# 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 March 31, 2005 |  | 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 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 May 20, 2005
|----------------------- |  | ---------------------------
|Common stock, par value |  | 5,613,141 shares           
|$.05 per share         

Transitional Small Business
Disclosure Format (Check One)   Yes  
     No  X

---

DOTRONIX, INC. INDEX

Part I  Financial
Information

| | Item 1. Financial Statements
| | ----------------------------

| | 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
Operations
| | ---------------------------------------------------------------------------------------------

| | Item 3. Controls and Procedures
| | -------------------------------

Part II  Other Information

|
|
|

2

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PART I. FINANCIAL
INFORMATIONITEM 1. FINANCIAL STATEMENTS

# DOTRONIX, INC. CONDENSED BALANCE SHEETS

|ASSETS:                                                  |             | March 312005 |   | June 302004
|-------------------------------------------------------- | ----------- | ------------ | - | -----------
|                                                         |             |              |   |            
|                                                         | (UNAUDITED) |              |  
|CURRENT ASSETS:                                          |             |              |   |            
|Cash and cash equivalents                                |             |              | $ | 25,437     
|Accounts receivable, less
allowance                      |             |             
|for doubtful
accounts of $1,000 and $3,000, respectively |             |              |   | 6,724      
|Inventories                                              |             |              |   | 66,093     
|Prepaid expenses                                         |             |              |   | 35,480     
|                                                         |             |              |   |            
|TOTAL CURRENT ASSETS                                     |             |              |   | 133,734    
|                                                        
|PROPERTY AND EQUIPMENT                                   |             |              |   | 36,832     
|                                                         |             |              |   |            
|TOTAL ASSETS                                             |             |              | $ | 170,566    
|                                                         |             |              |   |            
|LIABILITIES AND STOCKHOLDERS' DEFICIT:                   |             |             
|CURRENT LIABILITIES:                                     |             |             
|Revolving loan payable to a
related party                |             |              | $ | 439,000    
|Accounts payable                                         |             |              |   | 238,106    
|Accrued salaries, wages and
payroll taxes                |             |              |   | 35,398     
|Other accrued liabilities                                |             |              |   | 20,974     
|Current portion-deferred gain
on sale of building        |             |             
|to a related
party                                       |             |              |   | 47,613     
|                                                         |             |              |   |            
|TOTAL CURRENT LIABILITIES                                |             |              |   | 781,091    
|                                                        
|LONG TERM LIABILITY TO A RELATED PARTY                   |             |              |   | 150,000    
|DEFERRED GAIN ON SALE OF BUILDING                        |             |             
|TO A RELATED PARTY                                       |             |              |   | 146,807    
|                                                         |             |              |   |            
|TOTAL LIABILITIES                                        |             |              |   | 1,077,898  
|                                                         |             |              |   |            
|Common stock, $.05 par value,
12,000,000 authorized,     |             |             
|5,613,141
and 5,578,241 shares issued and                |             |             
|outstanding,
respectively                                |             |              |   | 280,657    
|Additional paid-in capital                               |             |              |   | 11,789,530 
|Accumulated deficit                                      |             |              |   | (12,977,519
|                                                         |             |              |   |            
|TOTAL STOCKHOLDERS' DEFICIT                              |             |              |   | (907,332   
|                                                         |             |              |   |            
|TOTAL LIABILITIES AND                                    |             |             
|STOCKHOLDERS' DEFICIT                                    |             |              | $ | 170,566    
|                                                         |             |              |   |            

See notes to condensed financial
statements.

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

3

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

|                                              | Three
months endedMarch 31 |  | Nine months endedMarch 31
|--------------------------------------------- | -------------------------- |  | -------------------------
|                                              |                            |  |                          
|
|                                              |                            |  |                          
|REVENUES                                      |                            |  | $                        
|COST OF SALES                                 |                            |  |                          
|                                              |                            |  |                          
|GROSS MARGIN                                  |                            |  |                          
|SELLING, GENERAL, AND                         |                            | 
|ADMISTRATIVE 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.

4

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

|                                                     | Nine months ended March 31
|---------------------------------------------------- | --------------------------
|                                                     |                           
|
|                                                     |                           
|CASH FLOWS FROM OPERATING ACTIVITIES:                |                           
|Net loss                                             |                           
|Adjustment to reconcile net loss to net cash         |                           
|provided by (used in) operating activities:          |                           
|Depreciation                                         |                           
|Life insurance proceeds receivable                   |                           
|Deferred gain on sale of building                    |                           
|Loss on sale of property and equipment               |                           
|Stock compensation                                   |                           
|Changes in operating assets and liabilities:         |                           
|Accounts receivable                                  |                           
|Inventories                                          |                           
|Prepaid expenses                                     |                           
|Accounts payable and accrued liabilities             |                           
|                                                     |                           
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES  |                           
|                                                     |                           
|CASH FLOWS FROM INVESTING ACTIVITIES:                |                           
|Purchases of property and equipment                  |                           
|                                                     |                           
|CASH FLOWS FROM FINANCING ACTIVITIES:                |                           
|Borrowings on demand notes                           |                           
|Borrowings on revolving loan                         |                           
|Repayments on revolving loan                         |                           
|Sale of common stock                                 |                           
|                                                     |                           
|NET CASH PROVIDED BY (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.

