<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR COMMISSION
ENDED JUNE 30, 1996 FILE NO. 0-9996
DOTRONIX, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1387074
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 FIRST STREET S. E.
NEW BRIGHTON, MINNESOTA 55112-7894
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 633-1742
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act: COMMON STOCK,
$.05 PAR VALUE
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.
X
Yes _______. No _______.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
State issuer's revenues for its most recent fiscal year: $14,576,259
The aggregate market value of voting stock held by nonaffiliates of the
registrant as of September 6, 1996 was approximately $5,086,172 (based on the
last sale price of such stock as reported by NASDAQ Stock Market).
The number of shares outstanding of the registrant's common stock, as of
September 6, 1996 was 4,220,135 shares.
A portion of the Registrant's Proxy Statement for the 1996 Annual Meeting of
Shareholders is incorporated into Part III as set forth therein.
Page 1
<PAGE>
Part I
Item 1. BUSINESS
- ----------------
General
- -------
Dotronix, Inc. (the "Company") was founded in 1980 for the purpose of designing,
manufacturing and marketing cathode ray tube ("CRT") displays and closed circuit
television ("CCTV") monitors. Such displays and monitors are used to display
alphanumeric information, graphics and images in a broad range of applications.
These applications range from use in relatively simple information systems, such
as airline flight information displays, to much more sophisticated systems such
as computer-aided design, manufacturing and engineering ("CAD/CAM/CAE") systems
and medical diagnostic imaging systems.
The image on a CRT display or CCTV monitor is produced by magnetically guiding
an interruptible stream of electrons against the back of a phosphorescent
screen. This stream of electrons scans a series of horizontal lines from the top
to the bottom of the screen. When the stream of electrons strikes the back of
the screen a bright area is produced, and when it is interrupted a dark area
appears. In a medium-resolution unit the stream of electrons scans the screen in
a series of 525 horizontal lines 30 times per second, so that the series of
light and dark areas produced appears as a steady coherent image to the viewer.
High-resolution displays scan a greater number of lines, in some instances at a
greater speed, thus producing a clearer image on the screen.
Products
- --------
The Company primarily designs, manufactures and markets products for the medical
diagnostic, transportation, and the multimedia presentation and display markets.
The medical market products consist primarily of high resolution monochrome and
color displays marketed to the major OEMs within the market. This OEM base
serves x-ray, CT scan, MRI and other instrumentation uses. The medical products
are used in diagnostic and work station applications and for fixed and portable
instrumentation devices. CRT sizes range from 5" to 21".
The Company also markets a product line of large screen color displays in the
multimedia arena. Product uses include video walls, displays for flight
information systems, and other public information displays. Products range from
20" to 27".
The Company continues to selectively market to the federal government and its
agencies, offering high quality, medium resolution, color and monochrome
displays.
Although the Company has developed standardized CRT displays in order to provide
cost-effective products, it also works closely with customers in order to adapt
existing designs and to develop new products to meet customers' specific
requirements.
Marketing
- ---------
The Company believes that the market for CRT displays and CCTV monitors is
extensive and diverse. As described above, CRT displays and CCTV monitors are
used in a wide variety of computer-based information systems and video-based
systems. The Company's principal marketing
Page 2
<PAGE>
effort is directed toward the OEMs of the various systems in which displays and
monitors are used. Company personnel work with these OEMs in order to determine
the OEMs' technical needs and cost objectives and to adapt the Company's
standard designs accordingly. This adaptation process typically entails
specification of the components to be used within the Company's standard design
in order to meet these needs and objectives. Greater degrees of customization
are required, however, for certain display applications.
The Company's present customer base consists of approximately 200 OEMs and
system integrators located predominantly in the United States, with 4% of the
Company's revenues during the year ended June 30, 1996 consisting of sales to
customers in Europe, Canada and the Far East. Sales to the Company's five
largest customers accounted for 55% of its revenues during the year ended June
30, 1996. Three separate customers have accounted for 10% or more of revenues
during one or more of the last three fiscal years. Their respective percentages
of revenue by fiscal year are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Customer A 23% 19% 16%
Customer B 10% 11% 14%
Customer C 10% 14%
</TABLE>
In order to meet the diverse requirements of OEMs, the Company markets its
products directly to such manufacturers through its own technically trained
sales employees. The Company employs salespersons in St. Paul, Minnesota, Eau
Claire, Wisconsin, Los Angeles, California, Eatontown, New Jersey, and Atlanta,
Georgia. The Company's CRT displays and CCTV monitors are priced in the range
from $100 to $10,000; depending on size and other specifications, degree of
adaptation required and quantity.
Competition
- -----------
The Company believes that competition in the market for CRT displays and CCTV
monitors is generally based on price, product performance, product availability
and customer service. A number of other domestic and foreign companies,
including Panasonic Company, Sony, Tatung Company, Conrac Corporation,
Tektronix, Inc., Electrohome Electronics, Philips Electronics, Ltd., and
Mitsubishi Electronic Corporation, presently manufacture CRT displays and CCTV
monitors and market them to OEMs. In addition, some OEMs produce their own CRT
displays and CCTV monitors. Many of the companies in the CRT display and CCTV
monitor market have substantially greater resources than the Company.
The Company also faces potential competition from other, non-CRT based
information display technologies, such as liquid crystal displays and other
flat-panel displays. The Company believes, however, that such alternative
technologies have not yet proven economical and effective in most applications
in which the Company's products are used. The development of an economical and
effective flat-panel display could have an adverse effect on the Company's
business; therefore, the Company is following developments closely and
evaluating the potential use of this technology in its product lines.
Manufacturing and Suppliers
- ---------------------------
The Company purchases the components of its CRT displays and CCTV monitors from
outside suppliers and manufactures, assembles, and tests these components at its
New Brighton, Minnesota and Eau Claire, Wisconsin facilities.
