Dynatronics (DYNT) 10-Q 14 May 19 2019 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2019	May 03, 2019
Document and Entity Information:
Entity Registrant Name	DYNATRONICS CORP
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Trading Symbol	dynt
Amendment Flag	false
Entity Central Index Key	0000720875
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		8,417,793
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Current Reporting Status	Yes
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Current assets:
Cash and cash equivalents	$ 414,255	$ 1,696,116
Trade accounts receivable, less allowance for doubtful accounts of $89,500 as of March 31, 2019 and $370,300 as of June 30, 2018	6,853,624	7,810,846
Other receivables	5,659	52,819
Inventories, net	11,218,935	10,987,855
Prepaid expenses	706,584	778,654
Income tax receivable	59,983	95,501
Total current assets	19,259,040	21,421,791
Property and equipment, net	5,814,836	5,850,899
Intangible assets, net	6,588,466	7,131,758
Goodwill	7,116,614	7,116,614
Other assets	516,345	532,872
Total assets	39,295,301	42,053,934
Current liabilities:
Accounts payable	4,248,740	3,412,960
Accrued payroll and benefits expense	1,468,821	1,929,465
Accrued expenses	1,147,296	830,243
Warranty reserve	205,850	205,850
Line of credit	4,793,505	6,286,037
Current portion of long-term debt	171,715	164,003
Current portion of capital lease obligations	282,415	226,727
Current portion of deferred gain	150,448	150,448
Current portion of acquisition holdback and earn-out liability	966,667	1,379,512
Total current liabilities	13,435,457	14,585,245
Long-term debt, net of current portion	173,601	303,348
Capital lease obligations, net of current portion	2,987,736	2,972,540
Deferred gain, net of current portion	1,416,717	1,529,553
Acquisition holdback and earn-out liability, net of current portion	0	875,000
Deferred tax liabilities, net	236,829	0
Other liabilities	171,489	411,466
Total liabilities	18,421,829	20,677,152
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par value: Authorized 50,000,000 shares; 4,899,000 shares and 4,899,000 shares issued and outstanding as of March 31, 2019 and June 30, 2018, respectively	11,641,816	11,641,816
Common stock, no par value: Authorized 100,000,000 shares; 8,322,544 shares and 8,089,398 shares issued and outstanding as of March 31, 2019 and June 30, 2018, respectively	20,996,558	20,225,107
Accumulated deficit	(11,764,902)	(10,490,141)
Total stockholders' equity	20,873,472	21,376,782
Total liabilities and stockholders' equity	$ 39,295,301	$ 42,053,934

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 89,500	$ 370,300
Preferred stock shares authorized	50,000,000	50,000,000
Preferred stock shares issued	4,899,000	4,899,000
Preferred stock shares outstanding	4,899,000	4,899,000
Common stock shares authorized	100,000,000	100,000,000
Common stock shares issued	8,322,544	8,089,398
Common stock shares outstanding	8,322,544	8,089,398

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Net sales	$ 14,551,519	$ 16,634,067	$ 47,057,320	$ 47,513,371
Cost of sales	10,146,361	11,342,518	32,425,066	32,112,451
Gross profit	4,405,158	5,291,549	14,632,254	15,400,920
Selling, general, and administrative expenses	4,818,093	6,455,796	15,087,393	16,193,643
Operating loss	(412,935)	(1,164,247)	(455,139)	(792,723)
Other income (expense):
Interest expense, net	(124,477)	(118,045)	(387,107)	(298,559)
Other income, net	6,905	4,859	390,459	26,845
Net other (expense) income	(117,572)	(113,186)	3,352	(271,714)
Loss before income taxes	(530,507)	(1,277,433)	(451,787)	(1,064,437)
Income tax provision	(32,880)	0	(236,829)	0
Net loss	(563,387)	(1,277,433)	(688,616)	(1,064,437)
Deemed dividend on convertible preferred stock and accretion of discount	0	0	0	(1,023,786)
Preferred stock dividend, cash	0	0	0	(104,884)
Convertible preferred stock dividend, in common stock	(196,240)	(190,523)	(586,145)	(578,178)
Net loss attributable to common stockholders	$ (759,627)	$ (1,467,956)	$ (1,274,761)	$ (2,771,285)
Basic and diluted net loss per common share	$ (0.09)	$ (0.18)	$ (0.16)	$ (0.45)
Weighted-average common shares outstanding:
Basic and diluted	8,307,117	7,962,179	8,189,890	6,135,224

