Dynatronics (DYNT) 10-Q 14 Feb 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2016	Feb. 14, 2017
Document and Entity Information:
Entity Registrant Name	DYNATRONICS CORP
Document Type	10-Q
Document Period End Date	Dec. 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		3,036,642
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	2,017
Document Fiscal Period Focus	Q2

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Current assets:
Cash and cash equivalents	$ 1,665,739	$ 966,183
Trade accounts receivable, less allowance for doubtful accounts of $437,123 as of December 31, 2016 and $389,050 as of June 30, 2016	3,384,968	3,523,731
Other receivables	39,501	10,946
Inventories, net	5,584,635	4,997,254
Prepaid expenses	430,751	256,735
Total current assets	11,105,594	9,754,849
Property and equipment, net	4,569,570	4,777,565
Intangible assets, net	144,783	160,123
Other assets	538,891	579,661
Total assets	16,358,838	15,272,198
Current liabilities:
Current portion of long-term debt	134,351	137,283
Current portion of capital lease	188,487	183,302
Current portion of deferred gain	150,448	150,448
Warranty reserve	151,579	152,605
Accounts payable	2,792,693	1,914,342
Accrued expenses	286,460	358,287
Accrued payroll and benefits expense	894,743	1,034,688
Income tax payable	3,961	2,895
Total current liabilities	4,602,722	3,933,850
Long-term debt, net of current portion	471,884	553,191
Capital lease, net of current portion	3,185,989	3,281,547
Deferred gain, net of current portion	1,755,225	1,830,449
Deferred rent	104,417	85,151
Total liabilities	10,120,237	9,684,188
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par value: Authorized 50,000,000 shares; 2,000,000 shares and 1,610,000 shares issued and outstanding as of December 31, 2016 and June 30, 2016, respectively	4,636,706	3,708,152
Common stock, no par value: Authorized 100,000,000 shares; 2,882,272 shares and 2,805,280 shares issued and outstanding as of December 31, 2016 and June 30, 2016, respectively	7,826,646	7,545,880
Accumulated deficit	(6,224,751)	(5,666,022)
Total stockholders' equity	6,238,601	5,588,010
Total liabilities and stockholders' equity	$ 16,358,838	$ 15,272,198

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets Parenthetical - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Condensed Consolidated Balance Sheets Parenthetical
Allowance for doubtful accounts	$ 437,123	$ 389,050
Preferred stock par value
Preferred stock shares authorized	50,000,000	5,000,000
Preferred stock shares issued	2,000,000	1,610,000
Preferred stock shares outstanding	2,000,000	1,610,000
Common stock par value
Common stock shares authorized	100,000,000	50,000,000
Common stock shares issued	2,882,272	2,805,280
Common stock shares outstanding	2,882,272	2,805,280

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Condensed Consolidated Statements of Income
Net sales	$ 8,713,355	$ 7,474,921	$ 16,876,089	$ 14,872,118
Cost of sales	5,640,048	4,797,939	11,008,094	9,684,307
Gross profit	3,073,307	2,676,982	5,867,995	5,187,811
Selling, general, and administrative expenses	2,851,236	2,469,131	5,615,594	4,824,785
Research and development expenses	309,476	253,868	588,360	519,229
Operating loss	(87,405)	(46,017)	(335,959)	(156,203)
Other income (expense):
Interest income	142	1,869	364	2,482
Interest expense	(63,550)	(77,274)	(123,092)	(157,517)
Other income, net	55,494	2,391	77,735	4,995
Net other expense	(7,914)	(73,014)	(44,993)	(150,040)
Loss before income taxes	(95,319)	(119,031)	(380,952)	(306,243)
Income tax (provision) benefit		(5,650)
Net loss	(95,319)	(124,681)	(380,952)	(306,243)
Deemed dividend on 8% convertible preferred stock	(375,858)		(375,858)
8% Convertible preferred stock dividend	(88,792)	(80,500)	(177,777)	(161,000)
Net loss attributable to common stockholders	$ (559,969)	$ (205,181)	$ (934,587)	$ (467,243)
Basic and diluted net loss per common share	$ (0.19)	$ (0.08)	$ (0.33)	$ (0.18)
Weighted-average common shares outstanding:
Basic	2,881,111	2,670,124	2,861,299	2,656,711
Diluted	2,881,111	2,670,124	2,861,299	2,656,711

