Dynatronics (DYNT) 10-Q 14 May 20 2020 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2020	May 06, 2020
Document and Entity Information:
Entity Registrant Name	DYNATRONICS CORP
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Amendment Flag	false
Entity Central Index Key	0000720875
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		13,803,855
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Current Reporting Status	Yes
Entity Shell Company	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	UT
Entity File Number	0-12697

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2020	Jun. 30, 2019
Current assets:
Cash and cash equivalents	$ 1,428,957	$ 155,520
Restricted cash	100,636	100,510
Trade accounts receivable, less allowance for doubtful accounts of $103,462 and $89,500 as of March 31, 2020 and June 30, 2019, respectively	6,635,441	7,495,309
Inventories, net	11,322,887	11,527,521
Prepaid expenses and other receivables	764,256	634,837
Total current assets	20,252,177	19,913,697
Property and equipment, net	5,157,470	5,677,419
Operating lease assets	3,045,883	0
Intangible assets, net	5,864,087	6,407,374
Goodwill	7,116,614	7,116,614
Other assets	607,315	516,841
Total assets	42,043,546	39,631,945
Current liabilities:
Accounts payable	5,539,558	3,989,546
Accrued payroll and benefits expense	1,479,462	1,373,481
Accrued expenses	767,633	1,038,726
Warranty reserve	207,988	207,988
Line of credit	6,368,559	6,540,639
Current portion of long-term debt	148,922	173,921
Current portion of finance lease liability	311,073	283,781
Current portion of deferred gain	150,448	150,448
Current portion of operating lease liability	902,476	0
Acquisition earn-out liability	0	500,000
Income tax payable	7,351	16,751
Total current liabilities	15,883,470	14,275,281
Long-term debt, net of current portion	22,073	129,428
Finance lease liability, net of current portion	2,679,110	2,915,241
Deferred gain, net of current portion	1,266,270	1,379,105
Operating lease liability, net of current portion	2,143,407	0
Other liabilities	190,160	177,181
Total liabilities	22,184,490	18,876,236
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par value: Authorized 50,000,000 shares; 3,681,000 shares and 4,899,000 shares issued and outstanding as of March 31, 2020 and June 30, 2019, respectively	8,770,798	11,641,816
Common stock, no par value: Authorized 100,000,000 shares; 10,407,775 shares and 8,417,793 shares issued and outstanding as of March 31, 2020 and June 30, 2019, respectively	24,962,007	21,320,106
Accumulated deficit	(13,873,749)	(12,206,213)
Total stockholders' equity	19,859,056	20,755,709
Total liabilities and stockholders' equity	$ 42,043,546	$ 39,631,945

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2020	Jun. 30, 2019
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 103,462	$ 89,500
Preferred stock shares authorized	50,000,000	50,000,000
Preferred stock shares issued	3,681,000	4,899,000
Preferred stock shares outstanding	3,681,000	4,899,000
Common stock shares authorized	100,000,000	100,000,000
Common stock shares issued	10,407,775	8,417,793
Common stock shares outstanding	10,407,775	8,417,793

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Net sales	$ 13,706,319	$ 14,551,519	$ 45,292,860	$ 47,057,320
Cost of sales	9,761,864	10,146,361	31,608,541	32,425,066
Gross profit	3,944,455	4,405,158	13,684,319	14,632,254
Selling, general, and administrative expenses	4,907,363	4,818,093	14,450,155	15,087,393
Operating loss	(962,908)	(412,935)	(765,836)	(455,139)
Other income (expense):
Interest expense, net	(110,101)	(124,477)	(351,382)	(387,107)
Other (expense) income, net	(18,193)	6,905	(12,809)	390,459
Net other (expense) income	(128,294)	(117,572)	(364,191)	3,352
Loss before income taxes	(1,091,202)	(530,507)	(1,130,027)	(451,787)
Income tax (provision) benefit	0	(32,880)	0	(236,829)
Net loss	(1,091,202)	(563,387)	(1,130,027)	(688,616)
Deemed dividend on convertible preferred stock and accretion of discount	(65,219)	0	(173,758)	0
Preferred stock dividend, in common stock, issued or to be issued	(168,356)	(196,240)	(537,509)	(586,145)
Net loss attributable to common stockholders	$ (1,324,777)	$ (759,627)	$ (1,841,294)	$ (1,274,761)
Net (loss) income per common share
Basic and diluted	$ (0.13)	$ (0.09)	$ (0.20)	$ (0.16)
Weighted-average common shares outstanding:
Basic and diluted	10,168,596	8,307,117	9,216,027	8,189,890

