<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 December 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
------------------------------- ------------------------
(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
----- -----
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 January 15, 1996
----------------------- -------------------------------
Common stock, par value
$ .05 per share 4,179,027
<PAGE>
DOTRONIX, INC.
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INDEX
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Part I - Financial Information Page(s)
- ------------------------------ -------
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
Part II - Other Information
- ---------------------------
Item 4. Submission of Matters to a Vote of
Securities Holders 6
Item 6.(b) Reports on Form 8-K 6
<PAGE>
PART I. FINANCIAL INFORMATION
--------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ------------------------------
DOTRONIX, INC.
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BALANCE SHEETS
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<TABLE>
<CAPTION>
December 31, June 30,
ASSETS 1995 1995
- ------ ------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,819,978 $ 2,028,371
Accounts receivable, less allowance
for doubtful accounts of $77,144
and $48,865, respectively 2,025,105 2,377,797
Inventories:
Raw materials 3,163,701 3,850,551
Work-in-process 541,161 480,723
Finished goods 440,630 350,880
------------ ------------
Total inventories 4,145,492 4,682,154
Prepaid expenses 80,758 87,775
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Total current assets 9,071,333 9,176,097
PROPERTY, PLANT & EQUIPMENT, at cost net of
accumulated depreciation of $5,167,369 and
$5,010,461, respectively 1,157,415 1,276,073
OTHER ASSETS:
Excess of cost over fair value of net assets
acquired, less amortization 809,973 845,973
Non-compete agreements, less amortization 5,000 12,500
Other 53,161 67,226
------------ ------------
TOTAL ASSETS $11,096,882 $11,377,869
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Revolving loan $ 1,987,509 $ 1,752,797
Accounts payable 355,041 833,898
Salaries, wages and payroll taxes 270,902 569,902
Other accrued liabilities 141,118 112,231
------------ ------------
Total current liabilities 2,754,570 3,268,828
STOCKHOLDERS' EQUITY:
Common stock, $.05 par value 208,951 208,661
Additional paid-in capital 10,946,006 10,940,929
Accumulated deficit (2,812,645) (3,040,549)
------------ ------------
Total stockholders' equity 8,342,312 8,109,041
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $11,096,882 $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.
<PAGE>
DOTRONIX,INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
-------------------------- -------------------------
1995 1994 1995 1994
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:(Note B) $3,077,795 $4,012,072 $7,118,173 $8,550,181
OPERATING EXPENSES:
Cost of Sales 1,951,445 2,729,518 4,778,081 5,990,080
Selling, general
and administrative 988,828 957,719 1,983,194 1,961,959
Interest 62,222 61,588 128,994 116,816
---------- ---------- ---------- ----------
Total operating expenses 3,002,495 3,748,825 6,890,269 8,068,855
---------- ---------- ---------- ----------
Net income $ 75,300 $ 263,247 $ 227,904 $ 481,326
========== ========== ========== ==========
Net income per
common and common
equivalent share $ .02 $ .07 $ .05 $ .12
---------- ---------- ---------- ----------
Average number of common
and common equivalent
shares outstanding 4,308,965 4,032,999 4,294,584 3,917,401
---------- ---------- ---------- ----------
</TABLE>
See notes to financial statements.
2.
<PAGE>
DOTRONIX, INC.
--------------
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Six months ended
December 31,
-------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 227,904 $ 481,326
Adjustments to reconcile net income (loss) to
cash provided by operating
activities:
Depreciation and amortization 200,400 199,795
Provision for loss on accounts receivable 30,000 60,000
Changes in assets and liabilities:
Accounts receivable 322,692 542,723
Inventories 536,662 454,872
Prepaid expenses 7,017 7,081
Other assets 14,065 (57,857)
Accounts payable and accrued liabilities (748,970) (418,375)
------------ ------------
Net cash provided by operating activities 589,770 1,269,565
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (38,243) (10,134)
------------ ------------
Net cash used in investing activities (38,243) (10,134)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 5,368 330,000
Borrowings on revolving and demand loans 7,689,538 9,190,769
Repayments on revolving and demand loans (7,454,826) (8,278,032)
Payments on other long-term obligations (132,942)
Payments on bank loans (720,000)
------------ ------------
Net cash provided by financing activities 240,080 389,795
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 791,607 1,649,226
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 2,028,371 578,592
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,819,978 $ 2,227,818
============ ============
</TABLE>
See notes to financial statements.
3.
<PAGE>
DOTRONIX, INC.
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NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
-----------
A. Basis of Presentation
The balance sheet as of December 31, 1995, the statements of operations for
the three and six month periods ended December 31, 1995 and 1994 and the
statements of cash flows for the six 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 December 31, 1995
and for the periods ended December 31, 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.