Page 3
<PAGE>
The components of CRT displays and CCTV monitors include standardized CRTs,
magnetic deflection yokes and transformers, power sources and other standardized
electronic components as well as printed circuit boards and chassis manufactured
to the Company's specifications. The Company believes that such standardized
components generally are available from more than one source of supply and that
numerous manufacturers of components to specification are available. In the
manufacturing process, transistors, capacitors and other electronic components
are inserted into holes drilled in a printed circuit board. The components are
then flow-soldered to the circuit board and then the CRT, deflection yoke and
power source are mounted on the chassis and hand wired. The completed units are
then put through a series of alignment and other quality control tests plus a
burn-in period before they are shipped to the purchaser.
Governmental Regulations
- ------------------------
The Company's products, or the products into which they are incorporated, must
be certified by officials of the Department of Health and Human Services as
complying with regulations limiting the amount of radiation that may be emitted
by CRT displays and CCTV monitors. The Company has been able to obtain such
approvals without material delay. The Company has received exemption from
certain of the certification procedures under an exception contained in the
regulations which reduces the administrative burden of such certification
procedures. In addition, the Company's products are subject to Federal
Communications Commission regulations limiting the amount of radio noise
emissions from computing devices. The Company has been able to obtain the
necessary certifications in a timely manner.
Personnel
- ---------
At June 30, 1996 the Company had 159 full-time employees. The Company believes
that its relationship with its employees is satisfactory. None of the Company's
employees are covered by collective bargaining agreements.
Sales Backlog; Research and Development
- ---------------------------------------
The Company's sales backlog expected to be shipped by the end of the next fiscal
year was approximately $8 million at June 30, 1996 and 1995. The Company
believes that the dollar amount of backlog at a given date is not necessarily
indicative of sales for any succeeding period. For example, certain regular
customers of the Company place frequent orders on a short term basis only.
Research and development costs totaled approximately $297,000 for fiscal 1996,
$284,000 for fiscal 1995 and $351,000 for fiscal 1994.
Item 2. PROPERTIES
- ------------------
The Company's corporate offices and certain manufacturing operations are located
in a building that is approximately 17,000 square feet in New Brighton,
Minnesota. The Company also leases in New Brighton, under a five year lease
expiring March 1998, approximately 22,000 square feet of warehouse space from a
company wholly owned by William S. Sadler, president of the Company, at a rental
rate of $5,457 per month. The lease has a renewal option for five additional
years at the same rate. The Company utilizes, on a month to month rental basis,
approximately 4,500 square feet in New Brighton, Minnesota at $1,750 per month,
from another company wholly owned by William S. Sadler.
Page 4
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Dotronix' office and manufacturing facility in Eau Claire, Wisconsin is located
in an approximately 33,600 square foot building owned by the Company. Dotronix,
Inc. is also leasing 6,000 square feet of storage space on a month to month
basis, from an unaffiliated party, for $780 per month.
Item 3. LEGAL PROCEEDINGS
- -------------------------
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
None
Page 5
<PAGE>
Part II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock has been quoted on the NASDAQ Stock Market since
October 21, 1986 under the symbol "DOTX." The following table sets forth the
range of high and low closing sales prices of the common Stock in the NASDAQ
Stock Market as reported by NASDAQ.
<TABLE>
<CAPTION>
Fiscal Year Ended June 30, 1995: HIGH LOW
<S> <C> <C>
First Quarter..............1 1/4 1
Second Quarter.............1 3/4 1 1/16
Third Quarter..............3 1 1/8
Fourth Quarter.............2 15/16 1 3/4
Fiscal Year Ended June 30, 1996: HIGH LOW
First Quarter..............2 13/16 2 1/8
Second Quarter.............2 11/16 1 5/8
Third Quarter..............2 1/16 1 1/2
Fourth Quarter.............1 7/8 1 1/4
</TABLE>
At June 30, 1996 there were 402 record holders of the Company's Common Stock.
The Company has not paid dividends on its Common Stock and does not expect to
pay cash dividends for the foreseeable future. As of June 30, 1996, the
Company's borrowing arrangement prohibited the payment of cash dividends. The
Company's current policy is to retain any earnings to finance operations.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
The Company's revenues decreased $1,463,637 (9%) during the fiscal year ended
June 30, 1996 and increased $1,427,029 (10%) during the fiscal year ended June
30, 1995 from the respective preceding fiscal years. The decrease for fiscal
1996 was mainly due to decreased multimedia units shipped caused by financial
difficulties at a major end user. The increase for fiscal 1995 was due to the
very favorable acceptance of large screen color displays for the multi-media
market.
Three separate customers have accounted for 10% or more of revenues during one
or more of the last three fiscal years. Their respective percentages of revenue
by fiscal year are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Customer A 23% 19% 16%
Customer B 10% 11% 14%
Customer C 10% 14%
</TABLE>
The Company's gross margin percentage was 35% in fiscal 1996, 32% in fiscal 1995
and 24% in fiscal 1994. The increase in fiscal 1996 was due primarily to
favorable product mix and the recording
Page 6
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of a $350,000 price adjustment on the FAA upgrade program. The increase in
fiscal 1995 was due primarily to favorable product mix, the growth in sales of
multimedia products, and product and overhead cost containment efforts put in
place during fiscal 1994.
Selling, general, and administrative expenses increased 4% and decreased 7% in
fiscal 1996 and 1995, from their respective preceding years. The increase in
fiscal 1996 was due to the addition of two salespeople and increased advertising
expenditures. The decrease in fiscal 1995 was due to reduced payroll costs due
to personnel cutbacks in all administrative areas and lower amortization of
costs related to intangibles partially offset by expenses incurred under the
Company's bonus plans.
