Dynatronics (DYNT) 10-Q 16 May 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2016	May. 12, 2016
Document and Entity Information:
Entity Registrant Name	DYNATRONICS CORP
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Trading Symbol	dynt
Amendment Flag	false
Entity Central Index Key	720,875
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		2,773,280
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Current assets:
Cash and cash equivalents	$ 1,078,406	$ 3,925,967
Trade accounts receivable, less allowance for doubtful accounts of $366,886 as of March 31, 2016 and $417,444 as of June 30, 2015	3,337,486	3,346,770
Other receivables	8,143	6,748
Inventories, net	5,368,257	5,421,787
Prepaid expenses and other	226,437	273,629
Prepaid income taxes	68,282	338,108
Total current assets	10,087,011	13,313,009
Property and equipment, net	4,754,949	5,025,076
Intangible assets, net	164,891	190,803
Other assets	561,933	623,342
Total assets	15,568,784	19,152,230
Current liabilities:
Current portion of long-term debt	135,165	121,884
Current portion of capital lease	180,764	173,357
Current portion of deferred gain	150,448	150,448
Line of credit		1,909,919
Warranty reserve	153,359	153,185
Accounts payable	1,843,418	2,520,327
Accrued expenses	51,223	279,547
Accrued payroll and benefits expense	448,620	263,092
Total current liabilities	2,962,997	5,571,759
Long-term debt, net of current portion	588,316	651,118
Capital lease, net of current portion	3,328,336	3,464,850
Deferred gain, net of current portion	1,868,061	1,980,897
Deferred rent	74,419	41,150
Deferred income tax liabilities	136,128	136,128
Total liabilities	$ 8,958,257	$ 11,845,902
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par value: Authorized 5,000,000 shares; 1,610,000 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively	$ 3,067,608	$ 3,087,554
Common stock, no par value: Authorized 50,000,000 shares; 2,742,355 shares and 2,642,389 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively	7,691,319	7,610,244
Accumulated deficit	(4,148,400)	(3,391,470)
Total stockholders' equity	6,610,527	7,306,328
Total liabilities and stockholders' equity	$ 15,568,784	$ 19,152,230

Consolidated Balance Sheets Par

Consolidated Balance Sheets Parenthetical - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Consolidated Balance Sheets Parenthetical
Allowance for doubtful accounts	$ 366,886	$ 417,444
Preferred stock par value
Preferred stock shares authorized	5,000,000	5,000,000
Preferred stock shares issued	1,610,000	1,610,000
Preferred stock shares outstanding	1,610,000	1,610,000
Common stock par value
Common stock shares authorized	50,000,000	50,000,000
Common stock shares issued	2,742,355	2,642,389
Common stock shares outstanding	2,742,355	2,642,389

Consolidated Statements of Inco

Consolidated Statements of Income - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Consolidated Statements of Income
Net sales	$ 7,408,990	$ 6,690,705	$ 22,281,107	$ 21,210,219
Cost of sales	4,922,570	4,498,818	14,606,877	13,987,149
Gross profit	2,486,420	2,191,887	7,674,230	7,223,070
Selling, general, and administrative expenses	2,620,238	2,217,397	7,445,023	6,848,746
Research and development expenses	249,995	236,461	769,223	687,961
Operating loss	(383,813)	(261,971)	(540,016)	(313,637)
Other income (expense):
Interest income	175	847	2,658	4,448
Interest expense	(71,690)	(87,127)	(229,207)	(215,156)
Other income, net	4,640	3,696	9,635	10,151
Net other expense	(66,875)	(82,584)	(216,914)	(200,557)
Loss before income taxes	(450,688)	(344,555)	(756,930)	(514,194)
Income tax (provision) benefit		136,542		213,562
Net loss	(450,688)	(208,013)	(756,930)	(300,632)
8% Convertible preferred stock dividend	(80,500)		(241,500)
Net loss attributable to common stockholders	$ (531,188)	$ (208,013)	$ (998,430)	$ (300,632)
Basic and diluted net loss per common share	$ (0.19)	$ (0.08)	$ (0.37)	$ (0.12)
Weighted-average common shares outstanding:
Basic	2,731,282	2,520,389	2,681,493	2,520,389
Diluted	2,731,282	2,520,389	2,681,493	2,520,389

