-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TZbwF0J5b0eNFCvR+G8AlVV9hs0DlXVtoFOZoD9rcAzA0wz4V2ksCKE06C0xY5NG exM+I6CU8lrW+HD2hMacww== 0000912057-01-005014.txt : 20010214 0000912057-01-005014.hdr.sgml : 20010214 ACCESSION NUMBER: 0000912057-01-005014 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOTRONIX INC CENTRAL INDEX KEY: 0000351809 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER TERMINALS [3575] IRS NUMBER: 411387074 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-09996 FILM NUMBER: 1537535 BUSINESS ADDRESS: STREET 1: 160 FIRST ST S E CITY: NEW BRIGHTON STATE: MN ZIP: 55112-7894 BUSINESS PHONE: 6126331742 MAIL ADDRESS: STREET 1: 160 FIRST STREET SE CITY: NEW BRIGHTON STATE: MN ZIP: 55112 10QSB 1 a2038387z10qsb.txt 10QSB 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, 2000 Commission 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.)
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 February 12, 2001 - ----------------------------- ---------------------------------- Common stock, par value 4,165,041 shares $ .05 per share
DOTRONIX, INC. INDEX
Part I - Financial Information Page(s) - ------------------------------ ------- Item 1. Financial Statements (Unaudited) Balance Sheets 3 Statements of Operations 4 Statements of Cash Flows 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 Part II - Other Information - --------------------------- Item 1. Exhibits and Reports on Form 8-K 9
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BALANCE SHEETS DOTRONIX, INC. (UNAUDITED)
December 31 June 30 ASSETS 2000 2000 ------------ -------------- Cash and cash equivalents $ 312,615 $ 75,466 Accounts receivable, less allowance for doubtful accounts of $28,893 at both dates 1,266,452 1,261,012 Inventories: Raw materials 1,358,270 1,255,966 Work-in-process 453,895 515,948 Finished goods 253,705 277,049 ------------ ------------ Total inventories 2,065,870 2,048,963 Prepaid expenses 73,314 47,359 ------------ ------------ Total current assets 3,718,251 3,432,800 PROPERTY, PLANT & EQUIPMENT at cost net of accumulated depreciation of $5,868,016 and $5,733,941 respectively 1,038,368 1,158,422 OTHER ASSETS: Excess of cost over fair value of net assets acquired, less amortization of $917,971 and $881,972, respectively 449,985 485,984 License agreement, net 7,500 15,000 Other 400 400 ------------ ------------ TOTAL ASSETS $ 5,214,504 $ 5,092,606 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Revolving loans $ 568,480 $ 453,328 Current maturities-capital lease obligations 4,807 33,256 Accounts payable 743,657 725,404 Salaries, wages and payroll taxes 167,505 214,264 Current portion-deferred gain on sale of building 47,613 47,613 Other accrued liabilities 60,428 172,106 ------------ ------------ Total current liabilities 1,592,490 1,645,971 DEFERRED GAIN ON SALE OF BUILDING 349,162 372,968 STOCKHOLDERS' EQUITY: Common stock, $.05 par value 208,252 203,737 Additional paid-in capital 10,913,426 10,883,778 Unearned compensation (4,750) (9,125) Accumulated deficit (7,844,076) (8,004,723) ------------ ------------ Total stockholders' equity 3,272,852 3,073,667 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,214,504 $ 5,092,606 ============ ============
See notes to financial statements 3 STATEMENTS OF OPERATIONS DOTRONIX, INC. (UNAUDITED)
Three months ended, Six months ended, December 31 December 31 2000 1999 2000 1999 ----------- ------------ ------------- ------------ REVENUES $ 1,947,437 $ 1,782,896 $ 3,997,434 $ 4,351,844 OPERATING EXPENSES: Cost of Sales 1,364,714 1,416,496 2,614,722 3,246,303 Selling, general and administrative 507,589 847,608 1,156,455 1,541,369 Interest 35,035 37,895 65,610 66,354 ----------- ----------- ----------- ----------- Net income (loss) $ 40,099 $ (519,103) $ 160,647 $ (502,182) =========== =========== =========== =========== Basic and diluted net income (loss) per common share (Note B) $ 0.01 $ (0.13) $ 0.04 $ (0.12) Average number of common shares outstanding 4,149,335 4,069,886 4,112,034 4,063,744
See notes to financial statements. 4 STATEMENTS OF CASH FLOWS DOTRONIX, INC (UNAUDITED)