Interest expense increased 4% during the year ended June 30, 1996 and increased
38% during the year ended June 30, 1995 from the respective preceding years. The
fiscal 1996 increase was due to higher borrowing levels on the Revolving Working
Capital Loan. The fiscal 1995 increase was also due to higher borrowing levels
on the Revolving Working Capital Loan and to increases in interest rates.
As of June 30, 1996, the Company had available income tax operating loss
carryforwards of approximately $ 229,000 that can be used to offset future
taxable income.
Effects of Inflation:
- ---------------------
The Company believes that its revenues and results of operations have not been
significantly affected by inflation during the three years ended June 30, 1996.
Financial Condition, Liquidity and Capital Resources:
- -----------------------------------------------------
On October 3, 1994, the Company entered into Amendment Number Three 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 totalling $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 (11.25% at June 30, 1996) 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. This agreement has an expiration date of October 11, 1997.
The loan agreement contains covenants which, among other things, prohibit the
payment of dividends. The Company was in compliance with the covenants on June
30, 1996.
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.
On October 6, 1994, the expiration date on warrants to purchase 140,000 shares
of common stock, issued in fiscal 1992, was extended to December 31, 1997 in
conjunction with renegotiation of the president's employment contract (65,000 of
which remained outstanding at June 30, 1996).
During fiscal year 1996 25,000 shares of common stock were issued upon exercise
of warrants and 20,721 shares were issued upon exercise of stock options. Total
proceeds from these transactions were $48,661.
Page 7
<PAGE>
During fiscal year 1995 a total of 380,000 shares of common stock were issued
upon exercise of warrants that were issued in fiscal 1992. In addition, 21,518
shares of common stock were issued upon exercise of stock options. Total
proceeds from these stock issues were $403,240.
Cash Flow
- ---------
During fiscal year 1996 operations provided approximately $1,264,000 due mainly
to net income and depreciation and amortization. Financing activities provided
$233,000 from net borrowings on the revolving loan and proceeds from stock
option and warrant exercises. Purchases of equipment used $69,000. Overall cash
increased approximately $1,429,000.
During fiscal year 1995 operations provided approximately $983,000 due mainly to
its net income for the year. Financing activities, primarily proceeds from the
exercise of warrants and options for common shares, provided approximately
$512,000. Property, plant and equipment purchases used approximately $45,000.
Overall, cash increased $1,450,000.
During fiscal year 1994 operations used approximately $589,000 due mainly to the
net loss for the year. Financing activities provided a net of $62,000 and
property, plant, and equipment purchases used $98,000. Overall, cash decreased
$613,000.
At June 30, 1996, working capital was $7,061,974.
The Company has no material commitments for capital expenditures.
Item 7. FINANCIAL STATEMENTS
- -----------------------------
The financial statements of the Company are included (with an index listing all
such statements) in a separate financial section at the end of this Annual
Report on Form 10-KSB.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
- --------------------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None.
Page 8
<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
- ----------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- -------------------------------------------------
See Part I of this Report. Pursuant to General Instruction E(2), reference is
made to information contained under the heading "Election of Directors" in the
Company's definitive proxy statement for its 1996 Annual Meeting of Shareholders
to be filed with the Securities and Exchange Commission on or before October 4,
1996, which information is incorporated herein.
Executive Officers of the Company
- ---------------------------------
The executive officers of the Company who are not also directors of the Company
are as follows:
Name Age Position
---- --- --------
Robert J. Andrews 54 Vice President, Operations
David R. Beel 47 Chief Financial Officer
Robert J. Andrews has been Vice President, Operations of the Company since 1986.
He has been employed by the Company since 1982 as Operations Manager. Prior to
joining the Company Mr. Andrews was the Director of Operations of Audiotronics
Corporation.
David R. Beel has been Chief Financial Officer of the Company since 1995 and had
been its assistant controller since 1988. Prior to joining the company Mr. Beel
was Division Controller for US Home Corporation/Thompson Division.
Item 10. EXECUTIVE COMPENSATION
- --------------------------------
Pursuant to General Instruction of E(2), reference is made to information
contained under the heading "Executive Compensation" in the Company's definitive
proxy statement for its 1996 Annual Meeting of Shareholders to be filed with the
Securities and Exchange Commission on or before October 4, 1996, which
information is incorporated herein.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
Pursuant to General Instruction E(2), reference is made to information contained
under the heading "Voting Securities and Principal Holders" in the Company's
definitive proxy statement for its 1996 Annual Meeting of Shareholders to be
filed with the Securities and Exchange Commission on or before October 4, 1996,
which information is incorporated herein.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
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Pursuant to General Instruction E(2), reference is made to information contained
under the heading "Certain Transactions" in the Company's definitive proxy
statement for its 1996 Annual Meeting of Shareholders to be filed with the
Securities and Exchange Commission on or before October 4, 1996, which
information is incorporated herein.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(a) Listing of Exhibits
-------------------
Exhibit
Number Description
- ------- -----------
3.1 Articles of Incorporation, as amended to date of this report
(incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended June 30, 1988).
3.2 Bylaws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Annual Report on Form 10-K for the year
ended June 30, 1991).
4.1 Specimen certificate representing the Company's Common Stock
(incorporated by reference to exhibit 3 (a) to Amendment No.
2 to the Company's Registration Statement on Form S-18, File
No. 2-71333C).
10.1 Amended and Restated Employment Agreement of William S.
Sadler dated January 1, 1995 (incorporated by reference to
exhibit 10.1 to the Company's Annual Report on Form 10-KSB
for the year ended June 30, 1995).