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flows from operating activities:
Net loss	$ (756,930)	$ (300,632)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment	168,439	325,015
Amortization of intangible assets	25,912	33,478
Amortization of other assets	38,529	38,529
Amortization of building lease	188,950	104,972
Stock-based compensation expense	81,075	50,176
Change in deferred income taxes		(1,121,732)
Change in provision for doubtful accounts receivable	(50,558)	67,543
Change in provision for inventory obsolescence	18,422	62,209
Deferred gain on sale/leaseback	(112,836)	(100,298)
Change in operating assets and liabilities:
Change in Receivables, net	58,447	252,058
Change in Inventories, net	35,108	(50,478)
Change in Prepaid expenses and other assets	47,192	(765,337)
Change in Other assets	22,880	(326,584)
Change in Prepaid income taxes	269,826	539,800
Change in Accounts payable and accrued expenses	(706,208)	(43,006)
Net cash used in operating activities	(671,752)	(1,234,287)
Cash flows from investing activities:
Purchase of property and equipment	(44,152)	(49,143)
Proceeds from sale of property and equipment		3,800,000
Net cash provided by (used in) investing activities	(44,152)	3,750,857
Cash flows from financing activities:
Principal payments on long-term debt	(92,631)	(745,860)
Principal payments on long-term capital lease	(129,107)	(119,944)
Net change in line of credit	(1,909,919)	(1,642,132)
Net cash used in financing activities	(2,131,657)	(2,507,936)
Net change in cash and cash equivalents	(2,847,561)	8,634
Cash and cash equivalents at beginning of the period	3,925,967	332,800
Cash and cash equivalents at end of the period	1,078,406	341,434
Supplemental disclosure of cash flow information:
Cash paid for interest	247,545	215,334
Cash paid for income taxes		356,151
Supplemental disclosure of non-cash investing and financing activity:
Capital lease - building		$ 3,800,000
Preferred stock dividend payable in common stock	$ 241,500

Note 1. Presentation and Summar

Note 1. Presentation and Summary of Significant Accounting Policies	9 Months Ended
	Mar. 31, 2016
Notes
Note 1. Presentation and Summary of Significant Accounting Policies	NOTE 1. PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The condensed consolidated balance sheets as of March 31, 2016 and June 30, 2015, and the condensed consolidated statements of operations and cash flows for the three and nine months ended March 31, 2016 and 2015, were prepared by Dynatronics Corporation (the “Company”) without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all necessary adjustments, which consist only of normal recurring adjustments, to the financial statements have been made to present fairly the Company’s financial position, results of operations and cash flows. The results of operations for the three and nine months ended March 31, 2016, are not necessarily indicative of the results of operations that may be expected for the fiscal year ending June 30, 2016. The Company previously filed with the SEC an annual report on Form 10-K, as amended, which included audited financial statements for each of the two years ended June 30, 2015 and 2014. It is suggested that the financial statements contained in this Form 10-Q be read in conjunction with the financial statements and notes thereto contained in the Company’s most recent Form 10-K. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 amounts of revenue and expenses during the period. Actual results could differ from those estimates. Some of the more significant estimates relate to inventory, allowance for doubtful accounts, stock-based compensation and valuation allowance for deferred income taxes. Significant Accounting Policies There have been no significant changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015.

Note 2. Net Loss Per Common Sha

Note 2. Net Loss Per Common Share	9 Months Ended
	Mar. 31, 2016
Notes
Note 2. Net Loss Per Common Share	NOTE 2. NET LOSS PER COMMON SHARE Net loss per common share is computed based on the weighted-average number of common shares outstanding and, when appropriate, dilutive common stock equivalents outstanding during the period. Stock options, convertible preferred stock and warrants are considered to be common stock equivalents. The computation of diluted net loss per common share does not assume exercise or conversion of securities that would have an anti-dilutive effect. Basic net loss per common share is the amount of net loss for the period available to each weighted-average share of common stock outstanding during the reporting period. Diluted net loss per common share is the amount of net loss for the period available to each weighted-average share of common stock outstanding during the reporting period and to each common stock equivalent outstanding during the period, unless inclusion of common stock equivalents would have an anti-dilutive effect. The reconciliations between the basic and diluted weighted-average number of common shares outstanding for the three and nine months ended March 31, 2016 and 2015, are as follows: Three Months Ended Nine Months Ended March 31, March 31, 2016 2015 2016 2015 Basic weighted-average number of common shares outstanding during the period 2,731,282 2,520,389 2,681,493 2,520,389 Weighted-average number of dilutive common stock equivalents outstanding during the period - - - - Diluted weighted-average number of common and common equivalent shares outstanding during the period 2,731,282 2,520,389 2,681,493 2,520,389 Outstanding options for common shares not included in the computation of diluted net loss per common share, because they were anti-dilutive, for the three months ended March 31, 2016 and 2015, totaled 4,167,814 and 143,609, respectively, and for the nine months ended March 31, 2016 and 2015, totaled 4,167,814 and 138,978, respectively.

