# 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, 2004               |  | 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.)       
|                                                      
|160 First Street, SE, New Brighton, MN 55112          
|                                                      
|(Address of principal executive offices)              
|                                                      
|651-633-1742                                          
|                                                      
|(Issuers telephone number)                           

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 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 November 12, 2004
|--------------------------------------- |  | --------------------------------
|Common stock, par value $ .05 per share |  | 5,612,741 shares                

Transitional Small Business Disclosure Format (Check
One)   YES       NO  X

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DOTRONIX, INC.
INDEX

Part I  Financial Information Item 1.   Condensed Financial Statements (Unaudited)  Balance Sheets  Statements of Operations  Statements of Cash Flows  Notes to Financial Statements  Item 2.   Managements Discussion and Analysis of Financial Condition and Results of Operation  Item 3.   Controls and Procedures  Part II  Other Information Item 6.   Exhibits


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PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

DOTRONIX, INC.
CONDENSED BALANCE SHEETS

|                                                         | September 302004 |  | June 302004
|-------------------------------------------------------- | ---------------- |  | -----------
|
|ASSETS:                                                  |                  |  |            
|CURRENT ASSETS:                                          |                  | 
|Cash and cash equivalents                                |                  |  | $          
|Accounts receivable, less allowance                      |                  | 
|for doubtful accounts of $3,000 and $3,900, respectively |                  |  |            
|Inventories                                              |                  |  |            
|Prepaid expenses                                         |                  |  |            
|                                                         |                  |  |            
|TOTAL CURRENT ASSETS                                     |                  |  |            
|PROPERTY AND EQUIPMENT                                   |                  |  |            
|                                                         |                  |  |            
|TOTAL ASSETS                                             |                  |  | $          
|                                                         |                  |  |            
|LIABILITIES AND STOCKHOLDERS DEFICIT:                   |                  | 
|CURRENT LIABILITIES:                                     |                  | 
|Accounts payable                                         |                  |  |            
|Salaries, wages and payroll taxes                        |                  |  |            
|Other accrued liabilities                                |                  |  |            
|Current portion-deferred gain on sale of building       
|to a related party                                       |                  |  |            
|                                                         |                  |  |            
|TOTAL CURRENT LIABILITIES                                |                  |  |            
|                                                        
|LONG TERM LIABILITY TO A RELATED PARTY                   |                  |  |            
|REVOLVING LOAN PAYABLE TO A RELATED PARTY                |                  |  |            
|DEFERRED GAIN ON SALE OF BUILDING                        |                  | 
|TO A RELATED PARTY                                       |                  |  |            
|                                                         |                  |  |            
|TOTAL LIABILITIES                                        |                  |  |            
|                                                         |                  |  |            
|STOCKHOLDERS DEFICIT:                                   |                  | 
|Common stock, $.05 par value, 12,000,000 authorized,    
|5,612,741 and 5,578,241 shares issued and               
|outstanding, respectively                                |                  |  |            
|Additional paid-in capital                               |                  |  |            
|Unearned compensation                                    |                  |  |            
|Accumulated deficit                                      |                  |  |            
|                                                         |                  |  |            
|TOTAL STOCKHOLDERS DEFICIT                              |                  |  |            
|                                                         |                  |  |            
|TOTAL LIABILITIES AND                                    |                  | 
|STOCKHOLDERS DEFICIT                                    |                  |  | $          
|                                                         |                  |  |            

See notes to condensed financial statements.

Note:   The balance sheet as of June 30, 2004
has been condensed from the audited financial statements.

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# DOTRONIX, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                                             | Three months ended September 30
|-------------------------------------------- | -------------------------------
|
|REVENUES                                     |                                
|                                            
|COST OF SALES                                |                                
|                                             |                                
|                                            
|GROSS MARGIN                                 |                                
|                                            
|SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE |                                
|                                             |                                
|                                            
|LOSS FROM OPERATIONS                         |                                
|                                            
|INTEREST EXPENSE                             |                                
|                                             |                                
|                                            
|NET LOSS                                     |                                
|                                             |                                
|                                            
|NET LOSS PER COMMON SHARE-BASIC AND DILUTED  |                                
|                                            
|AVERAGE NUMBER OF COMMON SHARES             
|OUTSTANDING-BASIC AND DILUTED                |                                

See notes to condensed financial statements.