10.2 Lease for land and building located at 60 Cleveland Avenue
S.E., New Brighton, Minnesota (incorporated by reference to
exhibit 10.10 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1988).
10.3 Amendment of lease for land and building located at 50
Cleveland Ave S.E., New Brighton, Minnesota (incorporated by
reference to exhibit 10.5 to the Company's Annual Report on
Form 10-KSB for the year ended June 30, 1993).
10.4 Dotronix, Inc. 1989 Stock Option and Restricted Stock Plan
(incorporated by reference to exhibit 10.9 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1990).
10.5 Form of Revolving Working Capital Loan Agreements
(incorporated by reference to exhibit 10.11 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1991).
Amendment No. 1 of Revolving Working Capital Loan Agreements
(incorporated by reference to exhibit 10.7 to the Company's
Annual Report on Form 10-KSB for the year ended June 30,
1993).
Page 10
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Exhibit
Number Description
- ------ -----------
10.6 Amendment No. 2 and Amendment No. 3 to Revolving Working Capital Loan
Agreement (incorporated by reference to exhibit 10.6 to the Company's
Annual Report on Form 10-KSB for the year ended June 30, 1995).
10.7 Dotronix, Inc. Non-employee Director Stock Option Plan (incorporated
by reference to exhibit 10.9 to the Company's Annual Report on Form
10-K for the year ended June 30, 1992).
23 Independent Auditors' Consent (filed herewith).
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K.
No reports were filed on Form 8-K during the quarter ended June 30,
1996.
Page 11
<PAGE>
SIGNATURES
- ----------
Pursuant to the requirements of Section 13 or 15(d) 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.
DOTRONIX, INC.
Date: September 13, 1996 By /s/ William S. Sadler
--------------------------------
William S. Sadler, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date Signature
- ---- ---------
September 13, 1996 By /s/ William S. Sadler
--------------------------------
William S. Sadler, President,
Treasurer and Director
September 13, 1996 By /s/ David R. Beel
--------------------------------
David R. Beel,
Chief Financial Officer
September 13, 1996 By /s/ Ray L. Bergeson
--------------------------------
Ray L. Bergeson,
Director
September 13, 1996 By /s/ Robert J. Snow
--------------------------------
Robert J. Snow,
Director
September 13, 1996 By /s/ Edward L. Zeman
--------------------------------
Edward L. Zeman,
Director
September 13, 1996 By /s/ L. Daniel Kuechenmeister
--------------------------------
L. Daniel Kuechenmeister,
Director
Page 12
<PAGE>
DOTRONIX, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Independent auditors' report........................F-2
Balance sheets......................................F-3
Statements of operations............................F-5
Statements of stockholder's equity..................F-6
Statements of cash flows............................F-7
Notes to financial statements.......................F-8
</TABLE>
F-1
Page 13
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Dotronix, Inc.
New Brighton, Minnesota
We have audited the accompanying balance sheets of Dotronix, Inc. (the Company)
as of June 30, 1996 and 1995, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended June 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Dotronix, Inc. as of June 30, 1996 and 1995,
and the results of its operations and cash flows for each of the three years in
the period ended June 30, 1996 in conformity with generally accepted accounting
principles.
/S/ Deloitte & Touche LLP
August 16, 1996
Minneapolis, Minnesota
F-2
Page 14
<PAGE>
BALANCE SHEETS
DOTRONIX, INC.
<TABLE>
<CAPTION>
ASSETS (Note C)
June 30
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................. $ 3,457,274 $ 2,028,371
Accounts receivable, less allowance for doubtful
accounts of $55,000 and $49,000, respectively............. 2,642,132 2,377,797
Inventories (Note A)....................................... 4,239,436 4,682,154
Prepaid expenses........................................... 79,785 87,775
----------- -----------
TOTAL CURRENT ASSETS............................... 10,418,627 9,176,097
PROPERTY, PLANT AND EQUIPMENT (Notes A and B)............... 1,123,958 1,276,073
OTHER ASSETS:
Excess of cost over fair value of net assets
acquired, less amortization (Note A)...................... 773,975 845,973
Non-compete agreements, less amortization (Note A)......... 12,500
Other...................................................... 39,095 67,226
----------- -----------
$12,355,655 $11,377,869
=========== ===========
</TABLE>
See Notes to Financial Statements.
F-3
Page 15
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Revolving loan (Note C).................................... $ 1,937,280 $ 1,752,797
Accounts payable........................................... 783,597 833,898
Salaries, wages and payroll taxes.......................... 532,971 569,902
Other accrued liabilities.................................. 102,805 112,231
----------- -----------
TOTAL CURRENT LIABILITIES.......................... 3,356,653 3,268,828
COMMITMENTS AND CONTINGENCIES (Notes D and H)................
STOCKHOLDERS' EQUITY (Notes C and E):
Common stock, $.05 par value; 12,000,000 shares authorized,
4,218,935 and 4,173,214 shares issued and outstanding,
respectively.............................................. 210,947 208,661
Additional paid-in capital................................. 10,987,304 10,940,929
Accumulated deficit........................................ (2,199,249) (3,040,549)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY......................... 8,999,002 8,109,041
----------- -----------
$12,355,655 $11,377,869
=========== ===========
</TABLE>
See Notes to Financial Statements.
F-4
Page 16
<PAGE>
STATEMENTS OF OPERATIONS
DOTRONIX, INC.
<TABLE>
<CAPTION>
Year ended June 30
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES (Note G)................................... $ 14,576,259 $ 16,039,896 $ 14,162,867
COSTS AND EXPENSES:
Cost of sales..................................... 9,401,912 10,984,090 11,087,411
Selling, general and administrative............... 4,080,387 3,917,238 4,205,451
Interest.......................................... 252,660 244.037 176,534
------------ ------------ ------------
13,734,959 15,145,365 15,469,396
------------ ------------ ------------
NET INCOME (LOSS)................................... $ 841,300 $ 894,531 ($ 856,529)
------------ ------------ ------------
NET INCOME (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE........................... $ .20 $ .22 $ .23
============ ============ ============
AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING....................................... 4,289,618 4,117,410 3,770,025
============ ============ ============
</TABLE>
See Notes to Financial Statements.
