<PAGE>
CONFORMED COPY
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended March 31, 1995 Commission File No. 0-9996
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DOTRONIX, INC.
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(Exact name of registrant as specified in its charter)
Minnesota 41-1387074
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 First Street S.E.
New Brighton, Minnesota 55112
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(Address of principal executive offices) (Zip Code)
(612) 633-1742
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required 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 registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class Outstanding at April 28, 1995
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Common stock, par value
$ .05 per share 4,101,696
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DOTRONIX , INC.
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INDEX
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<TABLE>
<CAPTION>
Part I - Financial Information Page(s)
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<S> <C>
Item 1. Financial Statements (Unaudited)
Balance Sheets 1
Statements of Operations 2
Statements of Cash Flows 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations. 5-6
Part II - Other Information
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Item 6. (b) Reports on Form 8-K 7
</TABLE>
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PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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DOTRONIX, INC.
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BALANCE SHEETS
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<TABLE>
<CAPTION>
ASSETS March 31, June 30,
- ------ 1995 1994
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(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,011,529 $ 578,592
Accounts receivable, less allowance,
for doubtful accounts of $143,952
and $162,444, respectively 2,131,195 2,288,382
Inventories:
Raw materials 3,791,746 3,659,875
Work-in-process 530,990 643,546
Finished goods 558,336 368,312
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Total inventories 4,881,072 4,671,733
Prepaid expenses 86,549 71,939
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Total current assets 9,110,345 7,610,646
PROPERTY, PLANT & EQUIPMENT, at cost net of
accumulated depreciation of $4,957,176 and
$4,727,961, respectively 1,349,641 1,519,823
OTHER ASSETS:
Excess of cost over fair value of net assets
acquired, less amortization 863,972 917,970
Non-compete agreements, less amortization 16,250 27,500
Other 75,827 3,155
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TOTAL ASSETS $11,416,035 $10,079,094
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Revolving and demand loans $ 1,865,200 $ 791,029
Accounts payable 1,130,857 1,188,170
Salaries, wages and payroll taxes 440,840 262,577
Other accrued liabilities 245,331 173,106
Current portion of long-term debt 368,865
Current portion of long-term debt with related parties 50,936
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Total current liabilities 3,682,228 2,834,683
LONG-TERM DEBT, less current portion 387,063
LONG-TERM DEBT WITH RELATED PARTIES,
less current portion 46,078
STOCKHOLDERS' EQUITY:
Common stock, $.05 par value 205,085 188,585
Additional paid-in capital 10,871,265 10,557,765
Accumulated deficit (3,342,542) (3,935,080)
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Total stockholders' equity 7,733,808 6,811,270
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $11,416,035 $10,079,094
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</TABLE>
The balance sheet at June 30, 1994 has been taken from the audited financial
statements at that date.
See notes to financial statements.
1.
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DOTRONIX, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
REVENUES: $3,510,690 $ 3,783,098 $12,060,871 $10,837,026
OPERATING EXPENSES:
Cost of Sales 2,378,443 2,859,181 8,368,523 8,097,724
Selling, general
and administrative 958,679 1,114,661 2,920,638 3,135,719
Interest 62,356 39,414 179,172 129,202
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Total operating
expenses 3,399,478 4,013,256 11,468,333 11,362,645
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Net income (loss) $ 111,212 $ (230,158) $ 592,538 $ (525,619)
========== =========== =========== ===========
Net income (loss) per
common and common
equivalent share $ .03 $ (.06) $ .15 $ (.14)
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Average number of common
and common equivalent
shares outstanding 4,191,823 3,771,696 4,047,845 3,769,470
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</TABLE>
See notes to financial statements.
2.
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DOTRONIX, INC.
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STATEMENTS OF CASH FLOWS
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<TABLE>
<CAPTION>
Nine months ended
March 31,
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1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 592,538 $ (525,619)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation and amortization 299,843 388,873
Provision for loss on accounts
receivable 90,000 90,000
Common stock grant 6,250
Changes in assets and liabilities:
Accounts receivable 67,188 (527,311)
Inventories (209,339) (51,525)
Prepaid expenses (14,610) (22,250)
Other assets (72,672) 6336
Accounts payable and accrued liabilities 193,175 645,216
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Net cash provided by
operating activities 946,123 10,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (64,415) (71,391)
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Net cash used in investing activities (64,415) (71,391)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 330,000
Borrowings on revolving and demand loans 13,352,510 10,082,082
Repayments on revolving and demand loans (12,278,339) (10,384,633)
Payments on other long-term obligations (132,942) (43,162)
Payments on bank loans (720,000) (275,557)
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Net cash provided by (used in)
financing activities 551,229 (621,270)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,432,937 (682,661)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE PERIOD 578,592 1,191,902
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CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 2,011,529 $ 509,241
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</TABLE>
See notes to financial statements.