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# DOTRONIX, INC
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                     | Three months ended September 30
|---------------------------------------------------- | -------------------------------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                |                                
|Net loss                                             |                                
|Adjustment to reconcile net loss to net cash         |                                
|used in operating activities:                        |                                
|Depreciation                                         |                                
|Amortization of loan facility fee                    |                                
|Deferred gain on sale of building                    |                                
|Stock compensation                                   |                                
|Changes in operating assets and liabilities:         |                                
|Accounts receivable                                  |                                
|Inventories                                          |                                
|Prepaid expenses                                     |                                
|Accounts payable and other accrued liabilities       |                                
|Salaries, wages and payroll taxes                    |                                
|                                                     |                                
|                                                    
|NET CASH USED IN OPERATING ACTIVITIES                |                                
|                                                     |                                
|                                                    
|CASH FLOWS FROM INVESTING ACTIVITIES:                |                                
|Purchases of property and equipment                  |                                
|Proceeds from life insurace                          |                                
|                                                     |                                
|                                                    
|NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES  |                                
|                                                     |                                
|CASH FLOWS FROM FINANCING ACTIVITIES:                |                                
|Borrowings on revolving loan                         |                                
|Repayments on revolving loan                         |                                
|                                                     |                                
|                                                    
|NET CASH USED IN FINANCING ACTIVITIES                |                                
|                                                     |                                
|                                                    
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                
|                                                    
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     |                                
|                                                    
|                                                     |                                
|CASH AND CASH EQUIVALENTS AT END OF PERIOD           |                                
|                                                     |                                

See notes to condensed financial statements.

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DOTRONIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

This Form 10-QSB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-QSB
that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words
such as may, will, expect, believe, anticipate, estimate,
continue or comparable terminology are intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors,
many of which are not within the Companys control. These factors include but are not limited to economic conditions
generally and in the industries in which the Companys customers participate; competition within the Companys industry,
including competition from much larger competitors; technological advances that could render the Companys products less
competitive or obsolete; failure by the Company to successfully develop new products or to anticipate current or prospective
customers product needs; price increases or supply limitations for components purchased by the Company for use in its
products; availability of sufficient financing and delays, reductions, or cancellations of orders previously placed with the
Company.

A.    Basis of Presentation

The condensed balance sheet as of September 30, 2004, the condensed
statements of operations for the three month periods ended September 30, 2004 and 2003 and the condensed statements of cash flows
for the three month periods ended September 30, 2004 and 2003 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 as of September 30, 2004 and for the three month periods ended September 30, 2004 and 2003
presented herein have been made.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted in the United States of America have been
condensed or omitted. These financial statements should 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, 2004.

B.    Stock Options

The Company uses the accounting guidance of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, for measurement and recognition of stock-based
transactions with employees. No compensation cost has been recognized for options issued under the plans when the exercise price
of the options is at least equal to the fair market value of the common stock at the date of grant. Had compensation cost for the

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stock options issued been determined based on the fair value at the grant
date, consistent with the provisions of SFAS No. 123,Accounting for Stock Based Compensation, the
Companys 2004 and 2003 net loss and loss per share would have been changed to the pro forma amounts indicated below:

|                                                | Years ended September 30
|----------------------------------------------- | ------------------------
|
|Net loss as reported                            |                         
|Deduct: Total stock-based employee compensation |                         
|expense determined under the fair value method  |                         
|                                                |                         
|Pro forma net loss                              |                         
|                                                |                         
|Net loss per common share:                      |                         
|Basic and diluted  as reported                 |                         
|                                                |                         
|Basic and diluted  pro forma                   |                         
|                                                |                         

C.    ACCOUNTING POLICIES AND ACCOUNTING PRONOUNCEMENTS

Accounting Policies

Accounting estimates  The preparation of financial statements in
conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the reporting period. Reserves for
inventories represent significant management estimates. Actual results could differ from those estimates.

Cash equivalents  The Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash equivalents.

Credit and return policies  The Company has credit policies that
establish specific criteria related to credit worthiness that its customers must meet prior to the shipment of product to the
customer. The Company periodically makes limited and selective exceptions to its policy of not shipping to customers with overdue
balances when the particular customer has met specific criteria that are indicative of such customers ability to pay their
past due and future balances.