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock	Preferred Stock	Accumulated Deficit	Total
Balance at Jun. 30, 2017	$ 11,838,022	$ 8,501,295	$ (8,014,927)	$ 12,324,390
Balance - shares at Jun. 30, 2017	4,653,165	3,559,000
Stock-based compensation	$ 12,382
Stock-based compensation - shares	71,786			71,786
Preferred stock dividend, in common stock, issued or to be issued	$ 187,061		(187,061)
Preferred stock dividend, in common stock, issued or to be issued - shares	72,042
Preferred stock converted to common stock	$ 187,500	$ (187,500)
Preferred stock converted to common stock, shares	75,000	(75,000)
Net income (loss)			198,647	$ 198,647
Balance at Sep. 30, 2017	$ 12,284,369	$ 8,313,795	(8,003,341)	12,594,823
Balance - shares at Sep. 30, 2017	4,812,589	3,484,000
Balance at Jun. 30, 2017	$ 11,838,022	$ 8,501,295	(8,014,927)	12,324,390
Balance - shares at Jun. 30, 2017	4,653,165	3,559,000
Stock-based compensation				211,747
Preferred stock dividends paid in cash				104,884
Preferred stock dividend, in common stock, issued or to be issued				578,178
Net income (loss)				(1,064,437)
Balance at Mar. 31, 2018	$ 20,087,549	$ 11,641,816	(9,762,427)	21,966,938
Balance - shares at Mar. 31, 2018	8,023,236	4,899,000
Balance at Sep. 30, 2017	$ 12,284,369	$ 8,313,795	(8,003,341)	12,594,823
Balance - shares at Sep. 30, 2017	4,812,589	3,484,000
Stock-based compensation	$ 45,287			45,287
Stock-based compensation - shares	2,044
Issuance of preferred stock and warrants, net of issuance costs		$ 10,600,121		10,600,121
Issuance of preferred stock and warrants, net of issuance costs - shares		4,381,935
Preferred stock dividends paid in cash			(104,884)	(104,884)
Preferred stock dividend, in common stock, issued or to be issued	$ 200,595		(200,595)
Preferred stock dividend, in common stock, issued or to be issued - shares	83,147
Preferred stock converted to common stock	$ 7,272,100	$ (7,272,100)
Preferred stock converted to common stock, shares	2,966,935	(2,966,935)
Preferred stock beneficial conversion feature		$ 1,023,786		1,023,786
Dividend of beneficial conversion feature		(1,023,786)		(1,023,786)
Net income (loss)			14,348	14,348
Balance at Dec. 31, 2017	$ 19,802,351	$ 11,641,816	(8,294,472)	23,149,695
Balance - shares at Dec. 31, 2017	7,864,715	4,899,000
Stock-based compensation	$ 94,676			94,676
Stock-based compensation - shares	88,974
Preferred stock dividends paid in cash				0
Preferred stock dividend, in common stock, issued or to be issued	$ 190,552		(190,552)	190,523
Preferred stock dividend, in common stock, issued or to be issued - shares	69,547
Net income (loss)			(1,277,433)	(1,277,433)
Balance at Mar. 31, 2018	$ 20,087,549	$ 11,641,816	(9,762,427)	21,966,938
Balance - shares at Mar. 31, 2018	8,023,236	4,899,000
Balance at Jun. 30, 2018	$ 20,225,107	$ 11,641,816	(10,490,141)	21,376,782
Balance - shares at Jun. 30, 2018	8,089,398	4,899,000
Stock-based compensation	$ 43,658			43,658
Stock-based compensation - shares	5,000
Preferred stock dividend, in common stock, issued or to be issued	$ 186,637		(186,637)
Preferred stock dividend, in common stock, issued or to be issued - shares	66,631
Net income (loss)			315,601	315,601
Balance at Sep. 30, 2018	$ 20,455,402	$ 11,641,816	(10,361,177)	21,736,041
Balance - shares at Sep. 30, 2018	8,161,029	4,899,000
Balance at Jun. 30, 2018	$ 20,225,107	$ 11,641,816	(10,490,141)	21,376,782
Balance - shares at Jun. 30, 2018	8,089,398	4,899,000
Stock-based compensation				185,306
Preferred stock dividends paid in cash				0
Preferred stock dividend, in common stock, issued or to be issued				586,145
Net income (loss)				(688,616)
Balance at Mar. 31, 2019	$ 20,996,558	$ 11,641,816	(11,764,902)	20,873,472
Balance - shares at Mar. 31, 2019	8,322,544	4,899,000
Balance at Sep. 30, 2018	$ 20,455,402	$ 11,641,816	(10,361,177)	21,736,041
Balance - shares at Sep. 30, 2018	8,161,029	4,899,000
Stock-based compensation		$ 56,082		56,082
Preferred stock dividend, in common stock, issued or to be issued	$ 203,268		(203,268)
Preferred stock dividend, in common stock, issued or to be issued - shares	65,494
Reduction in equity retained for acquisition holdback	$ (37,708)
Net income (loss)			(440,830)	(440,830)
Balance at Dec. 31, 2018	$ 20,714,752	$ 11,641,816	(11,005,275)	21,351,293
Balance - shares at Dec. 31, 2018	8,188,815	4,899,000
Stock-based compensation	$ 85,566			85,566
Stock-based compensation - shares	58,998
Preferred stock dividends paid in cash				0
Preferred stock dividend, in common stock, issued or to be issued	$ 196,240		(196,240)	196,240
Preferred stock dividend, in common stock, issued or to be issued - shares	74,731
Net income (loss)			(563,387)	(563,387)
Balance at Mar. 31, 2019	$ 20,996,558	$ 11,641,816	$ (11,764,902)	$ 20,873,472
Balance - shares at Mar. 31, 2019	8,322,544	4,899,000