Note 3. Stock-based Compensatio

Note 3. Stock-based Compensation	9 Months Ended
	Mar. 31, 2016
Notes
Note 3. Stock-based Compensation	NOTE 3. STOCK-BASED COMPENSATION Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized over the employee’s requisite service period. The Company recognized $51,453 and $16,265 in stock-based compensation expense during the three months ended March 31, 2016 and 2015, respectively, and recognized $81,075 and $50,176 in stock-based compensation expense during the nine months ended March 31, 2016 and 2015, respectively. These expenses were recorded as selling, general and administrative expenses in the condensed consolidated statements of operations. Stock Options. The Company granted 39,596 shares under its 2015 Plan during the nine months ended March 31, 2016. There were no equity awards granted under its 2005 Plan during that period. The following table summarizes the Company’s stock option activity for the 2005 and 2015 Plans during the nine-month period ended March 31, 2016. Number of Options Weighted-Average Exercise Price Outstanding at beginning of period 91,152 $ 5.07 Granted 80,000 3.34 Exercised - - Cancelled (23,395) 7.10 Outstanding at end of period 147,757 3.81 Exercisable at end of period 64,337 4.76 The Black-Scholes option-pricing model is used to estimate the fair value of options granted under the Company’s stock option plans. Expected option lives and volatilities are based on historical data of the Company. The risk-free interest rate is based on the U.S. Treasury Bills rate on the grant date for constant maturities that correspond with the option life. Historically, the Company has not declared dividends on common stock and there are no plans to do so. As of March 31, 2016, there was $377,903 of unrecognized stock-based compensation cost related to grants under the 2005 and 2015 Plans that is expected to be expensed over a weighted-average period of four to ten years. There was $2,166 of intrinsic value for options outstanding as of March 31, 2016.

Note 4. Convertible Preferred S

Note 4. Convertible Preferred Stock and Common Stock Warrants	9 Months Ended
	Mar. 31, 2016
Notes
Note 4. Convertible Preferred Stock and Common Stock Warrants	NOTE 4. CONVERTIBLE PREFERRED STOCK AND COMMON STOCK WARRANTS On June 30, 2015, the Company completed a private placement with affiliates of Prettybrook Partners, LLC (“Prettybrook”) and certain other purchasers (collectively with Prettybrook, the “Preferred Investors”) for the offer and sale of shares of the Company’s Series A 8% Convertible Preferred Stock (the “Series A Preferred”) in the aggregate amount of approximately $4 million. Offering costs incurred in conjunction with the private placement were recorded net of proceeds. The Series A Preferred is convertible to common stock on a 1:1 basis. A Forced Conversion can be initiated based on a formula related to share price and trading volumes as outlined in the terms of the private placement. The dividend is fixed at 8% and is payable in either cash or common stock. This dividend is payable quarterly and equates to an annual payment of $322,000 or equivalent value in common stock. Certain redemption rights are attached to the Series A Preferred, but none of the redemption rights for cash are deemed outside the control of the Company. The redemption rights deemed outside the control of the Company require common stock payments or an increase in the dividend rate. The Series A Preferred includes a liquidation preference under which Preferred Investors would receive cash equal to the stated value of their stock plus unpaid dividends. In accordance with the terms of the sale of the Series A Preferred, the Company was required to register the underlying common shares associated with the Series A Preferred and the warrants. That registration statement filed on form S-3 went effective on August 13, 2015. The Series A Preferred votes on an as-converted basis, one vote for each share of common stock issuable upon conversion of the Series A Preferred, provided, however, that no holder of Series A Preferred shall be entitled to cast votes for the number of shares of common stock issuable upon conversion of such Series A Preferred held by such holder that exceeds the quotient of (x) the aggregate purchase price paid by such holder of Series A Preferred for its Series A Preferred, divided by (y) the greater of (i) $2.50 and (ii) the market price of the common stock on the trading day immediately prior to the date of issuance of such holder’s Preferred Stock. The market price of the common stock on the trading day immediately prior to the date of issuance was $3.19 per share. Based on a $4,025,000 investment and a $3.19 per share price the number of common stock equivalents eligible for voting by preferred shareholders is 1,261,755. The Preferred Investors purchased a total of 1,610,000 shares of Series A Preferred Stock, and received in connection with such purchase, (i) A-Warrants, exercisable by cash exercise only, to purchase 1,207,500 shares of common stock, and (ii) B-Warrants, exercisable by “cashless exercise”, to purchase 1,207,500 shares of common stock after exercise of A-Warrants. The warrants are exercisable for 72 months from the date of issuance and carry a Black-Scholes put feature in the event of a change in control. The put right is not subject to derivative accounting as all equity holders are treated the same in the event of a change in control. The Company’s Board of Directors has the authority to cause the Company to issue, without any further vote or action by the shareholders, up to 3,390,000 additional shares of preferred stock, no par value per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series. The Series A Preferred includes a conversion right at a price that creates an embedded beneficial conversion feature. A beneficial conversion feature arises when the conversion price of a convertible instrument is below the per share fair value of the underlying stock into which it is convertible. The conversion price is ‘in the money’ and the holder realizes a benefit to the extent of the price difference. The issuer of the convertible instrument realizes a cost based on the theory that the intrinsic value of the price difference (i.e., the price difference times the number of shares received upon conversion) represents an additional financing cost. The conversion rights associated with the Series A Preferred issued by the Company do not have a stated life and, therefore, all of the beneficial conversion feature amount of $2,858,887 were recorded as a deemed dividend on the same date the preferred shares were issued. The June 2015 dividend of $2,858,887 was added to the net loss to arrive at the net loss applicable to common stockholders for purposes of calculating loss per share for the year ended June 30, 2015.