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net loss	$ (380,952)	$ (306,243)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment	106,098	110,912
Amortization of intangible assets	15,340	15,340
Amortization of other assets	60,069	58,172
Amortization of building lease	125,967	125,966
Gain on sale of property and equipment	(19,252)
Stock-based compensation expense	102,989	29,622
Change in provision for doubtful accounts receivable	48,073	29,423
Change in provision for inventory obsolescence	42,751	3,856
Deferred gain on sale/leaseback	(75,224)	(75,224)
Change in operating assets and liabilities:
Change in Receivables, net	62,135	299,462
Change in Inventories, net	(630,132)	(53,029)
Change in Prepaid expenses	(174,016)	(57,496)
Change in Other assets	(18,799)	(15,052)
Change in Income tax payable	1,066	(2,800)
Change in Accounts payable and accrued expenses	684,319	(611,993)
Net cash used in operating activities	(49,568)	(449,084)
Cash flows from investing activities:
Purchase of property and equipment	(36,818)	(20,538)
Proceeds from sale of property and equipment	32,000
Net cash used in investing activities	(4,818)	(20,538)
Cash flows from financing activities:
Principal payments on long-term debt	(84,239)	(60,131)
Principal payments on long-term capital lease	(90,373)	(85,471)
Net change in line of credit		(1,176,603)
Proceeds from issuance of preferred stock, net	928,554
Net cash provided by (used in) financing activities	753,942	(1,322,205)
Net change in cash and cash equivalents	699,556	(1,791,827)
Cash and cash equivalents at beginning of the period	966,183	3,925,967
Cash and cash equivalents at end of the period	1,665,739	2,134,140
Supplemental disclosure of cash flow information:
Cash paid for interest	124,797	139,334
Supplemental disclosure of non-cash investing and financing activity:
Deemed dividend on 8% convertible preferred stock	375,858
8% Preferred stock dividend paid in common stock	187,901	$ 161,000
Accrued compensation paid in common stock	$ 26,388

Note 1. Presentation and Summar

Note 1. Presentation and Summary of Significant Accounting Policies	6 Months Ended
	Dec. 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 December 31, 2016 and June 30, 2016, the condensed consolidated statements of operations for the three and six months ended December 31, 2016 and 2015 and cash flows for the six months ended December 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 six months ended December 31, 2016, are not necessarily indicative of the results of operations that may be expected for the fiscal year ending June 30, 2017. 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, 2016 and 2015. 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 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, 2016.

Note 2. Net Loss Per Common Sha

Note 2. Net Loss Per Common Share	6 Months Ended
	Dec. 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 potential common stock outstanding during the period. Stock options, convertible preferred stock and warrants are considered to be potential common stock. 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 potential common stock outstanding during the period, unless inclusion of potential common stock would have an anti-dilutive effect. The reconciliations between the basic and diluted weighted-average number of common shares outstanding for the three and six months ended December 31, 2016 and 2015, are as follows: Three Months Ended Six Months Ended December 31, December 31, 2016 2015 2016 2015 Basic weighted-average number of common shares outstanding during the period 2,881,111 2,670,124 2,861,299 2,656,711 Weighted-average number of dilutive potential common stock outstanding during the period - - - - Diluted weighted-average number of common and potential common shares outstanding during the period 2,881,111 2,670,124 2,861,299 2,656,711 Outstanding options, warrants and convertible preferred stock for common shares are not included in the computation of diluted net loss per common share, because they were anti-dilutive, for the three months ended December 31, 2016 and 2015 totaled 5,148,398 and 4,081,267, respectively, and for the six months ended December 31, 2016 and 2015 totaled 5,148,398 and 4,085,911, respectively.