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net loss	$ (688,616)	$ (1,064,437)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of property and equipment	397,095	298,973
Amortization of intangible assets	543,292	457,265
Amortization of other assets	32,219	56,433
Amortization of capital lease assets	253,194	188,950
Loss (gain) on sale of property and equipment	2,177	(7,002)
Stock-based compensation expense	185,306	211,747
Change in allowance for doubtful accounts receivable	(280,800)	(1,561)
Change in allowance for inventory obsolescence	(58,268)	162,528
Amortization deferred gain on sale/leaseback	(112,836)	(112,836)
Deferred income taxes	236,829	0
Change in fair value of earn-out liability	(375,000)	0
Change in operating assets and liabilities:
Trade accounts receivable	1,285,182	324,838
Inventories	(411,918)	(1,017,052)
Prepaid expenses	72,070	(124,079)
Other assets	(15,692)	(16,181)
Income tax receivable	35,518	(3,896)
Accounts payable and accrued expenses	452,212	750,894
Net cash provided by operating activities	1,551,964	104,584
Cash flows from investing activities:
Purchase of property and equipment	(124,804)	(131,040)
Net cash paid in acquisitions	0	(9,063,017)
Proceeds from sale of property and equipment	0	12,160
Net cash used in investing activities	(124,804)	(9,181,897)
Cash flows from financing activities:
Principal payments on long-term debt	(122,035)	(106,840)
Principal payments on long-term capital lease	(181,609)	(144,345)
Payment of acquisition holdbacks	(912,845)	(294,744)
Net change in line of credit	(1,492,532)	4,370,755
Proceeds from issuance of preferred stock, net	0	6,600,121
Preferred stock dividends paid in cash	0	(104,884)
Net cash (used in) provided by financing activities	(2,709,021)	10,320,063
Net change in cash and cash equivalents	(1,281,861)	1,242,750
Cash and cash equivalents at beginning of the period	1,696,116	254,705
Cash and cash equivalents at end of the period	414,255	1,497,455
Supplemental disclosure of cash flow information:
Cash paid for interest	392,039	284,437
Supplemental disclosure of non-cash investing and financing activity:
Deemed dividend on convertible preferred stock and accretion of discount	0	1,023,786
Preferred stock dividends paid or to be paid in common stock	586,145	578,178
Inventory reclassified to demonstration equipment	239,106	0
Preferred stock issued to acquire "Bird & Cronin"	0	4,000,000
Acquisition holdback	0	2,147,291
Conversion of preferred stock to common stock	0	7,459,600
Capital lease obligations incurred to acquire property and equipment	$ 252,493	$ 0

