing activities:
Decrease in Long term Assets 109,611
Sale of fixed Assets -- 31,803
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Net Cash from (used in) investing
activities -- 141,414
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Cash flows from financing activities
Proceeds from line of credit -- 80,000
Advances from shareholders 68,788 17,000
Payments from shareholders (32,911) (52,056)
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Net Cash from financing activities 35,877 44,944
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Net (decrease) increase in cash (153,519) 146,005
Cash beginning of period 1,366,881 1,154,825
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Cash end of period 1,213,362 1,300,830
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See accompanying notes to consolidated financial statements
5
DCI Telecommunications, Inc.
Notes to Unaudited Financial Statements September 30, 2001
NOTE 1.
- -------
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 presenations 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.
6
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 (collectivelly, the Company)
consolidated results of operations and financial condition for the six months
ended September 30, 2001. The discussion should be read in conjunction with the
Company's consolidated financial statements and accompanying notes.
Liquidity and Capital Resources
- -------------------------------
At September 30, 2001 the Company had unrestricted cash of approximately
$1,213,000. Net cash decreased $ 153,000 during the last six months. Cash used
in operating activities was about $ 189,000
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
- -----------------------------------
Six months Ended
September 30
2001 2000
----------- -----------
Net Sales $ 2,694,053 $ 2,154,176
Net Sales from continuing operations increases approximately $ 540,000 in the
six months ending September 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 $ 1,912,110 $ 1,476,339
Cost of Sales increased $ 436,000 in the first six months compared to a year
ago. Cost of sales for Muller rose corresponding to their higher sales under the
new method of accounting.
2001 2000
------------ ----------
Selling, General & Administration
Expense $ 69,088 $ 256,702
Selling, General & Administration declined $ 188,000 in the current period
compared to last year six months period principally as a result of the higher
activity and more employees at the corporate level in the 2000 six months ended
September 30. The closing of the Stratford corporate office also contributed to
the expense decline
2001 2000
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Salaries and Compensation $ 411,504 $ 388,483
Salaries increased $ 23,000 in the current period compared to last years six
month period principally as a result of normal increase at Muller Media.
7
2001 2000
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Professional and Consulting Fees $ 278,690 $ 238,247
Professional fees increased $ 40,000 in the first six months principally
due to heavy legal fees as a result of litigation.
2001 2000
----------- ----------
Amortization and Depreciation $ 40,860 $ 108,082
Amortization and Depreciation decreased $ 36,000 over the prior year six 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 $ (197,111) $ (178,952)
Interest Expense $ 4,736 $ 10,439
The increase in Investment income is due to the sale of some investment Stock.
Muller Media accounts for over $ 170,000 of investment income. Interest expense
declined approximately $ 4,000 due to the lower debt at the corporate level.
8
PART II
OTHER INFORMATION
ITEM 1.- LEGAL PROCEEDING
The Company last reported that DCI had filed a Motion to dismiss the class
action lawsuit. Judgement was rendered on April 23, 2002 granting the Motion to
dismiss save and except for certain allegations relating to the Corzon stock due
to the fact that those facts were subject to additional discovery. DCI remains
confident that upon completion of discovery, the Motion to dismiss will be
maintained in its entirety.
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
The financial Statements have not been reviewed by independent
accountants and or auditors.
ITEM 6.- EXHIBITS AND REPORTS ON FORM 8-K
9
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: May 2, 2002 By /s/ John J. Adams
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John J. Adams
Chairman/CEO
10