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock	Preferred Stock	Accumulated Deficit	Total
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 - amount	$ 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
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
Stock-based compensation - shares	0
Preferred stock dividend, in common stock, issued or to be issued - amount	$ 203,268		(203,268)	0
Preferred stock dividend, in common stock, issued or to be issued - shares	65,494
Reduction in equity retained for acquisition holdback	$ (37,708)			0
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 dividend, in common stock, issued or to be issued - amount	$ 196,240		(196,240)	0
Preferred stock dividend, in common stock, issued or to be issued - shares	74,731
Reduction in equity retained for acquisition holdback	$ (37,708)
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
Stock-based compensation	$ 115,343			115,343
Preferred stock dividend, in common stock, issued or to be issued - amount	$ 208,205		(208,205)	0
Preferred stock dividend, in common stock, issued or to be issued - shares	95,249
Net income (loss)			(233,106)	(233,106)
Balance at Jun. 30, 2019	$ 21,320,106	$ 11,641,816	(12,206,213)	20,755,709
Balance - shares at Jun. 30, 2019	8,417,793	4,899,000
Stock-based compensation	$ 129,793			129,793
Stock-based compensation - shares	135,244
Preferred stock dividend, in common stock, issued or to be issued - amount	$ 166,904		(166,904)	0
Preferred stock dividend, in common stock, issued or to be issued - shares	126,194
Net income (loss)			98,838	98,838
Balance at Sep. 30, 2019	$ 21,616,803	$ 11,641,816	(12,274,279)	20,984,340
Balance - shares at Sep. 30, 2019	8,679,231	4,899,000
Balance at Jun. 30, 2019	$ 21,320,106	$ 11,641,816	(12,206,213)	20,755,709
Balance - shares at Jun. 30, 2019	8,417,793	4,899,000
Balance at Mar. 31, 2020	$ 24,962,007	$ 8,770,798	(13,873,749)	19,859,056
Balance - shares at Mar. 31, 2020	10,407,775	3,681,000
Balance at Sep. 30, 2019	$ 21,616,803	$ 11,641,816	(12,274,279)	20,984,340
Balance - shares at Sep. 30, 2019	8,679,231	4,899,000
Stock-based compensation	$ 58,238
Stock-based compensation - shares	5,446
Preferred stock dividend, in common stock, issued or to be issued - amount	$ 202,249		(202,249)
Preferred stock dividend, in common stock, issued or to be issued - shares	165,251
Preferred stock converted to common stock	$ 1,791,320	$ (760,000)	(1,791,320)
Preferred stock converted to common stock, shares	760,000
Net income (loss)			(137,663)
Balance at Dec. 31, 2019	$ 23,668,610	$ 9,850,496	(12,614,191)	20,904,915
Balance - shares at Dec. 31, 2019	9,609,928	4,139,000
Stock-based compensation	$ 45,343			45,343
Stock-based compensation - shares	96,195
Preferred stock dividend, in common stock, issued or to be issued - amount	$ 168,356		(168,356)	0
Preferred stock dividend, in common stock, issued or to be issued - shares	243,652
Preferred stock converted to common stock	$ 1,079,698	$ (1,079,698)		0
Preferred stock converted to common stock, shares	458,000	(458,000)
Net income (loss)			(1,091,202)	(1,091,202)
Balance at Mar. 31, 2020	$ 24,962,007	$ 8,770,798	$ (13,873,749)	$ 19,859,056
Balance - shares at Mar. 31, 2020	10,407,775	3,681,000