Note 5. Comprehensive Income (l

Note 5. Comprehensive Income (loss)	9 Months Ended
	Mar. 31, 2016
Notes
Note 5. Comprehensive Income (loss)	NOTE 5. COMPREHENSIVE LOSS For the three and nine months ended March 31, 2016 and 2015, comprehensive loss was equal to the net loss as presented in the accompanying condensed consolidated statements of operations.

Note 6. Inventories

Note 6. Inventories	9 Months Ended
	Mar. 31, 2016
Notes
Note 6. Inventories	NOTE 6. INVENTORIES Inventories consisted of the following: March 31, 2016 June 30, 2015 Raw materials $ 2,101,074 $ 2,086,411 Finished goods 3,644,150 $ 3,693,921 Inventory obsolescence reserve (376,967) (358,545) $ 5,368,257 5,421,787

Note 7. Related-party Transacti

Note 7. Related-party Transactions	9 Months Ended
	Mar. 31, 2016
Notes
Note 7. Related-party Transactions	NOTE 7. RELATED-PARTY TRANSACTIONS The Company currently leases office and warehouse space in Detroit, Michigan and Hopkins, Minnesota from two shareholders and former independent distributors on an annual basis under operating lease arrangements. Management believes the lease agreements are on an arms-length basis and the terms are equal to or more favorable than would be available to the Company from third parties. The expense associated with these related-party transactions totaled $17,700 for the three months ended March 31, 2016 and 2015, and $53,100 for the nine months ended March 31, 2016 and 2015.

Note 8. Line of Credit

Note 8. Line of Credit	9 Months Ended
	Mar. 31, 2016
Notes
Note 8. Line of Credit	NOTE 8. LINE OF CREDIT There was no outstanding balance on the line of credit as of March 31, 2016 compared to the $1.9 million balance as of June 30, 2015. The line of credit was paid in full in February 2016 and the credit facility was closed. The reduction was made possible by the capital infusion from the sale of preferred stock on June 30, 2015, to affiliates of Prettybrook Partners. The Company believes that cash balances and cash generated from operating activities will continue to be sufficient to meet its annual operating requirements.