F-5
Page 17
<PAGE>
STATEMENTS OF STOCKHOLDERS' EQUITY
DOTRONIX, INC.
<TABLE>
<CAPTION>
Common stock Additional
----------------------- paid-in Accumulated
Shares Amount capital deficit Total
--------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
BALANCES AT
JUNE 30, 1993 3,761,696 $ 188,085 $ 10,552,015 ($ 3,078,551) $ 7,661,549
Common stock
issued 10,000 500 5,750 6,250
Net loss ( 856,529) ( 856,529)
--------- ----------- ------------ ------------- ------------
BALANCES AT
JUNE 30, 1994 3,771,696 188,085 10,557,765 ( 3,935,080) 6,811,270
Common stock
issued 401,518 20,076 383,164 403,240
Net income 894,531 894,531
--------- ----------- ------------ ------------- ------------
BALANCES AT
JUNE 30, 1995 4,173,214 208,661 10,940,929 ( 3,040,549) 8,109,041
Common stock
issued 45,721 2,286 46,375 48,661
Net income 841,300 841,300
--------- ----------- ------------ ------------- ------------
BALANCES AT
JUNE 30, 1996 4,218,935 $ 201,947 $ 10,987,304 ($ 2,199,249) $ 8,999,002
========= ========== ============ ============= ============
</TABLE>
See Notes to Financial Statements.
F-6
Page 18
<PAGE>
STATEMENTS OF CASH FLOWS
DOTRONIX, INC.
<TABLE>
<CAPTION>
Year ended June 30,
---------------------------------------------------------------
1996 1995 1994
--------------- --------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................ $ 841,300 $ 894,531 ($ 856,529)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization........................... 305,277 375,683 541,055
Provision for loss on accounts receivable............... 33,846 120,000
Changes in assets and liabilities:
Accounts receivable.................................. ( 298,179) ( 89,415) ( 545,914)
Inventories.......................................... 442,718 ( 10,421) 34,907
Prepaid expenses..................................... 7,990 ( 15,836) ( 36,034)
Other assets......................................... 28,121 ( 64,071) 6,366
Accounts payable and accrued liabilities........... ( 59,727) ( 415,147) ( 230,354)
Salaries, wages and payroll taxes payable............ ( 36,931) 307,325 ( 83,425)
--------------- -------------- ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES................................ 1,264,425 982,649 ( 589,220)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment.................... ( 68,666) ( 45,435) ( 97,600)
Proceeds from disposal of equipment........................... 500 11,414
--------------- --------------- ------------
NET CASH USED IN
INVESTING ACTIVITIES................................ ( 68,666) 44,935 ( 86,186)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock........................ 48,661 403,240 6,250
Borrowings on revolving loan.................................. 14,490,077 17,216,445 14,573,646
Repayments on revolving loan.................................. 14,305,594 ( 16,254,678) ( 14,094,959)
Payments on other long-term obligations ...................... ( 132,942) ( 62,841)
Payments on bank loans........................................ ( 720,000) ( 360,000)
--------------- --------------- ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES................................ 233,144 512,065 62,096
--------------- --------------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................................... 1,428,903 1,449,779 ( 613,310)
--------------- --------------- -------------
CASH AND CASH
EQUIVALENTS AT BEGINNING OF YEAR................................ 2,028,371 578,592 1,191,902
-------------- --------------- ------------
CASH AND CASH
EQUIVALENTS AT END OF YEAR...................................... $ 3,457,274 $ 2,028,371 $ 578,592
============== =============== ============
</TABLE>
See Notes to Financial Statements.
F-7
Page 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DOTRONIX, INC.
Years ended June 30, 1996, 1995 and 1994
A. Summary of significant accounting policies
Business:
The Company designs, manufactures and markets monochrome and color cathode ray
tube (CRT) displays and closed circuit television (CCTV) monitors for a broad
range of applications. CRT displays are used to display alphanumeric information
and graphics in market quotation systems, word processing systems, computer-
aided design, manufacturing and engineering (CAD/CAM/CAE) systems, desktop
publishing systems and other computer-based information systems. CCTV monitors
are used to display video images generated by medical imaging systems, closed-
circuit surveillance systems, studio monitor systems and other video-based
systems.
Cash equivalents:
The Company considers all highly liquid debt instruments with a maturity of
three months or less at the time of purchase to be cash equivalents.
Fair value of financial instruments:
Cash, receivables, accounts payable, revolving debt, accrued expenses and other
liabilities are carried at amounts which reasonably approximate their fair value
due to the short-term nature of these amounts or due to variable rates of
interest which are consistent with current market rates.
Inventories:
Inventories are valued at the lower of cost (first-in, first-out method) or
market. Inventories include material, direct labor and overhead and consist of
the following:
<TABLE>
<CAPTION>
June 30
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
Raw materials.......... $ 3,111,361 $ 3,850,551
Work-in-process........ 682,854 480,723
Finished goods......... 445,221 350,880
----------- -----------
$ 4,239,436 $ 4,682,154
=========== ===========
</TABLE>
Property, plant and equipment:
Depreciation is provided using the straight-line method over estimated useful
lives of 25 years for buildings, five years for laboratory equipment, eight
years for machinery, office furniture and fixtures and data processing equipment
and three years for transportation equipment. Building improvements are
depreciated over the remaining useful life of the building at the time of the
improvement.