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net loss	$ (1,130,027)	$ (688,616)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of property and equipment	763,197	650,289
Amortization of intangible assets	543,287	543,292
Amortization of other assets	27,007	32,219
Loss on sale of property and equipment	18,878	2,177
Stock-based compensation expense	233,374	185,306
Change in allowance for doubtful accounts receivable	13,962	(280,800)
Change in allowance for inventory obsolescence	(22,694)	(58,268)
Amortization deferred gain on sale/leaseback	(112,835)	(112,836)
Deferred income taxes	0	236,829
Change in fair value of earn-out liability	0	(375,000)
Change in operating assets and liabilities:
Trade accounts receivable and other receivables	848,565	1,285,182
Inventories	227,328	(411,918)
Prepaid expenses	(132,078)	72,070
Other assets	(117,481)	(15,692)
Income tax receivable	(9,400)	35,518
Accounts payable and accrued expenses	1,397,879	452,212
Net cash provided by operating activities	2,548,962	1,551,964
Cash flows from investing activities:
Purchase of property and equipment	(249,617)	(124,804)
Net cash used in investing activities	(249,617)	(124,804)
Cash flows from financing activities:
Principal payments on long-term debt	(132,354)	(122,035)
Principal payments on finance lease liability	(221,348)	(181,609)
Payment of acquisition holdbacks	(500,000)	(912,845)
Net change in line of credit	(172,080)	(1,492,532)
Net cash used in financing activities	(1,025,782)	(2,709,021)
Net change in cash and cash equivalents and restricted cash	1,273,563	(1,281,861)
Cash and cash equivalents and restricted cash at beginning of the period	256,030	1,696,116
Cash and cash equivalents and restricted cash at end of the period	1,529,593	414,255
Supplemental disclosure of cash flow information:
Cash paid for interest	362,595	392,039
Supplemental disclosure of non-cash investing and financing activity:
Deemed dividend on convertible preferred stock and accretion of discount	173,758	0
Preferred stock dividend, in common stock, issued or to be issued	537,509	586,145
Inventory reclassified to demonstration equipment	0	239,106
Conversion of preferred stock into common stock	2,871,018	0
Finance lease obligations incurred to obtain ROU assets	12,509	252,493
Operating lease obligations incurred to obtain ROU assets	$ 3,749,809	$ 0

Note 1. Presentation and Summar

Note 1. Presentation and Summary of Significant Accounting Policies	9 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Note 1. Presentation and Summary of Significant Accounting Policies	Business Dynatronics Corporation (“Company,” “Dynatronics”) is a leading medical device company committed to providing high-quality restorative products designed to accelerate optimal health. The Company designs, manufactures, and sells a broad range of restorative products for clinical use in physical therapy, rehabilitation, orthopedics, pain management, and athletic training. Through its distribution channels, Dynatronics markets and sells to orthopedists, physical therapists, chiropractors, athletic trainers, sports medicine practitioners, clinics, hospitals, and consumers. Basis of Presentation The accompanying unaudited condensed consolidated financial statements (the “Condensed Consolidated Financial Statements”) have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. As such, these Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2019 (the “Annual Report”) filed with the SEC on September 25, 2019. The Condensed Consolidated Balance Sheet at June 30, 2019, has been derived from the Annual Report. The accounting policies followed by the Company are set forth in Part II, Item 8, Note 1, Basis of Presentation and Summary of Accounting Policies, of the Notes to Financial Statements included in the Company’s Annual Report. In the opinion of management, the Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2020 and its results of operations and its cash flows for the periods presented. 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 Company’s fiscal year begins on July 1 and ends on June 30 and references made to “fiscal year 2020” and “fiscal year 2019” refer to the Company’s fiscal year ending June 30, 2020 and the fiscal year ended June 30, 2019, respectively. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates and assumptions. Reclassification Certain amounts in the prior year's Financial Statements have been reclassified for comparative purposes to conform to the presentation in the current year's Financial Statements. Risks and Uncertainties The pandemic caused by an outbreak of the Novel Coronavirus Disease 2019 (“COVID-19”) has resulted, and is likely to continue to result, in significant national and global economic disruption and has adversely affected and may continue to adversely affect the Company’s business. However, the Company is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, suppliers, industry, and workforce. Certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer orders, and reduced operations. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02, Leases In December 2019, the FASB issued ASU 2019-12, Income Taxes Simplifying the Accounting for Income Taxes

Note 2. Acquisitions

Note 2. Acquisitions	9 Months Ended
	Mar. 31, 2020
Business Combinations [Abstract]
Note 2. Acquisitions	The earn-out liability was $0 as of March 31, 2020. Payments during the quarters ended December 31, 2019 and September 30, 2019 totaled $375,000 and $125,000, respectively.

Note 3. Net Loss per Common Sha

Note 3. Net Loss per Common Share	9 Months Ended
	Mar. 31, 2020
Net (loss) income per common share
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 income 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. All 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 are anti-dilutive, which for the three months ended March 31, 2020, and 2019, totaled 10,946,022 and 11,744,083, respectively, and for the nine months ended March 31, 2020, and 2019, totaled 11,452,544 and 11,744,083, respectively.