Note 9. Recent Accounting Prono

Note 9. Recent Accounting Pronouncements	9 Months Ended
	Mar. 31, 2016
Notes
Note 9. Recent Accounting Pronouncements	NOTE 9. RECENT ACCOUNTING PRONOUNCEMENTS In April 2016, the FASB issued Accounting Standard Update (ASU) 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” The amendments in this update apply to entities with transactions included within the scope of Topic 606 (i.e., contracts with customers to transfer goods or services for consideration). Per Topic 606, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this update do not change the core principle of the guidance in Topic 606, but rather clarify various aspects. Prior to identifying performance obligations in a contract, an entity must first identify the promised goods or services in the contract. The amendments in this update clarify that: 1) An entity is not required to assess if goods or services are performance obligations if they are immaterial in the contract with the customer. 2) An entity can account for shipping and handling as activities to fulfill the promise to transfer the goods rather than an additional promised service. To identify performance obligations, Topic 606 includes criteria for assessing whether promises to transfer goods or services are distinct. This update improves guidance by: 1) Emphasizing that an entity determines whether the promise in the contract is to transfer each of the goods or services or to transfer a combined item (or items) to which the promised goods and/or services are inputs. 2) Revising the related factors and examples. The amendments in this update clarify licensing implementation guidance by stating: 1) An entity’s promise to grant a customer a license to intellectual property that has significant standalone functionality does not include supporting or maintaining that intellectual property during the license period. An entity’s promise to provide a customer with a right to use the entity’s intellectual property is satisfied at the point in time the customer is able to use and benefit from the license, unless the entity expects to undertake activities that change the functionality of the intellectual property to which the customer has rights. 2) An entity’s promise to grant a customer a license to intellectual property that does not have significant standalone functionality (symbolic intellectual property) includes supporting or maintaining that intellectual property during the license period. The nature of the entity’s promise is both to (a) grant the customer rights to use and benefit from the entity’s intellectual property and (b) support or maintain the intellectual property during the license period. As such, a license to symbolic intellectual property is satisfied over time. 3) An entity considers the nature of its promise in granting a license in order to apply the other guidance in Topic 606 to a single performance obligation that includes a license and other goods or services. Topic 606 includes implementation guidance on revenue recognition for a sales-based or usage-based royalty promised in exchange for a license of intellectual property. The amendments in this update clarify the following: 1) An entity should not split a sales-based or usage-based royalty into a portion subject to the recognition guidance on sales-based and usage based royalties and a portion that is not subject to that guidance. 2) The guidance on sales-based and usage-based royalties applies to a sales-based or usage-based royalty where the predominant item related to the royalty is a license of intellectual property. Lastly, this update clarifies that contractual provisions requiring an entity to transfer control of additional goods or services to a customer should be distinguished from contractual provisions that define the attributes of a single promised license. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of update 2014-09. That is, the amendments in this update are effective for annual reporting periods after December 15, 2017, including interim reporting periods within that reporting period. The Company has contracts with customers to transfer goods or services for consideration within the scope of Topic 606; therefore, the noted amendments in ASU 2016-10 are applicable and the Company will implement the new guidance accordingly; however, due to the extensive nature of the new revenue recognition standard, the Company is evaluating the impact this new guidance will have on its financials. In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The FASB is issuing this update as part of its simplification initiative, which is aimed at reducing the cost and complexity of certain areas of the accounting codification. This update simplifies the accounting for share-based payment transactions through the following amendments: · · · · · For public entities, the amendments in this update are effective for fiscal years beginning after December 15, 2016. The Company notes that this guidance does apply to its reporting requirements and will implement the new guidance accordingly. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” The amendments in this update apply to entities with transactions included within the scope of Topic 606 (i.e., contracts with customers to transfer goods or services for consideration). The amendment in this update does not change the core principles in Topic 606, but rather clarify the implementation guidance on principle versus agent considerations. An entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. To improve the implementation guidance on principal versus agent considerations, this update seeks to clarify the following: 1. An entity determines whether it is a principal or agent for each specified good or service promised to the customer. If a contract includes more than one specified good or service, an entity could be both a principal and agent. 2. An entity determines the nature of each specified good or service, whether it is a good, a service, or a right to a good or service. 3. When another party is involved in providing goods or services to a customer, an entity that is a principal obtains control of (a) a good or asset from the other party that it then transfers to the customer; (b) a right to a service that will be performed by another party, which gives the entity the ability to direct that party to provide the service to the customer on the entity’s behalf; or (c) a good or service from the other party that it combines with other goods or services to provide the specified good or service to the customer. 4. The amendments in paragraph 606-10-55-39A clarify that indicators may be more or less relevant to the control assessment and that one or more indicators may be more or less persuasive to the control assessment. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of update 2014-09. That is, the amendments in this update are effective for annual reporting periods after December 15, 2016, including interim reporting periods within that reporting period. The Company notes that this guidance does apply to its reporting requirements and will implement the new guidance accordingly. In March 2016, the FASB issued ASU 2016-07, “Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.” The FASB is issuing this update as part of its simplification initiative, which is aimed at reducing the cost and complexity of certain areas of the accounting codification. The amendments in this update eliminate the requirement to retroactively adopt the equity method of accounting. Instead, the investor adds the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopts the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The update requires that an entity with an available-for-sale security that qualifies for the equity method should recognize in earnings the unrealized holding gain or loss in accumulated comprehensive income as of the date that the investment becomes qualified for the equity method use. This update becomes effective for all entities for fiscal years beginning after December 15, 2016. The Company does not believe adoption of this ASU will have a material impact on its financial statements. In March 2016, the FASB issued ASU 2016-06, “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force).” The amendments in this update clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments in this update is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. The four-step decision sequence requires an entity to consider whether: 1) the payoff is adjusted based on changes in an index, 2) the payoff is indexed to an underlying other than interest rates or credit risk, 3) the debt involves a substantial premium or discount, and 4) the call (put) option is contingently exercisable. For public entities, the amendments in this update are effective for fiscal years beginning after December 15, 2016. The Company does not believe adoption of this ASU will have a material impact on its financial statements. In March 2016, the FASB issued ASU 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force).” The amendments in this update clarify that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under Topic 815 does not, in and of itself, require de-designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. For public entities, the amendments in this update are effective for fiscal years beginning after December 15, 2016. The Company does not believe adoption of this ASU will have a material impact on its financial statements. In March 2016, the FASB issued ASU 2016-04, “Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the Emerging Issues Task Force).” The amendments in this update apply to prepaid stored-value products, which are physical or digital products containing a stored monetary value that are issued for the purpose of being accepted as payment for goods or services. This update states that the liabilities related to the sale of prepaid stored-value products are financial liabilities. For public companies, not-for-profit entities with traded securities, and employee benefit plans that file financial statements with the SEC, the amendments in this update are effective for fiscal years beginning after December 15, 2018. The Company does not believe adoption of this ASU will have a material impact on its financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842), including Sections A, B, & C.” The objective of this update is to increase transparency and comparability among organizations by recognizing leased assets and lease liabilities on the balance sheet. Topic 842 affects any entity that enters into a lease. The main difference between previous GAAP and Topic 842 is the recognition of leased assets and lease liabilities for leases classified as operating leases under previous GAAP. For lessees, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases. However, the principal difference from previous guidance is that the leased assets and lease liabilities arising from operating leases should be recognized in the statement of financial position. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. If an entity elects to apply the practical expedients, it will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified. The exception is that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. For public companies, not-for-profit entities with traded securities and employee benefit plans that file financial statements with the SEC, the amendments in this update are effective for fiscal years beginning after December 15, 2018. Early application of the amendments in this update is permitted for all entities. The Company notes the new lease standard is applicable and will implement the new guidance accordingly; however, due to the extensive nature of the new lease standard, the Company is currently evaluating the impact this new guidance will have on its financials. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update make the following eight improvements to GAAP: 1) Equity investments (except those accounted for under the equity method or that result in consolidation of the investee) are to be measured at fair value with changes in fair value included in net income. However, an entity may choose to measure equity investments without readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. 2) A qualitative assessment is required for investments without readily determinable fair values in order to identify impairment. If impairment is identified, the investment is to be measured at fair value. 3) The requirement to disclose the fair value of financial instruments measured at amortized cost is eliminated for non-public business entities. 4) The requirement to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost is eliminated for public business entities. 5) Public entities are required to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 6) An entity is required to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. 7) Separate presentation of financial assets and liabilities by measurement category and form of financial asset is required on the balance sheet or accompanying notes. 8) An entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017. An entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values should be applied prospectively to equity investments that exist as of the date of adoption. The Company notes this new guidance will apply to its reporting requirements and will implement the new guidance accordingly and is currently evaluating the impact this new guidance will have on its financials.