The Company does not accept returns from customers without its prior
authorization. Returns are typically accepted only for damaged or defective goods, or for pricing or shipping discrepancies. The
Company reserves the right to refuse authorization of any returns. If the Company accepts an unauthorized return or if a return is
the result of a customer error, the customer may be subject to a 10% handling charge. The Company reserves the right to cancel
open orders or backorders for those customers who abuse or excessively use return privileges.

Allowance for doubtful accounts  An allowance is established for
estimated uncollectible accounts receivable. The required allowance is determined by reviewing customer accounts

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and making estimates of amounts that may be uncollectible. Factors considered
in determining the amount of the reserve include the age of the receivable, the financial condition of the customer, general
business and economic conditions, and other relevant facts and circumstances. Unexpected changes in the aforementioned factors
would result in materially different amounts.

Fair value of financial instruments  Cash, receivables, revolving debt,
accounts payable, accrued expenses and other liabilities are carried at amounts that reasonably approximate their fair value due
to the short-term nature of these amounts or due to variable rates of interest that are consistent with current market rates.

Property and equipment  Property and equipment are recorded at cost
less accumulated depreciation. Depreciation is provided using the straight-line method over estimated useful lives of twenty-five
years for buildings and improvements, five years for laboratory equipment and office furniture and fixtures and three years for
transportation equipment. Data processing hardware and software is being depreciated over two to five years.

Inventory Valuation  Inventories are valued at the lower of cost
(first-in, first out method) or market. Reserves for obsolescence are established to reduce inventories to the lower of cost or
market for estimated surplus and discontinued items. The amount of the reserves for obsolescence is determined by analyzing
historical and projected sales information, plans for discontinued products and other factors. Changes in sales volumes due to
unexpected economic or competitive conditions are among the factors that would result in materially different amounts for this
item. Because there is considerable uncertainty in the continuation of current sales trends, additional inventory write-downs may
be required if revenues remain at current levels, or continue to decline in future periods.

Recognition of revenue  The Company recognizes revenue when title of
the goods passes to the customer.

Research and development  Selling, general and administrative expenses
include research and development costs which are expensed as incurred.

Loss per common share  Basic loss per common share is computed by
dividing net loss by the weighted average number of common shares outstanding. Diluted loss per common share assumes the exercise
of stock options and warrants using the treasury stock method, if dilutive. All stock options and warrants have been excluded from
loss per common share calculations as they are anit-dilutive.

Accounting Pronouncements

In December 2003, the FASB issued FASB Interpretation No. 46R (FIN 46R),
Consolidation of Variable Interest Entities. This interpretation addresses the requirements for business enterprises to
consolidate related entities in which they are determined to be the primary economic beneficiary as a result of their variable
economic interests. The interpretation provides guidance in evaluating multiple economic interests in an entity and in determining
the primary beneficiary. FIN 46R is effective for the Company for the first reporting period

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ending after December 15, 2004. The adoption of FIN 46R is not expected to
have an effect on the Companys financial statements.

ITEM 2.   MANAGEMENTSDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Since the passing of William S. Sadler, the founder and former President of
Dotronix, Inc., in June 2003, the Company has developed strategies to move from a business that manufactures cathode ray tube
based display devices toward a business that designs and builds electronic digital signage systems, with an emphasis on computer
software and visual media creation. In support of these strategies the Company is also implementing major changes in its operating
and financial structure.

From February 2000 to June 2003, the Company had a revolving credit facility
with its President and major shareholder, William S. Sadler. In June 2003, Mr. Sadler died unexpectedly and the Estate of William
S Sadler (Estate) assumed his interest in the loan. At the time of Mr. Sadlers death the revolving credit facility had a
balance of approximately $1,460,000. As of September 30, 2004, $150,000 of borrowings were outstanding under the line of credit
(the maximum amount available) and are due November 30, 2008.