Note 4. Convertible Preferred S

Note 4. Convertible Preferred Stock and Common Stock Warrants	9 Months Ended
	Mar. 31, 2020
Equity [Abstract]
Note 4. Convertible Preferred Stock and Common Stock Warrants	As of March 31, 2020, the Company had issued and outstanding a total of 1,992,000 shares of Series A 8% Convertible Preferred Stock (“Series A Preferred”) and 1,459,000 shares of Series B Convertible Preferred Stock ("Series B Preferred"). The Series A Preferred and Series B Preferred are convertible into a total of 3,451,000 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, 2020, there were also issued and outstanding 230,000 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. During the quarter ended December 31, 2019, the Company issued 760,000 shares of common stock upon conversion of 760,000 shares of Series C Preferred. During the quarter ended March 31, 2020, the Company issued 450,000 and 8,000 shares of common stock upon conversion of 450,000 and 8,000 shares of Series C Preferred and Series A Preferred, respectively. In April 2020, the Company paid approximately $202,000 of preferred stock dividends with respect to the Series A Preferred and Series B Preferred that accrued during the three months ended March 31, 2020, by issuing 195,490 shares of common stock.

Note 5. Common Stock

Note 5. Common Stock	9 Months Ended
	Mar. 31, 2020
Equity [Abstract]
Note 5. Common Stock	As of March 31, 2020, the Company had issued and outstanding a total of 10,407,775 shares of common stock. On March 12, 2020, the Company entered into an Equity Distribution Agreement with Canaccord Genuity LLC and Roth Capital Partners, LLC relating to the offer and sale of shares of its common stock in an at-the-market offering (“ATM”). In accordance with the terms of the equity distribution agreement, the Company may offer and sell common stock having an aggregate offering price of up to $10,000,000 from time to time through Canaccord Genuity LLC and Roth Capital Partners, LLC, acting as the Company’s sales agents. The shares of common stock will be distributed at the market prices prevailing on The Nasdaq Capital Market at the time of the sale of such shares. Canaccord Genuity LLC and Roth Capital Partners, LLC will be entitled to compensation at a fixed commission rate equal to 3.0% of the gross sale price per share of common stock sold. No shares were sold in the ATM during the three months ended March 31, 2020. In April 2020, the Company sold 3,200,585 shares of common stock, no par value per share, in the ATM offering. The Company incurred offering costs totaling $238,169, inclusive of commission fees at a fixed rate of 3.0%, legal, accounting, and filing fees. Net proceeds from the shares sold totaled $2,286,939. The proceeds will be used to strengthen the Company's working capital position.

Note 6. Comprehensive Income

Note 6. Comprehensive Income	9 Months Ended
	Mar. 31, 2020
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Note 6. Comprehensive Income	For the three and nine months ended March 31, 2020 and 2019, comprehensive loss was equal to the net loss as presented in the accompanying Condensed Consolidated Statements of Operations.

Note 7. Inventories

Note 7. Inventories	9 Months Ended
	Mar. 31, 2020
Inventory Disclosure [Abstract]
Note 7. Inventories	Inventories consisted of the following: March 31, 2020 June 30, 2019 Raw materials $ 5,765,534 $ 5,830,140 Work in process 553,470 706,128 Finished goods 5,160,985 5,129,806 Inventory obsolescence reserve (157,102 ) (138,553 ) $ 11,322,887 $ 11,527,521