Note 10. Subsequent Events

Note 10. Subsequent Events	9 Months Ended
	Mar. 31, 2016
Notes
Note 10. Subsequent Events	NOTE 10. SUBSEQUENT EVENTS On April 4, 2016, the Company issued 30,925 shares of common stock as payment for the accrued “Preferred Stock Dividend.”

Note 1. Presentation and Summ16

Note 1. Presentation and Summary of Significant Accounting Policies: Basis of Presentation (Policies)	9 Months Ended
	Mar. 31, 2016
Policies
Basis of Presentation	Basis of Presentation The condensed consolidated balance sheets as of March 31, 2016 and June 30, 2015, and the condensed consolidated statements of operations and cash flows for the three and nine months ended March 31, 2016 and 2015, were prepared by Dynatronics Corporation (the “Company”) without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all necessary adjustments, which consist only of normal recurring adjustments, to the financial statements have been made to present fairly the Company’s financial position, results of operations and cash flows. The results of operations for the three and nine months ended March 31, 2016, are not necessarily indicative of the results of operations that may be expected for the fiscal year ending June 30, 2016. The Company previously filed with the SEC an annual report on Form 10-K, as amended, which included audited financial statements for each of the two years ended June 30, 2015 and 2014. It is suggested that the financial statements contained in this Form 10-Q be read in conjunction with the financial statements and notes thereto contained in the Company’s most recent Form 10-K.

Note 1. Presentation and Summ17

Note 1. Presentation and Summary of Significant Accounting Policies: Use of Estimates (Policies)	9 Months Ended
	Mar. 31, 2016
Policies
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 amounts of revenue and expenses during the period. Actual results could differ from those estimates. Some of the more significant estimates relate to inventory, allowance for doubtful accounts, stock-based compensation and valuation allowance for deferred income taxes.

Note 1. Presentation and Summ18

Note 1. Presentation and Summary of Significant Accounting Policies: Significant Accounting Policies (Policies)	9 Months Ended
	Mar. 31, 2016
Policies
Significant Accounting Policies	Significant Accounting Policies There have been no significant changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015.