5

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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, cancellations of
orders previously placed with the Company, or uncertainties associated with the
Companys efforts to restructure itself and its operations.

|A. |  | Basis
of Presentation
|-- |  | ---------------------

The condensed balance sheet as of
March 31, 2005, the condensed statements of operations for the three and nine month
periods ended March 31, 2005 and 2004 and the condensed statements of cash flows for the
nine month periods ended March 31, 2005 and 2004 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 March 31, 2005 and for the three and nine month periods ended March 31,
2005 and 2004 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 condensed 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. |  | Going
Concern
|-- |  | -------------

The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. In late
December 2004 an investor who provided the Company with a line of credit informed the
Company that he would no longer advance funds under the line. No funds have been advanced
since January 13, 2005. On January 28, 2005 the Company undertook a temporary layoff of
most of its employees, and it is likely that most of the employees will be permanently
laid off in the second calendar quarter.

6

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Since January 2005, the Company has
pursued discussions with creditors, stockholders, and others with an interest in the
Company in an effort to devise a plan for resolving outstanding liabilities and
obligations and restructure the Company and it operations. As a result of these
discussions the Company is pursuing the following plan:

| |  | A group, which includes current officers of the Company (Group), will acquire from the
Investor a portion of the line of credit obligation and the security interest in the
Companys assets.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Investor will provide additional capital to the Company for administrative costs and
working capital and cancel all of the remaining line of credit obligation for shares of
the Companys common stock.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company will settle outstanding notes payable to the Estate and the Companys
obligation under its facility lease, which is leased from the Estate, for shares of the
Companys common stock.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Group will acquire the operating assets of the Company in lieu of foreclosure of the
security interest underlying the portion of the line of credit obligation the Group
acquired from the Investor, and assume the trade payables of the Company for shares of the
Companys common stock.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company will seek additional capital for common stock from a limited group of persons
who are significant shareholders of the Company.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company will change its corporate domicile to Nevada and effect a two or three to one
reverse split of the issued and outstanding common stock of the Company, and in connection
with the transaction eliminate all of the outstanding warrants distributed in 2004.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There is no assurance the Company
will be successful in implementing the steps of the plan described above, and the failure
to achieve one of the steps could cause the entire plan to fail. Before the Company can
resolve the situation, the plan may change significantly. If the Company cannot implement
the plan or an effective variation of the plan, it is likely the Company would need to
seek protection from creditors under the Federal bankruptcy code. However, if the Company
can implement the plan or a reasonable variation, the result is that the Company will
become a shell corporation with limited cash and no meaningful liabilities seeking a
business venture in which to participate. The selection of a business opportunity in which
to participate is complex and extremely risky and will be made by management in the
exercise of its business judgment. There is no assurance that the Company will be able to
identify and acquire any business opportunity that will ultimately prove to be beneficial
to the Company and its shareholders.

These matters raise substantial doubt
that the Company will be able to continue as a going concern. The condensed financial
statements do not include any adjustments that may result from this uncertainty.

7

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|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 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.

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 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 2005 and 2004 net loss and net loss per share
would not have been materially different.

8

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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 operations, 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
net loss per common share is computed by dividing net loss by the weighted average number
of common shares outstanding. Diluted net 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 net loss per common share calculations as they are
anit-dilutive.

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

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 March 31, 2005,
$150,000 of borrowings were outstanding under the line of credit (the maximum amount
available) and are due November 30, 2008.

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 terms of which were based on advise of the investment banking
company. 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. Because of the financing problems
described below, in January 2005, the Company suspended the Registration Statement filed
with the SEC on Form SB-2 covering the warrant dividend, and currently no warrants may be
exercised or transferred in reliance upon such Registration Statement.

9

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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% annually. 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. As
of the date of this filing, no warrants have been issued as borrowings have not exceeded
$450,000. The line of credit is collateralized by substantially all of the assets of the
Company.

In December 2004, the Investor
informed the Company that he was unwilling to provide additional financing under the line
of credit. Funds were received on January 13, 2005, but funds requested subsequent to
January 13 were not advanced. As of March 31, 2005, $439,000 of borrowings were
outstanding under the line of credit.

