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Microcap & Penny Stocks : DCI Telecommunications - DCTC Today -- Ignore unavailable to you. Want to Upgrade?

To: JOE MEDSKER who wrote (9310)	10/15/1998 1:33:00 PM
From: wd	Read Replies (1) \| Respond to of 19331

Frequently Asked Investor Questions Over the year, DCI's selection of acquisition candidates has proven to be "above average." Without an Investment Banking relationship, to what do you attribute the success? DCI's management team has been together for a long time (see next question) and they were senior management -- not middle management -- of larger New York Stock Exchange companies. When we go after an acquisition there are certain things that we look for. The Company looks to take advantage of any under utilized assets, including applications to expand existing business. In this manner, not only are the apparent advantages added to the Company, but we actually can create value as well. Our due diligence teams explore all avenues including marketing, management and finance. Below are some examples of how we initially viewed acquisition candidates. In Muller Media DCI saw a successful non-telecom company that owns distribution rights to over 200 films. It has maintained its profitability and solid balance sheet. At present, we are looking to sell this subsidiary. Even in this current economic environment, we aim to get our price. CardCall International Holdings was a financially strapped company but management saw a distribution system that had value. In just seven months after the acquisition, DCI was able to sell the U.K. distribution system to SmarTalk for $9 million. The Canadian operation was later merged into a joint venture with PhoneLine International (for an update on the joint venture, see related question below). CyberFax was a venture capital play. We saw a very small company with a "breakout" product that could substantially increase future shareholder value. The first billable minutes were incurred in the quarter ended September 30, 1998. Edge Communications reported $5.4 million in sales and was marginally profitable in calendar year 1997. It is a well-managed, switchless prepaid phone card company that is now at a $40 million run rate, excluding the new contract with LDTI (see related question below). As a result of this aggressive external growth strategy, coupled with our substantial internal growth, DCI has begun to establish itself as a facilities-based service provider. How long has the management team been together? DCI's management team has been together for decades. Four members of DCI's top management have been together through three companies. While with those companies, they developed a reputation for achieving record-breaking revenue and earnings growth. How is the joint venture in Canada progressing? The consolidation process was slow and had some minor difficulties in the early stages from April to June 1998, resulting from cost reductions in Toronto. Since the consolidation in Vancouver, we now appear to have those problems behind us and are concentrating on improving sales and earnings. Does the new contract with Latin Debit Technologies, Inc. (LDTI) put Edge Communications over the $100 million mark? Without the new contract, Edge Communications is currently operating a $40 million + run rate. Therefore, with this contract, revenues should be close to $100 million. Apparently, DCI will reach its stated goal of $100 million. Will the Company continue to expand by acquisition? The Company is in the process of "rethinking" its acquisition strategy or growth by external expansion. It currently has a "full plate" internally, and must cultivate that growth. This is a pleasant surprise at this junction of our history. Our revenues per share growth will be more dramatic emphasizing internal growth. I believe Charles Zwebner is now with a company called VideoCall which did a reverse merger with a listed company called Legacy Software (NASDAQ: LGCY). Can you confirm that? That may be, but since Mr. Zwebner is no longer an employee of DCI Telecommunications or one of its subsidiaries, you will need to confirm that information on your own. Who is Alexander H. Walker, Jr.? Alexander H. Walker, Jr. is the Chairman of the Board and General Counsel for the Nevada Agency & Trust Company. He is also a director of VideoCall International Corporation. Did the rule changes applicable to Regulation S have an effect on the former CardCall International shareholders who exercised their options? It was and still is the Company's position that the changes to Regulation S affected the holding period for those individuals exercising options after April 27, 1998. The holding period was changed from 40 days to one year. DCI's attorneys issued a legal opinion so stating its position to the transfer agent. Claiming possession of an adverse opinion, the transfer agent removed the legends from some of the certificates. These actions took place during July and August of 1998. Did Nevada Agency & Trust's actions cause you to change transfer agents? Yes. There is an item in the Annual Report entitled "Due to Shareholders" - could you explain? Note 12 (Related Party Transactions) does not go into the details of the aforementioned question. With the approval of the Board of Directors, Mr. and Mrs. Murphy sold shares in private transactions in March and June of 1997, the proceeds of which were put back into DCI. These proceeds were specifically earmarked for CardCall companies. These transactions were fully reported to the Securities and Exchange Commission via 10Q, 10K, and 144 filings which can be verified through DCI's EDGAR filings (click on stock quote on our home page from there you will see a link to "Insider"). What is the difference between activation and usage in prepaid terminology? Activation is when the card is turned on. Usage is the actual consumption of minutes. Activation dictates immediate cash flow while usage dictates the reporting of sales for accounting purposes. What do you intend to do with the Series F convertible preferred? There is a "buy back" provision in the agreement and after certain events occur, we intend to exercise it. Is DCI involved in the class action suit brought against SmarTalk? Yes. In addition, we have also sued SmarTalk for short-changing us on the number of shares they should have delivered to us at the closing. Do you ever advertise your products? Absolutely. Edge Communications, for example, has full page ads in Intele-Card News magazine. If anyone is interested in purchasing prepaid phone cards or prepaid beepers they can call 800 605-2267. We are also in the process of allowing products to be purchased directly from the web site. On October 7, 1998, the Wall Street Journal ran an article on "Capital Crunch". How has that affected DCI? DCI like all other financially sound companies is "husbanding" its cash. Tight financial controls were already in place but recently we have become even more "miserly". As reported, the first quarter loss was principally due to building the European infrastructure and to a lesser degree CyberFax. We have plugged both these "holes" late in the second quarter and the results should show up in the third quarter. Why has our stock fallen since July 31, 1998, especially on such good news lately? There has been a great deal of speculation regarding certain former CardCall shareholders "selling off" their position. If it was just them that would be one thing, but in the words of Byron Wien, head US equity strategist at Morgan Stanley Dean Witter, "The market hadn't readily adjusted in price to reflect all the negatives out there, and now there's a new wave of negatives as we see financial demons appearing everywhere."