Note 9. Recent Accounting Pro19

Note 9. Recent Accounting Pronouncements: New Accounting Pronouncements, Policy (Policies)	9 Months Ended
	Mar. 31, 2016
Policies
New Accounting Pronouncements, Policy	In April 2016, the FASB issued Accounting Standard Update (ASU) 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” The amendments in this update apply to entities with transactions included within the scope of Topic 606 (i.e., contracts with customers to transfer goods or services for consideration). Per Topic 606, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this update do not change the core principle of the guidance in Topic 606, but rather clarify various aspects. Prior to identifying performance obligations in a contract, an entity must first identify the promised goods or services in the contract. The amendments in this update clarify that: 1) An entity is not required to assess if goods or services are performance obligations if they are immaterial in the contract with the customer. 2) An entity can account for shipping and handling as activities to fulfill the promise to transfer the goods rather than an additional promised service. To identify performance obligations, Topic 606 includes criteria for assessing whether promises to transfer goods or services are distinct. This update improves guidance by: 1) Emphasizing that an entity determines whether the promise in the contract is to transfer each of the goods or services or to transfer a combined item (or items) to which the promised goods and/or services are inputs. 2) Revising the related factors and examples. The amendments in this update clarify licensing implementation guidance by stating: 1) An entity’s promise to grant a customer a license to intellectual property that has significant standalone functionality does not include supporting or maintaining that intellectual property during the license period. An entity’s promise to provide a customer with a right to use the entity’s intellectual property is satisfied at the point in time the customer is able to use and benefit from the license, unless the entity expects to undertake activities that change the functionality of the intellectual property to which the customer has rights. 2) An entity’s promise to grant a customer a license to intellectual property that does not have significant standalone functionality (symbolic intellectual property) includes supporting or maintaining that intellectual property during the license period. The nature of the entity’s promise is both to (a) grant the customer rights to use and benefit from the entity’s intellectual property and (b) support or maintain the intellectual property during the license period. As such, a license to symbolic intellectual property is satisfied over time. 3) An entity considers the nature of its promise in granting a license in order to apply the other guidance in Topic 606 to a single performance obligation that includes a license and other goods or services. Topic 606 includes implementation guidance on revenue recognition for a sales-based or usage-based royalty promised in exchange for a license of intellectual property. The amendments in this update clarify the following: 1) An entity should not split a sales-based or usage-based royalty into a portion subject to the recognition guidance on sales-based and usage based royalties and a portion that is not subject to that guidance. 2) The guidance on sales-based and usage-based royalties applies to a sales-based or usage-based royalty where the predominant item related to the royalty is a license of intellectual property. Lastly, this update clarifies that contractual provisions requiring an entity to transfer control of additional goods or services to a customer should be distinguished from contractual provisions that define the attributes of a single promised license. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of update 2014-09. That is, the amendments in this update are effective for annual reporting periods after December 15, 2017, including interim reporting periods within that reporting period. The Company has contracts with customers to transfer goods or services for consideration within the scope of Topic 606; therefore, the noted amendments in ASU 2016-10 are applicable and the Company will implement the new guidance accordingly; however, due to the extensive nature of the new revenue recognition standard, the Company is evaluating the impact this new guidance will have on its financials. In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The FASB is issuing this update as part of its simplification initiative, which is aimed at reducing the cost and complexity of certain areas of the accounting codification. This update simplifies the accounting for share-based payment transactions through the following amendments: · · · · · For public entities, the amendments in this update are effective for fiscal years beginning after December 15, 2016. The Company notes that this guidance does apply to its reporting requirements and will implement the new guidance accordingly. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” The amendments in this update apply to entities with transactions included within the scope of Topic 606 (i.e., contracts with customers to transfer goods or services for consideration). The amendment in this update does not change the core principles in Topic 606, but rather clarify the implementation guidance on principle versus agent considerations. An entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. To improve the implementation guidance on principal versus agent considerations, this update seeks to clarify the following: 1. An entity determines whether it is a principal or agent for each specified good or service promised to the customer. If a contract includes more than one specified good or service, an entity could be both a principal and agent. 2. An entity determines the nature of each specified good or service, whether it is a good, a service, or a right to a good or service. 3. When another party is involved in providing goods or services to a customer, an entity that is a principal obtains control of (a) a good or asset from the other party that it then transfers to the customer; (b) a right to a service that will be performed by another party, which gives the entity the ability to direct that party to provide the service to the customer on the entity’s behalf; or (c) a good or service from the other party that it combines with other goods or services to provide the specified good or service to the customer. 4. The amendments in paragraph 606-10-55-39A clarify that indicators may be more or less relevant to the control assessment and that one or more indicators may be more or less persuasive to the control assessment. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of update 2014-09. That is, the amendments in this update are effective for annual reporting periods after December 15, 2016, including interim reporting periods within that reporting period. The Company notes that this guidance does apply to its reporting requirements and will implement the new guidance accordingly. In March 2016, the FASB issued ASU 2016-07, “Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.” The FASB is issuing this update as part of its simplification initiative, which is aimed at reducing the cost and complexity of certain areas of the accounting codification. The amendments in this update eliminate the requirement to retroactively adopt the equity method of accounting. Instead, the investor adds the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopts the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The update requires that an entity with an available-for-sale security that qualifies for the equity method should recognize in earnings the unrealized holding gain or loss in accumulated comprehensive income as of the date that the investment becomes qualified for the equity method use. This update becomes effective for all entities for fiscal years beginning after December 15, 2016. The Company does not believe adoption of this ASU will have a material impact on its financial statements. In March 2016, the FASB issued ASU 2016-06, “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force).” The amendments in this update clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments in this update is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. The four-step decision sequence requires an entity to consider whether: 1) the payoff is adjusted based on changes in an index, 2) the payoff is indexed to an underlying other than interest rates or credit risk, 3) the debt involves a substantial premium or discount, and 4) the call (put) option is contingently exercisable. For public entities, the amendments in this update are effective for fiscal years beginning after December 15, 2016. The Company does not believe adoption of this ASU will have a material impact on its financial statements. In March 2016, the FASB issued ASU 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force).” The amendments in this update clarify that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under Topic 815 does not, in and of itself, require de-designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. For public entities, the amendments in this update are effective for fiscal years beginning after December 15, 2016. The Company does not believe adoption of this ASU will have a material impact on its financial statements. In March 2016, the FASB issued ASU 2016-04, “Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the Emerging Issues Task Force).” The amendments in this update apply to prepaid stored-value products, which are physical or digital products containing a stored monetary value that are issued for the purpose of being accepted as payment for goods or services. This update states that the liabilities related to the sale of prepaid stored-value products are financial liabilities. For public companies, not-for-profit entities with traded securities, and employee benefit plans that file financial statements with the SEC, the amendments in this update are effective for fiscal years beginning after December 15, 2018. The Company does not believe adoption of this ASU will have a material impact on its financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842), including Sections A, B, & C.” The objective of this update is to increase transparency and comparability among organizations by recognizing leased assets and lease liabilities on the balance sheet. Topic 842 affects any entity that enters into a lease. The main difference between previous GAAP and Topic 842 is the recognition of leased assets and lease liabilities for leases classified as operating leases under previous GAAP. For lessees, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases. However, the principal difference from previous guidance is that the leased assets and lease liabilities arising from operating leases should be recognized in the statement of financial position. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. If an entity elects to apply the practical expedients, it will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified. The exception is that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. For public companies, not-for-profit entities with traded securities and employee benefit plans that file financial statements with the SEC, the amendments in this update are effective for fiscal years beginning after December 15, 2018. Early application of the amendments in this update is permitted for all entities. The Company notes the new lease standard is applicable and will implement the new guidance accordingly; however, due to the extensive nature of the new lease standard, the Company is currently evaluating the impact this new guidance will have on its financials. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update make the following eight improvements to GAAP: 1) Equity investments (except those accounted for under the equity method or that result in consolidation of the investee) are to be measured at fair value with changes in fair value included in net income. However, an entity may choose to measure equity investments without readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. 2) A qualitative assessment is required for investments without readily determinable fair values in order to identify impairment. If impairment is identified, the investment is to be measured at fair value. 3) The requirement to disclose the fair value of financial instruments measured at amortized cost is eliminated for non-public business entities. 4) The requirement to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost is eliminated for public business entities. 5) Public entities are required to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 6) An entity is required to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. 7) Separate presentation of financial assets and liabilities by measurement category and form of financial asset is required on the balance sheet or accompanying notes. 8) An entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017. An entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values should be applied prospectively to equity investments that exist as of the date of adoption. The Company notes this new guidance will apply to its reporting requirements and will implement the new guidance accordingly and is currently evaluating the impact this new guidance will have on its financials.