B. Revenues
Revenues for the quarter ended December 31, 1995 include $350,000 for a
price adjustment on the FAA upgrade project due to delays and pushouts of
delivery dates.
4.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS
- ---------------------
Revenue decreased 23% and 17%, respectively, for the quarter and six months
ended December 31, 1995 compared to the prior year. Revenues were down for the
periods due to a larger than expected seasonal slowdown in the retail multimedia
markets and fewer units shipped for the FAA upgrade program due to project
delays, offset by a $350,000 price adjustment due to those delays over the past
twelve months. The Company has recently received a new order of $2,200,000 for
the FAA upgrade which is expected to ship over the next six months.
Gross margin percentage for the quarter was 37% compared to 32% for the quarter
ended December 31, 1994. Gross margin for the six month period was 33% compared
to 30% in the prior year period.The increases are due primarily to the recording
of the price adjustment related to the FAA upgrade project referred to above.
Selling, general and administrative expenses increased $31,109, or 3% for the
quarter and $21,235 or 1% for the six months ended December 31, 1995, from the
comparable prior year periods. Both the quarter and year to date increases are
primarily due to the addition of two salespeople and increased spending for
selling related travel and advertising expenses.
Interest expense increased $634 and $12,178 for the three and six month periods,
respectively, compared to the prior year periods due mainly to increases in
rates.
There is no income tax charge because the Company has available the tax benefit
of operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the six months ended December 31, 1995 operations provided cash of
$590,000, primarily from net income and reductions in accounts receivable and
inventories offset by a decrease in accounts payable and accrued expenses. The
Company received $5,000 from the issuance of shares of common stock upon
exercise of options. Net borrowings on debt amounted to $230,000 and purchases
of property, plant and equipment used $38,000. The overall result was to
increase cash by $792,000.
At December 31, 1995 working capital amounted to $6,316,000
5.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 4. Submission of Matters to a Vote of Securities Holders
At the annual meeting of shareholders of the Company held on
November 8, 1995:
a) The following were elected directors:
Votes for Withheld
--------- --------
William S. Sadler 3,599,559 27,100
Ray L. Bergeson 3,599.859 26,800
Robert J. Snow 3,599,859 26,800
Edward L. Zeman 3,599,559 27,100
L. Daniel Kuechenmeister 3,599,859 26,800
b) An amendment to the Company's 1989 Stock Option and Restricted Stock
Plan to increase available shares from 250,000 to 500,000 was adopted
with 1,994,095 votes cast for the amendment, 446,161 against, and
59,965 abstaining.
c) An amendment to the Company's Nonemployee Director Stock Option Plan
to provide an annual grant of 500 shares to each nonemployee director
and to extend the term of the plan to coincide with the Company's
1989 Stock Option and Restricted Stock Plan was adopted with
3,228,893 votes cast for, 549,378 against, and 64,665 abstaining.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
Exhibit 27......Financial Data Schedule
(b) No reports on Form 8-K were issued during the quarter.
6.
<PAGE>
SIGNATURES
----------
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: February 5, 1996 DOTRONIX, INC.
By /s/ William S. Sadler
--------------------------------
William S. Sadler,
President and Treasurer
(Principal Executive
Officer)
By /s/ David R. Beel
--------------------------------
David R. Beel,
Chief Financial Officer
7.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1996
<PERIOD-START> OCT-01-1995 JUL-01-1995
<PERIOD-END> DEC-31-1995 DEC-31-1995
<CASH> 2,819,978 0
<SECURITIES> 0 0
<RECEIVABLES> 2,102,249 0
<ALLOWANCES> (77,144) 0
<INVENTORY> 4,145,492 0
<CURRENT-ASSETS> 9,071,333 0
<PP&E> 6,324,784 0
<DEPRECIATION> (5,167,369) 0
<TOTAL-ASSETS> 11,096,882 0
<CURRENT-LIABILITIES> 2,754,570 0
<BONDS> 0 0
<COMMON> 208,951 0
0 0
0 0
<OTHER-SE> 8,133,361 0
<TOTAL-LIABILITY-AND-EQUITY> 11,096,882 0
<SALES> 3,045,599 7,061,917
<TOTAL-REVENUES> 3,077,795 7,118,173
<CGS> 1,951,445 4,778,081
<TOTAL-COSTS> 2,940,273 6,761,275
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 62,222 128,994
<INCOME-PRETAX> 75,300 227,904
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 75,300 227,904
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 75,300 227,904
<EPS-PRIMARY> .02 .05
<EPS-DILUTED> .02 .05
</TABLE>