Note 1. Presentation and Summar

Note 1. Presentation and Summary of Significant Accounting Policies	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 1. Presentation and Summary of Significant Accounting Policies	Basis of Presentation The accompanying unaudited condensed consolidated balance sheets as of March 31, 2019 and June 30, 2018, condensed consolidated statements of operations for the three and nine months ended March 31, 2019 and 2018, and condensed consolidated statements of stockholders' equity and cash flows (“Financial Statements”) of Dynatronics Corporation and its wholly-owned subsidiaries (the “Company”) for the nine months ended March 31, 2019 and 2018, should be read in conjunction with the audited financial statements and notes thereto as of and for the year ended June 30, 2018 included in the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 27, 2018. In the opinion of management, the accompanying Financial Statements have been prepared by us in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of the Company's management, the Financial Statements for the periods presented reflect all adjustments, consisting of only normal, recurring adjustments, necessary to fairly state our financial position, results of operations, and cash flows. The March 31, 2019 condensed consolidated balance sheet was derived from audited financial statements, but does not include all GAAP disclosures. The results of operations for the first nine months of the fiscal year are not necessarily indicative of results for the full year or any future periods. The preparation of these Financial Statements requires the Company's management to make estimates and judgments that affect the amounts reported in the Financial Statements and the accompanying notes. The Company’s actual results may differ from these estimates under different assumptions or conditions. Research and Development Costs Research and development ("R&D") costs are expensed as incurred. R&D expense for the three and nine months ended March 31, 2019 totaled $14,000 and $40,000, respectively. R&D expense for the three and nine months ended March 31, 2018 totaled $242,000 and $1,048,000, respectively. R&D expense is included in selling, general, and administrative expenses in the condensed consolidated statements of operations. Reclassification Certain amounts in the prior year's condensed consolidated statements of operations have been reclassified for comparative purposes to conform to the presentation in the current year's condensed consolidated statements of operations. Recent Accounting Pronouncements In August 2018, the SEC adopted a final rule under SEC Release No. 33-10532, Disclosure Update and Simplification In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842,) a new guidance on leases. This guidance replaces the prior lease accounting guidance in its entirety. The underlying principle of the new standard is the recognition of lease assets and lease liabilities by lessees for substantially all leases, with an exception for leases with terms of less than twelve months. The standard also requires additional quantitative and qualitative disclosures. The guidance is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The standard requires a modified retrospective approach, which includes several optional practical expedients. Accordingly, the standard is effective for the Company for the fiscal year begining on July 1, 2019. The Company is currently evaluating the impact that this guidance will have on the consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customer y adopted this updated accounting guidance beginning July 1, 2018, using the modified retrospective method. This adoption did not have a material impact on the Company’s consolidated financial statements other than additional disclosures (see Note 10) as the timing of revenue recognition under the new standard is not materially different from our previous revenue recognition policy. Based on our analysis of open contracts as of July 1, 2018, the cumulative effect of applying the new standard was not material.