Note 3. Stock-based Compensatio

Note 3. Stock-based Compensation	6 Months Ended
	Dec. 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 $38,757 and $14,611 in stock-based compensation expense during the three months ended December 31, 2016 and 2015, respectively, and recognized $102,989 and $29,622 in stock-based compensation expense during the six months ended December 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 following table summarizes the Company’s stock option activity for the 2005 and 2015 Plans during the six-month period ended December 31, 2016. Number of Options Weighted-Average Exercise Price Outstanding at beginning of period 121,557 $ 3.83 Granted 32,000 2.65 Exercised - - Cancelled (2,539) 4.63 Outstanding at end of period 151,018 3.57 Exercisable at end of period 102,251 4.20 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 December 31, 2016, there was $290,322 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 6.25 years. There was $512 of intrinsic value for options outstanding as of December 31, 2016.

Note 4. Convertible Preferred S

Note 4. Convertible Preferred Stock and Common Stock Warrants	6 Months Ended
	Dec. 31, 2016
Notes
Note 4. Convertible Preferred Stock and Common Stock Warrants	NOTE 4. CONVERTIBLE PREFERRED STOCK AND COMMON STOCK WARRANTS On December 16, 2016 the shareholders authorized an increase to the aggregate number of shares of Preferred Stock that the Company is authorized to issue from 5,000,000 shares to 50,000,000 shares. On December 28, 2016, 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 the remaining designated 390,000 shares of the Company’s Series A 8% Convertible Preferred Stock (the “Series A Preferred”) in the aggregate amount of approximately $975,000. Proceeds from the private placement were recorded net of offering costs incurred. 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 certificate of designation of the rights and preferences of the Series A Preferred. 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 $78,000 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 warrants issued to the Preferred Investors in the private placement, as described below. That registration statement was filed on Form S-3 on January 28, 2017 and amended on February 1, 2017. The registration statement became effective on February 10, 2017. 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 Series A Preferred. The market price of the common stock on the trading day immediately prior to the date of issuance of the Series A Preferred in December 2016 was $2.37 per share. Based on a $975,000 investment and a $2.37 per share price the number of potential common stock eligible for voting by Preferred Investors is 390,000. The Preferred Investors purchased an aggregate total of 390,000 shares of Series A Preferred Stock, and received in connection with such purchase, (i) A-Warrants, exercisable by cash exercise only, to purchase 292,500 shares of common stock, and (ii) B-Warrants, exercisable by “cashless exercise”, to purchase 292,500 shares of common stock after exercise of A-Warrants. The warrants are exercisable for 72 months from the date of issuance and carry a 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. Shareholders originally authorized the issuance of 2,000,000 shares of the Series A Preferred stock in June, 2015 and 1,610,000 of those shares were issued in June 2015, leaving 390,000 available for future issuance. Those remaining 390,000 shares were issued in December 2016 as described in this Note 4. The only difference between the Series A Preferred issued in June 2015 and the Series A Preferred issued in December 2016 is that the formula determining voting rights for the Series A Preferred issued in June 2015 indicated a cutback in the voting power of those shares whereas the Series A Preferred issued in December 2016 were not subject to any cutback. For information regarding the original issuance of the Series A Preferred in June 2015 please see the 10K filed for fiscal year ended June 30, 2016. The Series A Preferred stock 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 $375,858 was recorded as dividends on the same date the preferred shares were issued. The $375,858 dividend is added to the net loss to arrive at the net loss applicable to common stockholders for purposes of calculating loss per share for the three and six months ended December 31, 2016.

Note 5. Common Stock

Note 5. Common Stock	6 Months Ended
	Dec. 31, 2016
Notes
Note 5. Common Stock	NOTE 5. COMMON STOCK On December 16, 2016 the shareholders authorized an increase to the aggregate number of shares of Common Stock that the Company is authorized to issue from 50,000,000 shares to 100,000,000 shares.

Note 6. Comprehensive Loss

Note 6. Comprehensive Loss	6 Months Ended
	Dec. 31, 2016
Notes
Note 6. Comprehensive Loss	NOTE 6. COMPREHENSIVE LOSS For the three and six months ended December 31, 2016 and 2015, comprehensive loss was equal to the net loss as presented in the accompanying condensed consolidated statements of operations.