On April 7, 2004 the Company entered into an agreement with a third party
investor (Investor) regarding a revolving line of credit of $450,000 for one year at 5% per annum. The agreement included an
option for the Investor to accept repayment of the loan in Company common stock at a price of $1.50 per share. As additional
consideration for the line of credit the Investor was to receive warrants with a seven-year term to purchase 100,000 shares of
Company common stock at an exercise price of $0.10 per share. The value of the warrants, using the Black-Scholes method of
determining warrant value, was $32,931, and is being amortized over the term of the loan. An amendment to the agreement dated
September 27, 2004 increased the line of credit to $1,000,000 and extended the due date of the revolving credit line to November
1, 2005. The Company agreed to issue one warrant to purchase Company common stock at $1.50 per share to the Investor for every $4
borrowed by the Company in excess of $450,000. No warrants have been issued as borrowings have not exceeded $450,000. As of
September 30, 2004, $170,000 of borrowings were outstanding under the line of credit.

Company management believes that cash on hand and available under the
combined lines of credit, of $1,150,000, is sufficient to enable the Company to operate in fiscal 2005.

In February 2004, the Company retained the services of an investment banking
company to assist in raising funds through equity financing. On March 16, 2004, the Board of Directors of Dotronix, Inc. declared
a warrant dividend. The distribution of the warrant dividend to shareholders of record on June 30, 2004 began on August 20, 2004.
Three year warrants to purchase up to 4,183,680 shares of Company common stock at prices ranging from $2.50 per share to $7.50 per
share were distributed. To date no warrants have been exercised.

There is no guarantee that the Company will be successful in obtaining equity
financing at terms and conditions acceptable to the Company and, even though the Company was able to

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satisfy its immediate working capital needs through debt financing, there is
no guarantee that the Company will be able to implement its new business plan successfully and continue operating or that the
Company will be profitable.

The Company has made progress in developing its new business plan to create a
strong presence in the electronic digital signage industry. It has hired key sales personnel and established relationships with a
major electronics company that gives the Company access to state of the art software, a crucial element of electronic digital
signage. The digital signage industry is in an early stage of development, and there is no assurance that the Company will be
successful in executing its new business plan.

COMMON STOCK LISTING
The Companys common stock is quoted on the OTC Bulletin Board under the symbol DOTX.

RESULTS OF OPERATIONS
Revenue decreased by $33,398 or 11% for the three months ended September 30, 2004 compared to the prior year. The decrease in
fiscal 2004 was caused by the continuing decline in demand for the Companys manufactured products, primarily cathode ray
tube based monochrome and color monitors. The Companys efforts to market electronic digital signage systems has not produced
significant revenues.

Gross margin percentage for the quarter ended September 30, 2004 was 52%
compared to 45% for the same quarter ended September 30, 2003. The improvement was due to the closing of the Eau Claire facility
in January 2003, which greatly reduced manufacturing overhead costs.

Selling, general, and administrative expenses increased by $117,638 or 48% in
the quarter ended September 30, 2004, when compared to the prior year. The increase was due to costs associated with the
registration and issuance of a Company common stock warrant dividend to shareholders of record on June 30, 2004 of approximately
$61,000, stock grants to directors of approximately $9,000, and stock grants to employees in lieu of merit increases for fiscal
2005 of approximately $42,000.

Interest expense decreased by $6,919, or 36% during the three month period
ended September 30, 2004 compared to the same period of the prior year, due to decreased borrowings and lower interest rates due
to renegotiation of terms on the Companys lines of credit.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents as of September 30, 2004 was $9,326, a decrease of
$235,704 from cash and equivalents as of June 30, 2004. During this period, the net cash used in operating activities amounted to
$223,933, of which approximately $61,000 was used in the issuance and registration of common stock warrants and $11,771 was used
to purchase test software and hardware for the electronic digital signage product line.