Six months ended December 31 --------------------------------- 2000 1999 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings (loss) $ 160,647 $ (502,182) Adjustment to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Writedown for inventory obsolescence 90,582 70,000 Depreciation and amortization 177,574 146,596 Stock compensation 38,538 29,485 Amortization of deferred gain on sale of building (23,806) (23,806) Change in assets and liabilities: Accounts receivable (5,440) 200,209 Inventories (107,489) 37,726 Prepaid expenses (25,955) (54,035) Other assets - 2,988 Accounts payable and accrued liabilities (140,184) (100,989) -------------- -------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 164,467 (194,008) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (14,021) (50,452) -------------- -------------- NET CASH USED IN INVESTING ACTIVITIES (14,021) (50,452) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings on revolving loan 3,959,000 4,589,436 Repayments on revolving loan (3,843,848) (4,585,681) Payments of capital lease obligations (28,449) (76,762) -------------- -------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 86,703 (73,007) -------------- -------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 237,149 (317,467) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 75,466 621,414 -------------- -------------- CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 312,615 $ 303,947 ============== ==============
See notes to financial statements. 5 DOTRONIX, INC. NOTES TO FINANCIAL STATEMENTS A. Basis of Presentation The balance sheet as of December 31, 2000, the statements of operations for the three and six month periods ended December 31, 2000 and 1999 and the statements of cash flows for the six month periods ended December 31, 2000 and 1999 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, 2000 and for the three and six months periods ended December 31, 2000 and 1999 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, 2000. B. Earnings per share The following table reflects the calculation of basic and diluted earnings per share:
Three months Three months Six months Six months ------------ ------------ ---------- ---------- December 31 (1) December 31 (1) December 31 (1) December 31 (1) 2000 1999 2000 1999 INCOME (LOSS) PER SHARE - BASIC AND DILUTED Net income (loss) $40,099 ($519,103) $160,647 ($502,182) Weighted average shares outstanding 4,149,335 4,069,886 4,112,034 4,063,744 Net income (loss) per share - basic $0.01 ($0.13) $0.04 ($0.12)
(1) The effect of all stock options have been excluded from the calculation of earnings per share for the three months and six months ended December 31, 2000 and 1999, as the average trading price of the Company's common stock during these periods were less than the exercise price of the stock options. C. Revolving Line of Credit On February 23, 2000, the Company entered into a revolving credit facility with its president and major stockholder, and in September 2000 the Company's president and major stockholder agreed to extend the loan agreement to February 28, 2002, and to increase the loan limit to $1,250,000 in secured financing. Loan availability is subject to a borrowing limit equal to 80% of eligible receivables. The revolving credit facility contains various restrictive covenants including a minimum tangible net worth balance of $2.0 million. As of February 12, 2001 the Company had $498,000 available under the 6 revolving credit facility. Interest on outstanding borrowings under the revolving credit facility is accrued at the Wells Fargo Bank prime interest rate plus 3%. Additionally, the Company is required to issue warrants on the Company's stock to the president and major shareholder for incremental increases in the outstanding borrowings balance. One warrant is issued for every $4 in incremental borrowings made by the Company. All warrants issued expire in 4 years and have an exercise price equal to the fair market value of the Company's stock at the date of grant. Once repayments on the facility have been made, additional warrants are issued for incremental borrowings on the facility only to the extent that the new outstanding borrowings balance exceeds the previous high outstanding borrowings balance. The Company recorded interest expense of $30,000 for the six months ended December 31, 2000 related to the warrants. