<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 September 30, 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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(Registrants' 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 issuers classes of
common stock as of the latest practicable date.
Class Outstanding at October 13, 1995
- ----------------------- -------------------------------
Common stock, par value
$.05 per share 4,176,885
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DOTRONIX, INC.
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INDEX
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Part I - Financial Information Page(s)
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Item 1. Financial Statements (Unaudited)
Balance Sheets 1
Statements of Operations 2
Statements of Cash Flows 3
Notes to Financial Statements 4
Item 2. Managements' Discussion and Analysis
of Financial Condition and Results
of Operations. 5-6
Part II - Other Information
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 7
<PAGE>
PART I. FINANCIAL INFORMATION
--------------------------------
ITEM 1. FINANCIAL STATEMENTS
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DOTRONIX, INC.
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BALANCE SHEETS
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<TABLE>
<CAPTION>
ASSETS September 30, June 30,
- ------ 1995 1995
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(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,889,202 $ 2,028,371
Accounts receivable, less allowance
for doubtful accounts of $77,353
and $48,864, respectively 2,948,627 2,377,797
Inventories:
Raw materials 3,225,759 3,850,551
Work-in-process 743,322 480,723
Finished goods 358,354 350,880
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Total inventories 4,327,435 4,682,154
Prepaid expenses 91,650 87,775
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Total current assets 9,256,914 9,176,097
PROPERTY, PLANT & EQUIPMENT, at cost net of
accumulated depreciation of $5,088,915 and
$5,010,461, respectively 1,200,594 1,276,073
OTHER ASSETS:
Excess of cost over fair value of net assets
acquired, less amortization 827,973 845,973
Non-compete agreements, less amortization 8,750 12,500
Other 62,539 67,226
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TOTAL ASSETS $ 11,356,770 $ 11,377,869
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Revolving loan $ 1,778,638 $ 1,752,797
Accounts payable 863,776 833,898
Salaries, wages and payroll taxes 326,043 569,902
Other accrued liabilities 123,552 112,231
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Total current liabilities 3,092,009 2,834,683
STOCKHOLDERS' EQUITY:
Common stock, $.05 par value 208,845 208,661
Additional paid-in capital 10,943,861 10,940,929
Accumulated deficit (2,887,945) (3,040,549)
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Total stockholders' equity 8,264,761 8,109,041
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 11,356,770 $ 11,377,869
============ ============
</TABLE>
The balance sheet at June 30, 1995 has been taken from the audited financial
statements at that date.
See notes to financial statements.
1.
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DOTRONIX, INC.
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STATEMENTS OF OPERATIONS
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(Unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
-----------------------
1995 1994
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<S> <C> <C>
REVENUES: $4,040,378 $4,538,109
OPERATING EXPENSES:
Cost of Sales 2,826,636 3,260,562
Selling, general and administrative 994,366 1,004,240
Interest 66,772 55,228
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Total operating expenses 3,887,774 4,320,030
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Net income $ 152,604 $ 218,079
========== ==========
Net income per common and common
equivalent share $ .04 $ .06
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Average number of common and common
equivalent shares outstanding 4,280,202 3,844,838
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</TABLE>
See notes to financial statements.
2.
<PAGE>
DOTRONIX, INC.
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STATEMENTS OF CASH FLOWS
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(Unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
-----------------------------
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 152,604 $ 218,079
Adjustments to reconcile net income to
cash provided by operating
activities:
Depreciation and amortization 100,204 112,890
Provision for loss on accounts
receivable 30,000 30,000
Changes in assets and liabilities:
Accounts receivable (600,830) (363,645)
Inventories 354,718 261,528
Prepaid expenses (3,875) (22,392)
Other assets 4,687 (28,936)
Accounts payable and accrued liabilities (202,660) 131,469
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Net cash (used in) provided by
operating activities (165,152) 338,993
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (2,975) (12,874)
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Net cash used in investing activities (2,975) (12,874)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 3,117 --
Borrowings on revolving loan 3,557,893 4,300,000
Repayments on revolving loan (3,532,052) (4,198,505)
Payments on other long-term obligations -- (97,014)
Payments on bank loans -- (95,928)
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Net cash provided by (used in) financing activities 28,958 (91,447)
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (139,169) 234,672
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE QUARTER 2,028,371 578,592
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CASH AND CASH EQUIVALENTS AT THE END
OF THE QUARTER $ 1,889,202 $ 813,264
=========== ===========
</TABLE>
See notes to financial statements.