Note 7. Inventories

Note 7. Inventories	6 Months Ended
	Dec. 31, 2016
Notes
Note 7. Inventories	NOTE 7. INVENTORIES Inventories consisted of the following: December 31, 2016 June 30, 2016 Raw materials $ 2,144,961 $ 2,059,048 Finished goods 3,898,183 $ 3,353,964 Inventory obsolescence reserve (458,509) (415,758) $ 5,584,635 4,997,254

Note 8. Related-party Transacti

Note 8. Related-party Transactions	6 Months Ended
	Dec. 31, 2016
Notes
Note 8. Related-party Transactions	NOTE 8. 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 December 31, 2016 and 2015, and $35,400 for the six months ended December 31, 2016 and 2015. Certain officers and directors of the Company participated as investors in the private placement of the Company’s Series A Preferred in December 2016 (see Note 4). The terms of the offering were reviewed and approved by the disinterested members of the Company’s Board of Directors who did not invest in the private placement and who do not own any shares of Series A Preferred. Details of the private placement were included in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 3, 2017.

Note 9. Line of Credit

Note 9. Line of Credit	6 Months Ended
	Dec. 31, 2016
Notes
Note 9. Line of Credit	NOTE 9. LINE OF CREDIT There was no outstanding balance on the line of credit as of December 31, 2016, or as of June 30, 2016. The $1.0 million line of credit was effective September 21, 2016. Interest on the line of credit is based on the prime rate plus 5%. It is collateralized by inventory and accounts receivable. Borrowing limitations are based on 85% of eligible accounts receivable and $700,000 of eligible inventory. The current borrowing base on the line of credit would be approximately $3.3 million. Presently the line of credit is on stand-by status. The Company pays $2,000 per month as a minimum access fee to the line of credit. If the Company determines to activate the line it is required to provide the lender with 45 days’ notice of intent to begin borrowing. The line of credit has a maturity date of September 21, 2017. The line of credit has no negative loan covenants, however, once the line of credit is activated there are affirmative covenants to provide regular accounts receivable reports and financial statements.

Note 10. Recent Accounting Pron

Note 10. Recent Accounting Pronouncements	6 Months Ended
	Dec. 31, 2016
Notes
Note 10. Recent Accounting Pronouncements	NOTE 10. RECENT ACCOUNTING PRONOUNCEMENTS In November 2016, the Financial Accounting Standards Board (or FASB) issued Accounting Standards Update (ASU) 2016-18 , Statement of Cash Flows (Topic 230): Restricted Cash. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.

Note 11. Subsequent Events

Note 11. Subsequent Events	6 Months Ended
	Dec. 31, 2016
Notes
Note 11. Subsequent Events	NOTE 11. SUBSEQUENT EVENTS On January 5, 2017, the Company issued 37,784 shares of common stock as payment for the accrued preferred stock dividend.

Note 1. Presentation and Summ17

Note 1. Presentation and Summary of Significant Accounting Policies: Basis of Presentation (Policies)	6 Months Ended
	Dec. 31, 2016
Policies
Basis of Presentation	Basis of Presentation The condensed consolidated balance sheets as of December 31, 2016 and June 30, 2016, the condensed consolidated statements of operations for the three and six months ended December 31, 2016 and 2015 and cash flows for the six months ended December 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 six months ended December 31, 2016, are not necessarily indicative of the results of operations that may be expected for the fiscal year ending June 30, 2017. 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, 2016 and 2015. 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 Summ18

Note 1. Presentation and Summary of Significant Accounting Policies: Use of Estimates (Policies)	6 Months Ended
	Dec. 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 Summ19

Note 1. Presentation and Summary of Significant Accounting Policies: Significant Accounting Policies (Policies)	6 Months Ended
	Dec. 31, 2016
Policies
Significant Accounting Policies	Significant Accounting Policies There have been no 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, 2016.

Note 10. Recent Accounting Pr20

Note 10. Recent Accounting Pronouncements: New Accounting Pronouncements, Policy (Policies)	6 Months Ended
	Dec. 31, 2016
Policies
New Accounting Pronouncements, Policy	In November 2016, the Financial Accounting Standards Board (or FASB) issued Accounting Standards Update (ASU) 2016-18 , Statement of Cash Flows (Topic 230): Restricted Cash. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.