Amortization of intangible assets:
Excess of cost over fair value of net assets acquired is being amortized using
the straight-line method over a 20 year period. The Company evaluates impairment
of this intangible asset, related to the acquisition of a subsidiary which was
merged into Dotronix, Inc., by considering the undiscounted future cash flows
and profitability of the products and technologies acquired in this business
combination. Non-compete agreements were amortized using the straight-line
method over their respective terms of three to ten years and are fully amortized
at June 30, 1996. Accumulated amortization relating to excess of cost over fair
value of net assets acquired was $666,000 and $594,000, and accumulated
amortization of non-compete agreements was $586,000 and $573,000 at June 30,
1996 and 1995, respectively.
F-8
Page 20
<PAGE>
Recognition of revenue:
The Company recognizes revenue upon shipment of products to the customer.
Net income (loss) per share:
Net income (loss) per share has been computed by dividing the net income (loss)
by the weighted average number of common and common equivalent shares
outstanding during each period. Outstanding stock options and warrants have not
been considered in the calculation for 1994 as they have an antidilutive effect.
Net income (loss) per share assuming full dilution would be the same.
Accounting estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and the expenses during the
reporting period. Actual results could differ from those estimates.
Recently issued accounting standards:
In October, 1995, The Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123). SFAS 123 requires expanded disclosures of stock-based
compensation arrangements with employees and encourages (but does not require)
application of the fair value recognition provisions of SFAS 123 to such
arrangements. SFAS 123 is required to be adopted for reporting purposes by the
Company beginning in 1996. Companies are permitted, however, to continue to
apply APB opinion No. 25, which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. The Company will continue to
apply APB No. 25 to its stock-based compensation awards to employees and will
disclose the required pro forma effect on net income and earnins per share.
<TABLE>
<CAPTION>
June 30
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
Cost:
Land.............................................. $ 182,509 $ 182,509
Building and building improvements................ 1,344,005 1,344,005
Machinery and laboratory equipment................ 3,341,969 3,333,863
Office furniture and fixtures..................... 686,156 629,920
Data processing equipment......................... 762,501 758,177
Transportation equipment.......................... 38,060 38,060
---------- ----------
6,355,200 6,286,534
Less accumulated depreciation
and amortization.................................... 5,231,242 5,010,461
---------- ----------
$1,123,958 $1,276,073
========== ==========
</TABLE>
F-9
Page 21
<PAGE>
C. Financing Arrangements
On October 3, 1994, the Company entered into Amendment Number Three 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
totalling $657,000 and a revolving loan with a maximum availability of
$4,000,000. The loans continue to bear interest at the base rate plus 3%
(11.25% at June 30, 1996) 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. This agreement
has an expiration date of October 11, 1997. Based on the value of pledged
assets at June 30, 1996, the Company had additional available borrowings of
approximately $633,000.
The loan agreement contains covenants which, among other things, prohibit
the payment of dividends. The Company was in compliance with the covenants on
June 30, 1996.
D. Commitments and Contingencies
The Company has no capital lease liabilities at June 30, 1996. Warehouse
facilities, office equipment and vehicles are leased under operating leases.
Total operating lease rent expense for the Company for the years ended June 30,
1996, 1995, and 1994 was $168,000, $150,000 and $145,000, respectively. Minimum
future obligations on these operating leases at June 30, 1996 are as follows:
<TABLE>
<CAPTION>
Year ending June 30:
<S> <C>
1997...............................$ 118,200
1998............................... 93,100
1999............................... 13,900
----------
$ 225,200
==========
</TABLE>
F-10
Page 22
<PAGE>
E. Stockholders' equity
The Company has a incentive stock option plan for employees for the granting of
options to purchase up to 500,000 shares of the Company's stock.
The Company also has a Nonemployee Director Stock Option Plan for the granting
of options to purchase up to 100,000 shares of the Company's common stock. Each
nonemployee director is automatically granted, on the first business day
following the Company's annual meeting, 500 shares of common stock and an option
to purchase an additional 2,500 shares of common stock. New directors receive an
initial grant, following the first board meeting or shareholders meeting at
which such director is elected, of an option to purchase 5,000 shares of common
stock.
The following schedule summarizes activity in the stock option plans for the
years ended June 30, 1996, 1995 and 1994, respectively:
<TABLE>
<CAPTION>
Stock Exercise
Options Price
------- -------------
<S> <C> <C>
Outstanding June 30, 1993.................. 195,581 $ .78--$2.34
Granted.................................... 10,000 $ 1.25
Cancelled.................................. (9,694) $ .78--$2.13
-------
Outstanding June 30, 1994.................. 195,887 $ .78--$2.34
Granted.................................... 136,109 $ 1.06--$2.54
Cancelled.................................. (22,948) $ .78--$2.13
Exercised.................................. 21,518 $ .78--$2.34
-------
Outstanding June 30, 1995.................. 287,530 $ 1.06--$2.54
Granted.................................... 10,000 $ 2.13
Cancelled.................................. (20,577) $ .78--$2.31
Exercised.................................. (18,721) $ .78--$1.19
-------
Outstanding June 30, 1996.................. 259,232 $ .78--$2.54
=======
</TABLE>
Options become exercisable in varying amounts beginning six months to five years
after the date of grant. Options to purchase 116,516 shares are exercisable at
June 30, 1996 at exercise prices of $.78 to $2.54.
In November 1994, 300,000 shares of common stock were issued upon the exercise
of warrants granted in fiscal 1992 in connection with the sale of common stock.
The president of the Company personally guaranteed up to $150,000 of the
Company's October, 1991 bank loan. In consideration of this guarantee, the
Company issued the president warrants to purchase 50,000 shares of the Company's
Common Stock. These warrants were exercised in June 1995 at an exercise price
of $1.00 per share.
