Case study: DCTC
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1.- Trading prior to halt. Halt Monday, May 3rd
DATE CLOSING PRICE OPEN HIGH LOW VOLUME
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4/30/1999 2.125 2.062 2.187 2.000 223,500
4/29/1999 2.125 2.093 2.125 2.000 161,600
4/28/1999 2.093 2.062 2.187 2.062 32,000
4/27/1999 2.062 2.281 2.281 2.000 134,800
4/26/1999 2.187 2.312 2.406 2.187 29,400
4/23/1999 2.250 2.250 2.500 2.250 56,100
4/22/1999 2.312 2.281 2.312 2.187 36,400
4/21/1999 2.187 2.187 2.281 2.000 60,400
4/20/1999 2.156 2.250 2.250 2.000 56,700
4/19/1999 2.187 2.250 2.281 2.031 186,400
4/16/1999 2.218 2.437 2.437 2.218 112,700
4/15/1999 2.437 2.500 2.562 2.312 196,500
4/14/1999 2.437 2.781 2.781 2.437 165,000
4/13/1999 2.687 2.625 3.281 2.562 270,300
4/12/1999 2.593 2.468 2.625 2.375 51,900
4/09/1999 2.375 2.500 2.500 2.375 40,400
4/08/1999 2.437 2.531 2.562 2.218 218,000
4/07/1999 2.468 2.531 2.531 2.468 37,700
4/06/1999 2.468 2.875 3.031 2.343 268,300
4/05/1999 2.937 3.187 3.218 2.906 152,100
4/01/1999 3.062 3.250 3.281 3.062 47,500
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2.- The SEC reason
" questions regarding the accuracy and adequacy of DCI's financial statements, specifically DCI's apparent inflation of revenues for one or more business combinations as a 'pooling of interest.'''
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3.- The effect on filings (according to DCTC)
"As the company is in the process of concluding its year-end audit, it is anticipated that the effect of a change to the purchase method of accounting, will be a reduction of approximately $1 million, or 2%, of anticipated sales, and the addition of approximately $8 million of 'goodwill,' which will be amortized over 20 years. Aside from a reduction of the gross margin relating to the reduction in sales, there will be no other effect on Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), which is a key measurement factor in the telecom industry. This accounting change will have no bearing on the company's current or future business activities.''
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4.- Latest news from the Co.
"Consolidated revenues for the 12 months ended March 31, 1999 totaled $34.1 million, which is more than seven times reported revenues of $4.5 million for the comparable period ended March 31, 1998. Loss from operations, before other expenses, was $6.7 million, versus a $2.3 million loss for the same prior-year period. The total loss, including other expenses and discontinued operations, was $12.8 million, versus net income of $116,000 a year ago. Current and prior-year audited results have been restated in accordance with generally accepted accounting principles"......
"Subsequent to year end, a trading suspension was placed on DCI's stock due to Securities & Exchange Commission concerns over acquisition accounting using the pooling of interests method rather than the purchase method of accounting. The company moved rapidly to restate its prior 1O-Qs and is working closely with market makers to file the prerequisite forms necessary for the resumption of trading on the OTC Bulletin Board. In addition, DCI named Deloitte & Touche as its new independent accountants. ''I believe filing the audited statements on Edgar will have a beneficial effect on the market makers in filing the proper forms,'' said Mr. Murphy."
"DCI said the year was highlighted by the recent opening of its new facility in Madrid, Spain, the leasing of new switching equipment from Harris Corporation and the formation of several alliances, including but not limited to Retevision, the national cable company in Spain. The agreement with Retevision, which enables DCI to achieve CLEC status throughout Spain, also allows DCI to serve as an Internet service provider in Spain. DCI's access to Retevision's cable and wireless microwave transmission facilities will form the Spanish segment of the company's planned Pan-European Internet-based voice and data transmission network."
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5.- The share is not back in the OTC-BB yet, after aprox. 2 1/2 months. It is in the Pink Sheets at a price of aprox. $1.00 and 13,700 shares were traded in the last session
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6.- Some #'s
The Float is aprox. 33 MM shares
The Revs were 34 MM $
Losses were 12.8 MM $
Sh.Equity aprox. 20 MM $
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7.- DCI's 10-K
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