Note 2. Net Loss Per Common S20

Note 2. Net Loss Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Earnings Per Share, Basic and Diluted	Three Months Ended Nine Months Ended March 31, March 31, 2016 2015 2016 2015 Basic weighted-average number of common shares outstanding during the period 2,731,282 2,520,389 2,681,493 2,520,389 Weighted-average number of dilutive common stock equivalents outstanding during the period - - - - Diluted weighted-average number of common and common equivalent shares outstanding during the period 2,731,282 2,520,389 2,681,493 2,520,389

Note 3. Stock-based Compensat21

Note 3. Stock-based Compensation: Summary of Stock Option Activity (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Summary of Stock Option Activity	Number of Options Weighted-Average Exercise Price Outstanding at beginning of period 91,152 $ 5.07 Granted 80,000 3.34 Exercised - - Cancelled (23,395) 7.10 Outstanding at end of period 147,757 3.81 Exercisable at end of period 64,337 4.76

Note 6. Inventories_ Schedule o

Note 6. Inventories: Schedule of Inventory, Current (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Inventory, Current	March 31, 2016 June 30, 2015 Raw materials $ 2,101,074 $ 2,086,411 Finished goods 3,644,150 $ 3,693,921 Inventory obsolescence reserve (376,967) (358,545) $ 5,368,257 5,421,787

Note 2. Net Loss Per Common S23

Note 2. Net Loss Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - shares	3 Months Ended		9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Details
Basic weighted-average number of common shares outstanding during the year	2,731,282	2,520,389	2,681,493	2,520,389
Diluted weighted-average number of common and common equivalent shares outstanding during the year	2,731,282	2,520,389	2,681,493	2,520,389

Note 2. Net Loss Per Common S24

Note 2. Net Loss Per Common Share (Details) - shares	3 Months Ended		9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	4,167,814	143,609	4,167,814	138,978

Note 3. Stock-based Compensat25

Note 3. Stock-based Compensation (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Details
Allocated Share-based Compensation Expense	$ 51,453	$ 16,265	$ 81,075	$ 50,176
Common Stock, Capital Shares Reserved for Future Issuance	380,404		380,404
Stock Granted, Value, Share-based Compensation, Net of Forfeitures			$ 39,596
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 377,903		377,903
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	$ 2,166		$ 2,166

Note 3. Stock-based Compensat26

Note 3. Stock-based Compensation: Summary of Stock Option Activity (Details)	3 Months Ended
	Mar. 31, 2016$ / sharesshares
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | shares	91,152
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 5.07
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | shares	80,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares	$ 3.34
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period | shares	(23,395)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price | $ / shares	$ 7.10
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | shares	147,757
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares	$ 3.81
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options | shares	64,337
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ / shares	$ 4.76

Note 6. Inventories_ Schedule27

Note 6. Inventories: Schedule of Inventory, Current (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Details
Inventory, Raw Materials, Gross	$ 2,101,074	$ 2,086,411
Inventory, Finished Goods, Gross	3,644,150	3,693,921
Inventory Valuation Reserves	(376,967)	(358,545)
Inventories, net	$ 5,368,257	$ 5,421,787

Note 7. Related-party Transac28

Note 7. Related-party Transactions (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Details
Related Party Transaction, Expenses from Transactions with Related Party	$ 17,700	$ 17,700	$ 53,100	$ 53,100