Note 2. Acquisitions

Note 2. Acquisitions	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 2. Acquisitions	Bird & Cronin On October 2, 2017, the Company, through its wholly-owned subsidiary Bird & Cronin, LLC, completed the purchase of substantially all the assets of Bird & Cronin, Inc. (“Bird & Cronin”), a manufacturer and distributor of orthopedic soft goods and specialty patient care products. The purchase price is subject to an earn-out payment ranging from $500,000 to $1,500,000, based on sales in fiscal year 2019. The amount recognized for the earn-out liability was $875,000 as of June 30, 2018. The earn-out liability was reduced by $375,000 in the first fiscal quarter of 2019. The change in the fair value of the earn-out liability is included in other income in the accompanying condensed consolidated statements of operations. As of March 31, 2019, the earn-out liability was $500,000. The earn-out liability is combined with the acquisition holdback in the accompanying condensed consolidated balance sheets. A holdback of $647,291 cash and 184,560 shares of common stock was retained by the Company for purposes of satisfying adjustments to the purchase price, if any. On October 2, 2018, the Company released to Bird & Cronin cash of $162,845 and 54,572 shares of common stock pursuant to the holdback provisions of the purchase agreement. In addition, the Company canceled 37,708 shares of common stock held back for the benefit of Bird & Cronin, pursuant to the settlement of working capital adjustments as provided in the purchase agreement. As of March 31, 2019, the remaining earn-out liability and holdback payable, contingent upon the terms set forth in the purchase agreement, and the maturity dates for such payments, are as follows: April 2, 2019 August 15, 2019 500,000 Acquisition holdback and earn-out liability $ 966,667 On April 2, 2019, the Company released to Bird & Cronin cash of $466,667 and 92,280 shares of common stock pursuant to the holdback provisions of the purchase agreement. Hausmann On April 3, 2017, the Company, through its wholly-owned subsidiary Hausmann Enterprises, LLC, completed the purchase of substantially all the assets of Hausmann Industries, Inc. (“Hausmann”), a manufacturer of physical therapy rehabilitation equipment. The purchase price included a holdback of cash totaling $1,044,744 for purposes of satisfying adjustments to the purchase price and indemnification claims, if any. In the second and third fiscal quarters of 2018, the Company released $44,744 and $250,000, respectively, of the holdback to Hausmann. On October 3, 2018, the Company released the remaining holdback amount totaling $750,000.

Note 3. Net Loss per Common Sha

Note 3. Net Loss per Common Share	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 3. 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 share of potential common stock outstanding during the period, unless inclusion of potential common stock would have an anti-dilutive effect. Certain outstanding options, warrants and shares of preferred stock convertible into common shares are not included in the computation of diluted net loss per common share because they were anti-dilutive, which for the three months ended March 31, 2019, and 2018, totaled 11,744,083 and 11,772,349, respectively and for the nine months ended March 31, 2019, and 2018, totaled 11,744,083 and 12,003,052, respectively.

Note 4. Convertible Preferred S

Note 4. Convertible Preferred Stock and Common Stock Warrants	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 4. Convertible Preferred Stock and Common Stock Warrants	As of March 31, 2019, the Company had issued and outstanding a total of 2,000,000 shares of Series A 8% Convertible Preferred Stock (“Series A Preferred”) and 1,459,000 shares of Series B 8% Convertible Preferred Stock ("Series B Preferred"). The Series A Preferred and Series B Preferred are convertible into a total of 3,459,000 shares of common stock. Dividends payable on these preferred shares accrue at the rate of 8% per year and are payable quarterly in stock or cash at the option of the Company. The Company generally pays the dividends on the preferred stock by issuing shares of our common stock. The formula for paying these dividends using common stock in lieu of cash can change the effective yield on the dividend to more or less than 8% depending on the market price of the common stock at the time of issuance. As of March 31, 2019, there were also issued and outstanding 1,440,000 shares of Series C Non-Voting Convertible Preferred Stock (“Series C Preferred”). The Series C Preferred shares are non-voting, do not receive dividends, and have no liquidation preferences or redemption rights.