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COMMITMENTS AND CONTINGENCIES

Headquarter facilities, office equipment, and computer equipment are leased
under non-cancelable operating leases. Minimum future obligations on these operating leases and amounts owing under the revolving
credit facility, at September 30, 2004, are as follows:

Contractual obligation payments due by period:

|                                      | 1 Year |  | 2-3 Years |         | 4-5 years |   | Over 5 Years |  | Total
|------------------------------------- | ------ |  | --------- | ------- | --------- | - | ------------ |  | -----
|                                     
|Operating leases                      |        |  | $         | 104,922 |           | $ | 37,900       |  | $    
|                                     
|Revolving credit facility             |        |  |           |         |           |   | 170,000      |  |      
|(Line of Credit)                      |        | 
|                                     
|Long term debt to an affiliated party |        |  |           |        |           |   |             |  |      
|                                     
|                                      |        |  |           |         |           |   |              |  |      
|Total                                 |        |  | $         | 104,922 |           | $ | 207,900      |  | $    
|                                      |        |  |           |         |           |   |              |  |      

CRITICAL ACCOUNTING POLICIES

Credit and return policies  The Company has credit policies that
establish specific criteria related to credit worthiness that its customers must meet prior to the shipment of product to the
customer. The Company periodically makes limited and selective exceptions to its policy of not shipping to customers with overdue
balances when the particular customer has met specific criteria that are indicative of such customers ability to pay their
past due and future balances.

The Company does not accept returns from customers without its prior
authorization. Returns are typically accepted only for damaged or defective goods, or for pricing or shipping discrepancies. The
Company reserves the right to refuse authorization of any returns. If the Company accepts an unauthorized return or if a return is
the result of a customer error, the customer may be subject to a 10% handling charge. The Company reserves the right to cancel
open orders or backorders for those customers who abuse or excessively use return privileges.

Inventory Valuation  Inventories are valued at the lower of cost
(first-in, first out method) or market. Reserves for obsolescence are established to reduce inventories to the lower of cost or
market for estimated surplus and discontinued items. The amount of the reserves for obsolescence is determined by analyzing
historical and projected sales information, plans for discontinued products and other factors. Changes in sales volumes due to
unexpected economic or competitive conditions are among the factors that would result in materially different amounts for this
item. Because there is considerable uncertainty in the continuation of current sales trends, additional inventory write-downs may
be required if revenues remain at current levels, or continue to decline in future periods.

Allowance for Doubtful Accounts  An allowance is established for
estimated uncollectible accounts receivable. The required allowance is determined by reviewing customer accounts

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and making estimates of amounts that may be uncollectible. Factors considered
in determining the amount of the reserve include the age of the receivable, the financial condition of the customer, general
business and economic conditions, and other relevant facts and circumstances. Unexpected changes in the aforementioned factors
would result in materially different amounts.

Recognition of Revenue  The Company recognizes revenue when title of
the goods passes to the customer.

Item 3.   CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.
The Companys Chief Executive Officer, Kurt T. Sadler, and Chief Financial Officer, Robert V. Kling, have reviewed the
Companys disclosure controls and procedures as of the end of the period covered by this report. Based upon this review,
these officers believe that the Companys disclosure controls and procedures are effective in ensuring that information that
is required to be disclosed by the Company in reports that it files under the Securities Exchange Act of 1934 is recorded,
processed and summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission.

Changes in internal controls.
There were no changes in the Companys internal controls over financial reporting that occurred during the period covered
by this report that have materially affected, or are reasonably likely to materially affect, the Companys internal control
over financial reporting.

PART II  OTHER INFORMATION

Item 6.   Exhibits

See Exhibit Index below.

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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.

|                          |                                                                                   | Dotronix, Inc.
|------------------------- | --------------------------------------------------------------------------------- | --------------
|Date:   November 12, 2004 |                                                                                   | By:           
|                          |                                                                                  
|                          | Kurt T. Sadler, President(Principal Executive Officer)                            |               
|                          |                                                                                   | By:           
|                          |                                                                                  
|                          | Robert V. KlingChief Financial Officer(Principal Financial andAccounting Officer) |               

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DOTRONIX, INC.
EXHIBIT INDEX
QUARTERLY REPORT ON FORM 10-QSB
FOR QUARTER ENDED SEPTEMBER 30, 2004

| |  | 31.1* |  | Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| |  | ----- |  | ---------------------------------------------------------------------------------------------------

| |  | 31.2* |  | Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| |  | ----- |  | ---------------------------------------------------------------------------------------------------

| |  | 32.1* |  | Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| |  | ----- |  | ---------------------------------------------------------------------------------------------------

| |  | 32.2* |  | Certification
of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| |  | ----- |  | ---------------------------------------------------------------------------------------------------

| | *Filed herewith
| | ---------------

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