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue increased by $165,000, or 9%, for the three months ended December 31, 2000, and decreased $354,000, or 8%, for the six months ending December 31, 2000, compared to like periods in the prior year. Over the past several years the Company has seen a decline in sales and a decline in unit order size for several of its mature products. In March 2000 the Company informed several of its customers of its unwillingness to accept low volume orders and its intention to discontinue maintenance of manufacturing capacity for several products if order unit size did not increase. The result of the customer notification has been an increase in sales for mature products in the quarter ended December 31, 2000 over the prior year quarter. The decrease in sales for the six month period ended December 31, 2000, over the prior year six month period, was attributable to a one time order of $700,000 shipped in August and September of 1999, partially offset by the increase in sales of mature products in the current six month period. The Company's revenues and earnings for the quarter ended and six months ended December 31, 2000 are not necessarily indicative of those for future periods. The gross margin percentage for the quarter ended December 31, 2000, was 30%, compared to 21%, for the same quarter ended December 31, 1999. The gross margin percentage for the six months ended December 31, 2000, was 35%, compared to 25%, for the six months ended December 31, 1999. Increased order size on certain mature monochrome products, and cost reduction efforts, contributed to the gross margin increase for both the quarter ended December 31, 2000 and the six month period ended December 31, 2000, compared to the same periods in the prior year. Selling, general, and administrative expenses decreased $340,000, or 40%, for the quarter ended December 31, 2000, and $385,000, or 25%, for the six months ended December 31, 2000, when compared to the same periods in the prior year. The decrease was due to significant expense reduction efforts. Interest expense decreased $3,000, or 8%, during the quarter ended December 31, 2000, and $1,000, or 1%, for the six months ended December 31, 2000, compared to the same periods of the prior year. 7 LIQUIDITY AND CAPITAL RESOURCES On February 23, 2000, the Company entered into a revolving credit facility with its president and major stockholder, and in September 2000 the Company's president and major stockholder agreed to extend the loan agreement to February 28, 2002, and to increase the loan limit to $1,250,000 in secured financing. Loan availability is subject to a borrowing limit equal to 80% of eligible receivables. The revolving credit facility contains various restrictive covenants including a minimum tangible net worth balance of $2.0 million. As of February 12, 2001 the Company had $498,000 available under the the revolving credit facility. Interest on outstanding borrowings under the revolving credit facility is accrued at the Wells Fargo Bank prime interest rate plus 3%. Company management believes that the cash and cash equivalents on hand at February 12, 2001 and future amounts available under the aforementioned credit agreement should be adequate to meet cash requirements for the next quarter. During the six months ended December 31, 2000, cash flow from operating activities was $164,000. During the same period $14,000 of cash was used in the purchase of property, plant, and equipment. Payment of capital lease obligations used $28,000 of cash. An increase in borrowings on the working capital loan contributed $115,000 to Company cash. The overall result was an increase in cash of $237,000. COMMON STOCK LISTING The Company's Common Stock previously was quoted on the NASDAQ Stock Market under the symbol "DOTX". Effective August 4, 1999 the Company's Common Stock transferred to the OTC Bulletin Board. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Securities Holders At the annual meeting of the shareholders of the Company held on December 28, 2000 the following items were voted on: 8
Election of Directors Votes For Withheld --------- -------- William S. Sadler 3,838,981 93,935 Ray L. Bergeson 3,845,081 87,835 Edward L. Zeman 3,845,081 87,835 L. Daniel Kuechenmeister 3,845,081 87,835
Confirmation of Outside Auditors Votes For Against Abstain --------- ------- ------- Deloitte & Touche LLP 3,889,141 11,700 22,075
Item 6. Exhibits and reports on Form 8-K No reports on Form 8-K were issued during the quarter. 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 12, 2001 Dotronix, Inc. By /s/ William S. Sadler ---------------------- William S. Sadler President (Principal Executive Officer) By /s/ Robert V. Kling ---------------------- Robert V. Kling Chief Financial Officer (Principal Financial and accounting Officer)
9 -----END PRIVACY-ENHANCED MESSAGE-----