Note 5. Comprehensive Loss

Note 5. Comprehensive Loss	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 5. Comprehensive Loss	For the three and nine months ended March 31, 2019 and 2018, 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, 2019
Disclosure Text Block [Abstract]
Note 6. Inventories	Inventories consisted of the following: March 31, 2019 June 30, 2018 Raw materials $ 5,484,244 $ 6,216,150 Work in process 664,516 625,830 Finished goods 4,604,264 Inventory obsolescence reserve (400,121 ) (458,389 ) $ 11,218,935 $ 10,987,855

Note 7. Related-party Transacti

Note 7. Related-party Transactions	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 7. Related-party Transactions	The Company leases office, manufacturing and warehouse facilities in Detroit, Michigan; Hopkins, Minnesota; Northvale, New Jersey; and Eagan, Minnesota from employees, shareholders, and entities controlled by shareholders, who were previously principals of businesses acquired by the Company. The combined expenses associated with these related-party transactions totaled $261,792 and $259,980 for the three months ended March 31, 2019 and 2018, respectively, and $785,353 and $626,140 for the nine months ended March 31, 2019 and 2018, respectively.

Note 8. Line of Credit

Note 8. Line of Credit	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 8. Line of Credit	On March 31, 2017, the Company entered into an $8,000,000 loan and security agreement with Bank of the West to provide asset-based financing to the Company for funding acquisitions and for working capital (“Line of Credit”). The Line of Credit provided for revolving credit borrowings by the Company in an amount up to the lesser of $8,000,000 or the calculated borrowing base. The borrowing base is computed monthly and is equal to the sum of stated percentages of eligible accounts receivable and inventory, less a reserve. Amounts outstanding bear interest at LIBOR plus 2.25%. On September 28, 2017, the Company modified the Line of Credit to provide additional capital for funding the Bird & Cronin acquisition and for operating capital. The Line of Credit, as amended, provides for revolving credit borrowings by the Company in an amount up to the lesser of $11,000,000 or the calculated borrowing base. On July 13, 2018, the Company further amended the Line of Credit to modify the maximum monthly consolidated leverage and a minimum monthly consolidated fixed charge coverage ratio. An additional modification was executed on November 9, 2018, to extend the maturity date to December 15, 2020. Borrowings on the Line of Credit were $4,793,505 and $6,286,037 as of March 31, 2019 and June 30, 2018, respectively. As of March 31, 2019, there was approximately $2,600,000 available to borrow.

Note 9. Accrued Payroll and Ben

Note 9. Accrued Payroll and Benefits Expense	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 9. Accrued Payroll and Benefits Expense	As of March 31, 2019 and June 30, 2018, the accrued payroll and benefits expense balance included $358,654 and $473,146, respectively, of accrued severance expense maturing in less than one year. As of March 31, 2019 and June 30, 2018, long-term severance accrual included in other liabilities was $0 and $258,145, respectively. The Company recognized $54,778 and $185,831 in severance expense during the three and nine months ended March 31, 2019, respectively. The Company recognized $839,807 in severance expense during the three and nine months ended March 31, 2018. Severance expense is included in selling, general, and administrative expenses.