3.
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DOTRONIX, INC.
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NOTES TO FINANCIAL STATEMENTS
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(Unaudited)
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A. Basis of Presentation
The balance sheet as of March 31, 1995, the statements of operations for
the three and nine month periods ended March 31, 1995 and 1994 and the
statements of cash flows for the nine month periods then ended have been
prepared by the Company without audit. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the financial position, results of operations and cash flows at March 31,
1995, and for all periods presented, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the Company's financial statements and notes thereto
included in the Annual Report on Form 10-KSB of the Company for the fiscal year
ended June 30, 1994.
4.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS
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Revenue decreased 7% and increased 11%, respectively, for the quarter and nine
months ended March 31, 1995 compared to the prior year. As expected sales volume
was soft in the third quarter due to the normal late holiday slowdown. The
increase for the nine month period is due to very favorable acceptance of large
screen color displays for the multi-media market during the first and second
quarters. The Company expects flat sales for the fourth quarter compared to a
year ago but improved net income due to higher gross margins.
Gross margin percentage for the quarter was 32% compared to 24% for the quarter
ended March 31, 1994. Gross margin for the nine month period was 31% compared
to 25% in the prior year period. The increases are due primarily to the sales
growth explained above, favorable product mix, product cost reductions through
aggressive value engineering programs and overhead cost containment efforts put
in place during fiscal 1994.
Selling, general and administrative expenses decreased $155,982, or 14% for the
quarter and $215,081 or 7% for the nine months ended March 31, 1995, from the
comparable prior year periods due mainly to lower amortization expenses and
reduced payroll costs due to personnel cutbacks in all administrative areas
partially offset by payments and accruals made under the Company's bonus plans.
Interest expense increased $22,942 and $49,970 for the three and nine month
periods, respectively, compared to the prior year periods due to increases in
interest rates and higher borrowing levels on the Revolving Working Capital
Loan.
There is no income tax charge because the Company has available the tax benefit
of operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
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On October 3, 1994, the Company entered into Amendment Number 3 to the Revolving
Working Capital Loan commitment which had been in effect since October 10, 1991.
This amendment provided for the payoff of all of the Company's other existing
debt and consolidated it into two demand loans totaling $657,000 and a revolving
loan with a maximum availability of $4,000,000. The loans continue to bear
interest at 3% over the base rate (12% at March 31, 1995) and are secured by all
assets of the Company. The monthly principal payment on the demand loans is
$10,950. The amendment also provides for a total minimum monthly interest
payment based on the higher of the average daily outstanding principal balance
or $2,000,000. The agreement now has an expiration date of October 11, 1997.
5.
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The Company believes the amended agreement and consolidation of debt improved
the Company's liquidity and resources through more favorable payment terms than
its previous debt structure. Future amounts available to it under this
agreement should be adequate to meet both short and long term capital needs.
During the nine months ended March 31, 1995 operations provided cash of
$946,000, primarily from net income and non-cash charges for depreciation and
amortization offset by an increase in inventories. The Company received
$330,000 from the issuance of 330,000 shares of common stock upon exercise of
warrants. Net borrowings on debt amounted to $521,000 and purchases of
property, plant and equipment used $64,000. The overall result was to increase
cash by $1,433,000.
At March 31, 1995 working capital amounted to $5,428,000.
6.
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PART II - OTHER INFORMATION
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Item 6. (b) Reports on Form 8-K
No reports on Form 8-K were issued during the quarter.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 5, 1995
DOTRONIX, INC.
By /s/ William S. Sadler,
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William S. Sadler,
President and Treasurer
(Principal Executive
Officer)
By /s/ Warren M. White
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Warren M. White,
Vice President Finance
(Principal Financial and
Accounting Officer)
7.