3.
<PAGE>
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 September 30, 1995, the statements of operations and
cash flows for the three month periods ended September 30, 1995 and 1994 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 September
30, 1995 and for the periods ended September 30, 1995 and 1994 presented herein
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, 1995.
4.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS
- ---------------------
Revenue for the three months ended September 30, 1995 decreased 11% from the
corresponding period of 1994 and increased 2% from the quarter ended June 30,
1995. The decrease is due to a decrease in the number of units shipped in both
the medical product and multi-media product lines. Shipments of these products
are expected to continue at these levels through the second quarter.
Gross margin percentage for the quarter was 30.0% compared to 28.2% for the
quarter ended September 30, 1994, and 31.5% for the year ended June 30, 1995.
The increase in gross margin from the comparable quarter of fiscal year 1994 was
due primarily to product mix with a higher percentage of medical and a lower
percentage of multimedia units shipped relative to the prior year and lower
levels of repair work. The decrease from the year ended June 30, 1995 was due to
the reverse, with reduced quantities of medical products shipped as referred to
above.
Selling, general and administrative expense decreased $9,874, or 1%, from the
comparable prior year period.
Interest expense increased $11,544 from the comparable prior year period due
mainly to increased borrowing levels to maintain the $2,000,000 minimum debt
requirement as explained under Liquidity and Capital Resources below. This is
offset by an increase in cash and cash equivalents.
There is no income tax charge because the Company has available the tax benefit
of operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On October 3, 1994, the Company entered into Amendment Number 3 to the Revolving
Working Capital Loan commitment which has 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 (11.75% at September 30, 1995) and are secured
by all assets of the Company. The monthly principal payment on the demand loans
is $10,950. The amendment also provided 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.
<PAGE>
The Company believes future amounts available to it under this agreement should
be adequate to meet both short and long term capital needs.
During the three months ended September 30, 1995 operations used cash of
$165,000, primarily due to an increase in accounts receivable from higher than
average September shipments. Net borrowings on the revolving loan amounted to
$25,000. The overall result was to decrease cash by $139,000.
At September 30, 1995, working capital amounted to $6,164,905.
6.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27...... Financial Data Schedule
(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: October 27, 1995 DOTRONIX, INC.
/s/ William S. Sadler
By _______________________
William S. Sadler,
President and Treasurer
(Principal Executive
Officer)
/s/ Warren M. White
By _______________________
Warren M. White, Vice
President Finance
(Principal Financial and
Accounting Officer)
7.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,889,202
<SECURITIES> 0
<RECEIVABLES> 3,025,980
<ALLOWANCES> (77,353)
<INVENTORY> 4,327,435
<CURRENT-ASSETS> 9,256,914
<PP&E> 6,289,509
<DEPRECIATION> (5,088,915)
<TOTAL-ASSETS> 11,356,770
<CURRENT-LIABILITIES> 3,092,009
<BONDS> 0
<COMMON> 208,845
0
0
<OTHER-SE> 8,055,916
<TOTAL-LIABILITY-AND-EQUITY> 11,356,770
<SALES> 4,016,318
<TOTAL-REVENUES> 4,040,378
<CGS> 2,826,636
<TOTAL-COSTS> 3,821,002
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,772
<INCOME-PRETAX> 152,604
<INCOME-TAX> 0
<INCOME-CONTINUING> 152,604
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152,604
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