Note 10. Revenue

Note 10. Revenue	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 10. Revenue	On July 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied which occurs upon the transfer of control of a product. This occurs either upon shipment or delivery of goods, depending on whether the contract is FOB origin or FOB destination. Contracts sometimes allow for forms of variable consideration including rebates and incentives. In these cases, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring products to customers utilizing the most likely amount method. Rebates and incentives are estimated based on contractual terms or historical experience and a liability is maintained for rebates and incentives that have been earned but are unpaid. As of March 31, 2019 and June 30, 2018, the rebate liability was $254,144 and $243,758, respectively. The rebate liability is included in accrued expenses in the accompanying condensed consolidated balance sheets. Revenue is reduced by estimates of potential future contractual discounts including prompt payment discounts. Provisions for contractual discounts are recorded as a reduction to revenue in the period sales are recognized. Estimates are made of the contractual discounts that will eventually be incurred. Contractual discounts are estimated based on negotiated contracts and historical experience. As of March 31, 2019 and June 30, 2018, the allowance for sales discounts was $14,500 and $0, respectively. The allowance for sales discounts is included in trade accounts receivable, less allowance for doubtful accounts in the accompanying condensed consolidated balance sheets. The Company made an accounting policy election to account for shipping and handling activities as fulfillment activities. As such, shipping and handling are not considered promised services to our customers. Costs for shipping and handling of products to customers are recorded as cost of sales. The following table disaggregates revenue by major product category: Three Months Ended March 31 Nine Months Ended March 31 2019 2018 2019 2018 Orthopedic Soft Bracing Products $ 5,681,928 $ 17,182,340 $ 11,380,235 Physical Therapy and Rehabilitation Products 8,973,207 10,694,000 29,576,820 35,479,422 Other 67,851 258,139 298,160 653,714 $ 14,551,519 $ 16,634,067 $ 47,057,320 $ 47,513,371

Note 11. Subsequent Events

Note 11. Subsequent Events	9 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Note 11. Subsequent Events	In April 2019, the Company issued 95,249 shares of common stock as payment of dividends with a total value of approximately $196,000 with respect to the Series A Preferred and Series B Preferred that accrued during the three months ended March 31, 2019.

Note 1. Presentation and Summ_2

Note 1. Presentation and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Mar. 31, 2019
Policy Text Block [Abstract]
Basis of Presentation	The accompanying unaudited condensed consolidated balance sheets as of March 31, 2019 and June 30, 2018, condensed consolidated statements of operations for the three and nine months ended March 31, 2019 and 2018, and condensed consolidated statements of stockholders' equity and cash flows (“Financial Statements”) of Dynatronics Corporation and its wholly-owned subsidiaries (the “Company”) for the nine months ended March 31, 2019 and 2018, should be read in conjunction with the audited financial statements and notes thereto as of and for the year ended June 30, 2018 included in the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 27, 2018. In the opinion of management, the accompanying Financial Statements have been prepared by us in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of the Company's management, the Financial Statements for the periods presented reflect all adjustments, consisting of only normal, recurring adjustments, necessary to fairly state our financial position, results of operations, and cash flows. The March 31, 2019 condensed consolidated balance sheet was derived from audited financial statements, but does not include all GAAP disclosures. The results of operations for the first nine months of the fiscal year are not necessarily indicative of results for the full year or any future periods. The preparation of these Financial Statements requires the Company's management to make estimates and judgments that affect the amounts reported in the Financial Statements and the accompanying notes. The Company’s actual results may differ from these estimates under different assumptions or conditions.
Research and Development Costs	Research and development ("R&D") costs are expensed as incurred. R&D expense for the three and nine months ended March 31, 2019 totaled $14,000 and $40,000, respectively. R&D expense for the three and nine months ended March 31, 2018 totaled $242,000 and $1,048,000, respectively. R&D expense is included in selling, general, and administrative expenses in the condensed consolidated statements of operations.
Reclassification	Certain amounts in the prior year's condensed consolidated statements of operations have been reclassified for comparative purposes to conform to the presentation in the current year's condensed consolidated statements of operations.
Recent Accounting Pronouncements	In August 2018, the SEC adopted a final rule under SEC Release No. 33-10532, Disclosure Update and Simplification In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842,) a new guidance on leases. This guidance replaces the prior lease accounting guidance in its entirety. The underlying principle of the new standard is the recognition of lease assets and lease liabilities by lessees for substantially all leases, with an exception for leases with terms of less than twelve months. The standard also requires additional quantitative and qualitative disclosures. The guidance is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The standard requires a modified retrospective approach, which includes several optional practical expedients. Accordingly, the standard is effective for the Company for the fiscal year begining on July 1, 2019. The Company is currently evaluating the impact that this guidance will have on the consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customer y adopted this updated accounting guidance beginning July 1, 2018, using the modified retrospective method. This adoption did not have a material impact on the Company’s consolidated financial statements other than additional disclosures (see Note 10) as the timing of revenue recognition under the new standard is not materially different from our previous revenue recognition policy. Based on our analysis of open contracts as of July 1, 2018, the cumulative effect of applying the new standard was not material.