Note 2. Net Loss Per Common S21

Note 2. Net Loss Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Tables)	6 Months Ended
	Dec. 31, 2016
Tables/Schedules
Schedule of Earnings Per Share, Basic and Diluted	Three Months Ended Six Months Ended December 31, December 31, 2016 2015 2016 2015 Basic weighted-average number of common shares outstanding during the period 2,881,111 2,670,124 2,861,299 2,656,711 Weighted-average number of dilutive potential common stock outstanding during the period - - - - Diluted weighted-average number of common and potential common shares outstanding during the period 2,881,111 2,670,124 2,861,299 2,656,711

Note 3. Stock-based Compensat22

Note 3. Stock-based Compensation: Summary of Stock Option Activity (Tables)	6 Months Ended
	Dec. 31, 2016
Tables/Schedules
Summary of Stock Option Activity	Number of Options Weighted-Average Exercise Price Outstanding at beginning of period 121,557 $ 3.83 Granted 32,000 2.65 Exercised - - Cancelled (2,539) 4.63 Outstanding at end of period 151,018 3.57 Exercisable at end of period 102,251 4.20

Note 7. Inventories_ Schedule o

Note 7. Inventories: Schedule of Inventory, Current (Tables)	6 Months Ended
	Dec. 31, 2016
Tables/Schedules
Schedule of Inventory, Current	December 31, 2016 June 30, 2016 Raw materials $ 2,144,961 $ 2,059,048 Finished goods 3,898,183 $ 3,353,964 Inventory obsolescence reserve (458,509) (415,758) $ 5,584,635 4,997,254

Note 2. Net Loss Per Common S24

Note 2. Net Loss Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - shares	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Details
Basic weighted-average number of common shares outstanding during the year	2,881,111	2,670,124	2,861,299	2,656,711
Diluted weighted-average number of common and common equivalent shares outstanding during the year	2,881,111	2,670,124	2,861,299	2,656,711

Note 2. Net Loss Per Common S25

Note 2. Net Loss Per Common Share (Details) - shares	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,148,398	4,081,267	5,148,398	4,085,911

Note 3. Stock-based Compensat26

Note 3. Stock-based Compensation (Details) - USD ($)	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Details
Allocated Share-based Compensation Expense	$ 38,757	$ 14,611
Common Stock, Capital Shares Reserved for Future Issuance	373,404
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 290,322
Employee Service Share Based Compensation Unrecognized Compensation Costs On Nonvested Awards Weighted Average Period Of Recognition	6.25 years
Aggregate intrinsic value of options outstanding	$ 512

Note 3. Stock-based Compensat27

Note 3. Stock-based Compensation: Summary of Stock Option Activity (Details)	3 Months Ended
	Dec. 31, 2016$ / sharesshares
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | shares	121,557
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 3.83
Options granted | shares	32,000
Weighted average exercise price - options granted | $ / shares	$ 2.65
Options canceled or expired | shares	(2,539)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price | $ / shares	$ 4.63
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | shares	151,018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares	$ 3.57
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options | shares	102,251
Weighted average exercise price - exercisable options | $ / shares	$ 4.20

Note 4. Convertible Preferred28

Note 4. Convertible Preferred Stock and Common Stock Warrants (Details) - shares	Dec. 31, 2016	Jun. 30, 2016
Details
Preferred stock shares authorized	50,000,000	5,000,000

Note 5. Common Stock (Details)

Note 5. Common Stock (Details) - shares	Dec. 31, 2016	Jun. 30, 2016
Details
Common stock shares authorized	100,000,000	50,000,000

Note 7. Inventories_ Schedule30

Note 7. Inventories: Schedule of Inventory, Current (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Details
Raw Materials	$ 2,144,961	$ 2,059,048
Finished Goods	3,898,183	3,353,964
Inventory Reserves	(458,509)	(415,758)
Inventories, net	$ 5,584,635	$ 4,997,254

Note 8. Related-party Transac31

Note 8. Related-party Transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Details
Related Party Transaction, Expenses from Transactions with Related Party	$ 17,700	$ 17,700	$ 35,400	$ 35,400