In addition, the president of the Company privately purchased during fiscal
1992, 120,000 shares of the Company's Common Stock, together with warrants to
purchase an additional 120,000 shares, for an aggregate cash consideration of
$150,000. 30,000 of these warrants were exercised in October 1994 at an exercise
price of $1.00 per share. On October 6, 1994, the expiration of warrants to
purchase 140,000 shares was extended to December 31, 1997 in conjunction with
renegotiation of the president's employment contract, of which 65,000 remain
outstanding at June 30, 1996.
F-11
Page 23
<PAGE>
F. Income taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires an asset and liability approach to
financial accounting and reporting for income taxes. Deferred income tax assets
and liabilities are computed annually for differences between the financial
statement and income tax bases of assets and liabilities that will result in
taxable or deductible amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax expense is
the tax payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.
A reconciliation of the Company's income tax provision to taxes that would be
provided based on a statutory federal income tax rate of 35% to the Company's
effective rate is as follows:
<TABLE>
<CAPTION>
Year ended June 30
---------------------------------------------
<S> <C> <C> <C>
1996 1995 1994
Computed tax (benefit) provision at federal ---------- ---------- -----------
tax rate....................................... $ 294,500 $ 304,000 ($ 290,000)
Change in valuation allowance.................... ( 292,000) ( 338,000) 264,000
State income tax expense.........................
Permanent differences............................ 5,900 34,000 26,000
Graduated tax benefit............................ ( 8,400)
---------- ---------- -----------
Provision (benefit) $ 0 $ 0 $ 0
========== ========== ===========
</TABLE>
F-12
Page 24
<PAGE>
Deferred income taxes are provided for the temporary differences between the
financial reporting and income tax basis of the Company's assets and
liabilities. Temporary differences, net operating loss carryforwards and
valuation allowances comprising the net deferred taxes on the balance sheets are
as follows:
<TABLE>
<CAPTION>
June 30, 1996
---------------------------------------
Assets Liabilities Total
------------ ----------- ----------
<S> <C> <C> <C>
Tax depreciation greater than book depreciation..................... $ ($ 13,849) ($ 13,849)
Net operating loss carryforward..................................... 77,825 77,825
Accrual for obsolete inventory...................................... 343,937 343,937
Inventory costs capitalized......................................... 114,327 114,327
Tax credit carryforward............................................. 82,145 82,145
Allowance for doubtful accounts..................................... 18,850 18,850
Accrual for warranty reserve........................................ 8,030 8,030
Prepaid insurance................................................... ( 25,107) ( 25,107)
Accrual for vacation................................................ 24,781 24,781
Accrual for health insurance........................................ 17,922 17,922
Other............................................................... 7,172 ( 3,192) 3,980
Valuation allowance................................................. ( 652,841) ( 652,841)
------------ ---------- ----------
$ 42,148 ($ 42,148) $ 0
============ ========== ==========
June 30, 1995
---------------------------------------
Assets Liabilities Total
------------ ----------- ----------
Tax depreciation greater than book depreciation..................... $ ($ 33,690) ($ 33,690)
Net operating loss carryforward..................................... 312,882 312,882
Accrual for obsolete inventory...................................... 298,492 298,492
Inventory costs capitalized......................................... 227,149 227,149
Tax credit carryforward............................................. 82,145 82,145
Allowance for doubtful accounts..................................... 16,614 16,614
Accrual for warranty reserve........................................ 7,380 7,380
Prepaid insurance................................................... ( 26,543) ( 26,543)
Accrual for vacation................................................ 30,226 30,226
Accrual for health insurance........................................ 23,767 23,767
Other............................................................... 9,549 ( 3,193) 9,549
Valuation allowance................................................. ( 944,778) ( 944,778)
------------ ---------- ----------
$ 63,426 ($ 63,426) $ 0
============ ========== ==========
</TABLE>
At June 30, 1996, the Company has federal income tax net operating loss
carryforwards of approximately $ 229,000 which will expire in 2009 and has
available for state income tax purposes net operating loss carryforwards
ranging from $35,000 to $750,000 which will expire primarily in 2009. The
Company also has general business tax credit carryforwards of approximately
$82,000 which will expire from fiscal 2002 through 2006.
F-13
Page 25
<PAGE>
G. Significant customers and other information on operations
Three separate customers have accounted for 10% or more of revenues during
one or more of the last three fiscal years. Their respective percentages of
revenue by fiscal year are as follows:
1996 1995 1994
---- ---- ----
Customer A 23% 19% 16%
Customer B 10% 11% 14%
Customer C 10% 14%
The Company is susceptible to various risks due to the nature of its business,
including customer requested delays of shipments or th e possible cancellation
of certain orders.
Revenues include interest income from investments of approximately $122,000,
$37,000 and $16,000 for the years ended June 30, 1996, 1995 and 1994,
respectively.
Costs and expenses include research and development costs and advertising of
approximately $297,000 and $126,000, $284,000 and $106,000, and $351,000 and
$99,000 for the years ended June 30, 1996, 1995 and 1994, respectively.
H. Related-party transactions
The Company is leasing manufacturing and warehousing facilities owned by
companies which are owned by the president and major stockholder of Dotronix.
During each of the years ended June 30, 1996, 1995 and 1994, Dotronix incurred
approximately $86,000 for rental of these manufacturing and warehousing
facilities. Operating lease commitments as of June 30, 1996 (Note D) include
$115,000 of obligations to the president and major stockholder of Dotronix.
The Company leased its Wisconsin offices and production facilities from a
partnership comprised of certain former officers and shareholders of a
subsidiary which was merged into the Company (VMI). The terms of the capital
lease called for monthly installments of $4,800 through May 31, 1996 at which
time the Company would receive title to the building. In conjunction with the
refinancing in October 1994, the Company paid off the lease balance and received
title to the property.