Note 2. Acquisitions (Tables)

Note 2. Acquisitions (Tables)	9 Months Ended
	Mar. 31, 2019
Table Text Block Supplement [Abstract]
Acquisition	April 2, 2019 August 15, 2019 500,000 Acquisition holdback and earn-out liability $ 966,667

Note 6. Inventories (Tables)

Note 6. Inventories (Tables)	9 Months Ended
	Mar. 31, 2019
Table Text Block Supplement [Abstract]
Schedule of inventory	March 31, 2019 June 30, 2018 Raw materials $ 5,484,244 $ 6,216,150 Work in process 664,516 625,830 Finished goods 4,604,264 Inventory obsolescence reserve (400,121 ) (458,389 ) $ 11,218,935 $ 10,987,855

Note 10. Revenue (Tables)

Note 10. Revenue (Tables)	9 Months Ended
	Mar. 31, 2019
Table Text Block Supplement [Abstract]
Disaggregation of revenue	Three Months Ended March 31 Nine Months Ended March 31 2019 2018 2019 2018 Orthopedic Soft Bracing Products $ 5,681,928 $ 17,182,340 $ 11,380,235 Physical Therapy and Rehabilitation Products 8,973,207 10,694,000 29,576,820 35,479,422 Other 67,851 258,139 298,160 653,714 $ 14,551,519 $ 16,634,067 $ 47,057,320 $ 47,513,371

Note 1. Presentation and Summ_3

Note 1. Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Accounting Policies [Abstract]
Research and development costs	$ 14,000	$ 242,000	$ 40,000	$ 1,048,000

Note 2. Acquisitions (Details)

Note 2. Acquisitions (Details)	9 Months Ended
	Mar. 31, 2019USD ($)
Acquisition holdback and earn-out liability	$ 966,667
April 2, 2019
Acquisition holdback and earn-out liability	466,667
August 15, 2019
Acquisition holdback and earn-out liability	$ 500,000

Note 3. Net Loss per Common S_2

Note 3. Net Loss per Common Share (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share	11,744,083	11,772,349	11,744,083	12,003,052

Note 6. Inventories (Details)

Note 6. Inventories (Details) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Inventory, Net [Abstract]
Raw Materials	$ 5,484,244	$ 6,216,150
Work in Process	664,516	625,830
Finished Goods	4,604,264	4,604,264
Inventory Obsolescence Reserve	(400,121)	(458,389)
Inventories, Net	$ 11,218,935	$ 10,987,855

Note 7. Related-party Transac_2

Note 7. Related-party Transactions (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Related Party Transactions [Abstract]
Related party transaction, expenses from transactions with related party	$ 261,792	$ 259,980	$ 785,353	$ 626,140

Note 8. Line of Credit (Details

Note 8. Line of Credit (Details Narrative) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Line of Credit Facility [Abstract]
Line of credit	$ 4,793,505	$ 6,286,037
Line of credit facility, current borrowing capacity	$ 2,600,000

Note 9. Accrued Payroll and B_2

Note 9. Accrued Payroll and Benefits Expense (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Jun. 30, 2018
Accrued Liabilities [Abstract]
Accrued severance	$ 358,654		$ 358,654		$ 473,146
Long-term accrued severance	0		0		$ 258,145
Severance costs	$ 54,778	$ 839,807	$ 185,831	$ 839,807

Note 10. Revenue (Details)

Note 10. Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Net sales	$ 14,551,519	$ 16,634,067	$ 47,057,320	$ 47,513,371
Orthopedic Soft Goods and Medical Supplies
Net sales	5,681,928	17,182,340	11,380,235	0
Physical Therapy and Rehabilitation Equipment
Net sales	8,973,207	10,694,000	29,576,820	35,479,422
Other
Net sales	$ 67,851	$ 258,139	$ 298,160	$ 653,714