Since January 2005, the Company has
pursued discussions with creditors, stockholders, and others with an interest in the
Company in an effort to devise a plan for resolving outstanding liabilities and
obligations and restructure the Company and it operations. As a result of these
discussions the Company is pursuing the following plan:

| |  | A group, which includes current officers of the Company (Group), will acquire from the
Investor a portion of the line of credit obligation and the security interest in the
Companys assets.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Investor will provide additional capital to the Company for administrative costs and
working capital and cancel all of the remaining line of credit obligation for shares of
the Companys common stock.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company will settle outstanding notes payable to the Estate and the Companys
obligation under its facility lease, which is leased from the Estate, for shares of the
Companys common stock.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Group will acquire the operating assets of the Company in lieu of foreclosure of the
security interest underlying the portion of the line of credit obligation the Group
acquired from the Investor, and assume the trade payables of the Company for shares of the
Companys common stock.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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| |  | The Company will seek additional capital for common stock from a limited group of persons
who are significant shareholders of the Company.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company will change its corporate domicile to Nevada and effect a two or three to one
reverse split of the issued and outstanding common stock of the Company, and in connection
with the transaction eliminate all of the outstanding warrants distributed in 2004.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There is no assurance the Company
will be successful in implementing the steps of the plan described above, and the failure
to achieve one of the steps could cause the entire plan to fail. Before the Company can
resolve the situation, the plan may change significantly. If the Company cannot implement
the plan or an effective variation of the plan, it is likely the Company would need to
seek protection from creditors under the Federal bankruptcy code. However, if the Company
can implement the plan or a reasonable variation, the result is that the Company will
become a shell corporation with limited cash and no meaningful liabilities seeking a
business venture in which to participate. The selection of a business opportunity in which
to participate is complex and extremely risky and will be made by management in the
exercise of its business judgment. There is no assurance that the Company will be able to
identify and acquire any business opportunity that will ultimately prove to be beneficial
to the Company and its shareholders.

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 $237,216 or 68%
for the three-month period ended March 31, 2005 and by $349,160 or 41% for the nine-month
period ended March 31, 2005, compared to the same periods in the prior year. The Company
currently generates revenue primarily from the sale of cathode ray tube (CRT) based
products and services. As CRT based products are in decline due to new technologies, and
the installed base of CRT based products is diminishing, the number of units of CRT
products sold or serviced continues to decline significantly. In addition, in December
2004 an outside investor informed the Company of his unwillingness to lend further funds
to the Company and in January 2005 the Company laid off substantially all of its
employees. Since June 2004 revenues have been minimal and the Company does not anticipate
any significant increase in revenues in the future.

The gross margin percentage for the
three-month period ended March 31, 2005 was 10% and 21% for the nine-month period ended
March 31, 2005, compared to 43% and 47%, respectively, for the same periods ended March
31, 2004. The decline in gross margin percentage in both the three month period and the
nine month period is due to one time high margin sales in the three month and nine month
periods in fiscal 2004, and substantial inventory write down charges of $55,968 for the
three month period and $180,968 for the nine month period of fiscal 2005 due to the
declining value of CRT based inventory and business issues discussed above.

11

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Selling, general, and administrative
expenses decreased $47,535 or 17% in the three-month period ended March 31, 2005 and
increased $137,691 or 17% in the nine-month period ended March 31, 2005, when compared to
the same periods of the prior year. The decrease for the three-month period was due to the
layoff of most of the employees in January 2005. The increase for the nine month periods
was due to costs associated with a common stock warrant dividend, stock grants to
directors, stock grants to employees in lieu of merit increases, and costs associated with
the Companys attempt to enter the digital signage market.

Interest expense increased $15,578 or
747% during the three-month period ended March 31, 2005 and $2,056 or 5% during the
nine-month period ended March 31, 2005, compared to the same periods of the prior year.
The increases were due to increased borrowings and to the amortization of costs associated
with warrants to purchase Company common stock issued to an outside investor in September
2004 to secure an increase in a line of credit.

LIQUIDITY AND CAPITAL
RESOURCES

Cash and cash equivalents as of March
31, 2005 was $25,437, a decrease of $219,593 from cash and equivalents as of June 30,
2004. During this period, the net cash used in operating activities amounted to $471,500
consisting of a net loss of $863,766 reduced by non-cash costs of $99,389 and changes in
current assets and liabilities of $292,877. Approximately $17,000 was used to purchase
demo software and hardware for the electronic digital signage product line.

The Company has sufficient cash to
pay minimal operating expenses. Continuing operations and payment of creditors will depend
on the success of the plans described in ITEM 2. above.

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 operations, additional inventory write-downs may be required if
revenues remain at current levels, or continue to decline in future periods.

12

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

13

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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:  May 20, 2005 | By: /s/ Kurt T.  Sadler                                                                                                                                           
|                    |                                                                                                                                                                   
|                    | Kurt T. Sadler
                                                                               President(Principal Executive Officer)                              
|                   
|                    | By: /s/ Robert V. Kling                                                                                                                                           
|                    |                                                                                                                                                                   
|                    | Robert V. KlingChief Financial Officer
                                                                               (Principal Financial and accounting Officer)

DOTRONIX, INC. EXHIBIT INDEX QUARTERLY REPORT ON FORM
10-QSB FOR QUARTER ENDED March 31, 2005

| | 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
| | ---------------

14

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