I. Retirement plans
The Company has a 401(k) retirement plan for all Dotronix employees who elect to
participate once certain eligibility requirements are met. Each eligible
employee may elect to defer 1% to 15% of his or her compensation. The Company
may contribute an amount on behalf of each participant equal to a percentage of
each participant's compensation or an amount as determined each year by the
Board of Directors. Contributions to the plan by the Company were approximately
$50,000, $25,000 and $28,000 for the years ended June 30, 1996, 1995 and 1994,
respectively.
F-14
Page 26
<PAGE>
The Amended and Restated Employment Agreement with the president and major
shareholder now expires June 30, 1998 and provides for a base compensation of
$15,000 per month. In addition, subject to the Company's pretax earnings levels,
a minimum bonus of $150,000 each fiscal year is to be paid in cash or, at the
option of the president, up to 50% in the form of warrants to purchase common
stock. The Company incurred and expensed, relative to the bonus provision,
$150,000 for each of the years ended June 30, 1996 and 1995 and $34,000 for the
year ended June 30, 1994.
J. Supplemental cash flow statement information
Supplemental disclosures of cash flow activities are as follows:
<TABLE>
<CAPTION>
Year ended June 30
-----------------------------------
<S> <C> <C> <C>
Cash paid during the year for: 1996 1995 1994
--------- --------- ---------
Interest.......................... $ 253,000 $ 250,000 $ 196,000
Income taxes...................... $ -- $ -- $ 45,000
</TABLE>
F-15
Page 27
<PAGE>
DOTRONIX, INC.
EXHIBIT INDEX
ANNUAL REPORT ON FORM 10-KSB
FOR YEAR ENDED JUNE 30, 1995
Exhibit Page
Number in Form
- ------- -------
3.1 Articles of Incorporation, as amended to date of this
report (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended June 30,
1988).
3.2 Bylaws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form
10-K for the year ended June 30, 1991).
4.1 Specimen certificate representing the Company's
Common Stock (incorporated by reference to Exhibit
3(a) to Amendment No. 2 to the Company's Registration
Statement on Form S-18, File No. 2-71333C).
10.1 Amended and Restated Employment Agreement with
William S. Sadler dated January 1, 1995 (incorporated
by reference to exhibit 10.1 to the Company's Annual
Report on Form 10-KSB for the year ended June 30, 1995).
10.2 Lease for land and building located at 60 Cleveland
Avenue S.E., New Brighton, Minnesota (incorporated by
reference to exhibit 10.10 to the Company's Annual
Report on Form 10-K for the year ended June 30, 1988).
10.3 Amendment of lease for land and building located at 50
Cleveland Ave S.E., New Brighton, Minnesota
(incorporated by reference to exhibit 10.5 to the
Company's Annual Report on Form 10-KSB for the year
ended June 30, 1993).
10.4 Dotronix, Inc. 1989 Stock Option and Restricted Stock
Plan (incorporated by reference to exhibit 10.9 to the
Company's Annual Report on Form 10-K for the year ended
June 30, 1990).
Page 28
<PAGE>
Exhibit Page
Number in Form
- ------- -------
10.5 Form of Revolving Working Capital Loan Agreements
(incorporated by reference to exhibit 10.11 to the
Company's Annual Report on Form 10-K for the year
ended June 30, 1991). Amendment of Revolving
Working Capital Loan Agreements (incorporated by
reference to exhibit 10.7 to the Company's Annual
Report on Form 10-KSB for the year ended June 30,
1993).
10.6 Amendment No. 2 and Amendment No. 3 to Revolving
Working Capital Loan Agreement (incorporated by
reference to exhibit 10.6 to the Company's Annual
Report on Form 10-KSB for the year ended June 30,
1995).
10.7 Dotronix, Inc. Nonemployee Director Stock Option
Plan (incorporated by reference to exhibit 10.9
to the Company's Annual Report on Form 10-K for
the year ended June 30,1992).
23 Independent Auditors' Consent (filed herewith).
27 Financial Data Schedule (filed herewith).
Page 29
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-33702 of Dotronix, Inc. on Form S-8 and in Registration Statement No.
33-46456 of Dotronix, Inc. on Form S-3 of our report dated August 16, 1996
appearing in the Annual Report on Form 10-KSB of Dotronix, Inc. for the year
ended June 30, 1996.
/s/ Deloitte & Touche LLP
September 24, 1996
Minneapolis, Minnesota
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1996
<PERIOD-START> APR-01-1996 JUL-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 3,457,274 0
<SECURITIES> 0 0
<RECEIVABLES> 2,697,132 0
<ALLOWANCES> (55,000) 0
<INVENTORY> 4,239,436 0
<CURRENT-ASSETS> 10,418,627 0
<PP&E> 6,355,200 0
<DEPRECIATION> (5,231,242) 0
<TOTAL-ASSETS> 12,355,655 0
<CURRENT-LIABILITIES> 3,356,653 0
<BONDS> 0 0
<COMMON> 210,947 0
0 0
0 0
<OTHER-SE> 8,999,002 0
<TOTAL-LIABILITY-AND-EQUITY> 12,355,655 0
<SALES> 4,286,800 14,451,457
<TOTAL-REVENUES> 4,322,334 14,576,259
<CGS> 2,581,886 9,401,912
<TOTAL-COSTS> 3,755,146 13,482,298
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 66,384 252,661
<INCOME-PRETAX> 500,804 841,300
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 500,804 841,300
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 500,804 841,300
<EPS-PRIMARY> .12 .20
<EPS-DILUTED> .12 .20
</TABLE>