Note 8. Leases

Note 8. Leases	9 Months Ended
	Mar. 31, 2020
Leases [Abstract]
Note 8. Leases	Management determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Such assets are classified as ROU assets with a corresponding lease liability. Finance and operating lease ROU assets and liabilities are recorded at commencement at the present value of future minimum lease payments over the expected lease term. As the implicit discount rate for the present value calculation is not determinable in most of the Company’s leases, management uses the Company’s incremental borrowing rate based on the information available at commencement of the lease. The expected lease terms include options to extend the lease when it is reasonably certain the Company will exercise such options. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term. Leases with an expected term of 12 months or less are not accounted for on the balance sheet and the related lease expense is recognized on a straight-line basis over the expected lease term. The Company has operating and finance leases for various administrative, manufacturing, and distribution facilities and equipment. Most of the Company’s leases include one or more options to renew and extend the lease term two years to five years. The exercise of lease renewal options is typically at the Company's sole discretion, however, as a material economic incentive to exercise the option exists, the majority of renewals to extend the lease terms are included in the ROU assets and lease liabilities as they are reasonably certain of exercise. The Company’s lease agreements do not contain any material non-lease components, residual value guarantees, or material restrictive covenants. Leases recorded on the balance sheet consist of the following: Classification on the Balance Sheet March 31, 2020 Lease Assets Operating lease assets Operating lease assets, net $ 3,045,883 Finance lease assets Property and equipment, net $ 2,630,542 Lease Liabilities Current Operating Current portion of operating lease liability $ 902,476 Finance Current portion of finance lease liability $ 311,073 Noncurrent Operating Operating lease liability, net of current portion $ 2,143,407 Finance Finance lease liability, net of current portion $ 2,679,110 Other information related to lease term and discount rate is as follows: March 31, 2020 Weighted Average Remaining Lease Term Operating leases 3.3 years Finance leases 8.8 years Weighted Average Discount Rate Operating leases 4.6% Finance leases 5.7% The components of lease expense are as follows: Classification on the Statement of Operations Three Months Ended March 31, 2020 Nine Months Ended March 31, 2020 Operating lease cost Operating lease cost Cost of sales $ 70,515 $ 211,545 Operating lease cost Selling, general, and administrative expenses 188,256 564,188 Short term lease cost Selling, general, and administrative expenses 15,750 47,250 Finance lease cost Amortization of finance lease assets Cost of sales $ 35,670 $ 107,010 Amortization of finance lease assets Selling, general, and administrative expenses 54,968 152,923 Interest on finance lease liabilities Interest expense, net 43,477 133,566 Total lease cost $ 408,636 $ 1,216,482 Supplemental cash flow information related to leases is as follows: Three Months Ended March 31, 2020 Nine Months Ended March 31, 2020 ROU assets obtained in exchange for lease liabilities: Operating leases - 3,749,809 Financing leases 9,423 12,509 Future minimum lease payments are summarized as follows: Operating Leases Finance Leases Year ending June 30, 2020 (excluding the nine months ended March 31, 2020) $ 257,916 $ 114,028 2021 959,721 465,624 2022 150,000 472,874 2023 - 445,280 2024 - 384,754 Thereafter - 2,113,348 Total future minimum lease payments $ 1,367,637 $ 3,995,908 Imputed interest 815,566 Deferred rent 190,160 The Company leases office, manufacturing and warehouse facilities in 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 $261,666 and $261,792 for the three months ended March 31, 2020 and 2019, respectively, and $784,999 and $785,353 for the nine months ended March 31, 2020 and 2019, respectively.

Note 9. Line of Credit

Note 9. Line of Credit	9 Months Ended
	Mar. 31, 2020
Line of Credit Facility [Abstract]
Note 9. Line of Credit	The Company has a line of credit with Bank of the West (“Line of Credit”) available pursuant to a loan and security agreement, as amended (the “Loan and Security Agreement”), that matures on January 15, 2022. The Company’s obligations under the Line of Credit are secured by a first-priority security interest in substantially all of the Company’s assets. The Line of Credit requires a lockbox arrangement and contains affirmative and negative covenants, including covenants that restrict the Company's ability to, among other things, incur or guarantee indebtedness, incur liens, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, make changes in the nature of its business, and engage in transactions with affiliates. The agreement also contains financial covenants including a minimum monthly consolidated fixed charge coverage ratio which only applies when the excess availability amount under the Line of Credit is less than the greater of $1,000,000 or 10% of the borrowing base. As amended, the Loan and Security Agreement provides for revolving credit borrowings in an amount up to the lesser of $11,000,000 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% (approximately 3% as of March 31, 2020). The Line of Credit is subject to an unused line fee of .25%. Borrowings on the Line of Credit were $6,368,559 and $ 6,540,639 as of March 31, 2020 and June 30, 2019, respectively. As of March 31, 2020, there was approximately $1,000,000 available to borrow.

Note 10. Long-term Debt

Note 10. Long-term Debt	9 Months Ended
	Mar. 31, 2020
Debt Disclosure [Abstract]
Note 10. Long-term Debt	As of March 31, 2020 and June 30, 2019 long-term debt was $170,995 and $303,349, respectively. Long-term debt is primarily comprised of the mortgage loan on the Company's office and manufacturing facility in Tennessee maturing in 2021. On April 29, 2020, the Company entered into a promissory note (the “Note”) with Bank of the West to evidence a loan to the Company in the amount of $3,477,412 under the Paycheck Protection Program (the “PPP”) established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), administered by the U.S. Small Business Administration (“SBA”). In accordance with the requirements of the CARES Act, the Company expects to use the proceeds from the loan exclusively for qualified expenses under the PPP, including payroll costs, mortgage interest, rent and utility costs, as further detailed in the CARES Act and applicable guidance issued by the SBA. Interest will accrue on the outstanding balance of the Note at a rate of 1.00% per annum. The Company expects to apply for forgiveness of up to all amounts due under the Note, in an amount equal to the sum of qualified expenses under the PPP incurred during the eight weeks following initial disbursement. Notwithstanding the Company’s expected eligibility to apply for forgiveness, no assurance can be given that the Company will obtain forgiveness of all or any portion of amounts due under the Note. Subject to any forgiveness granted under the PPP, the Note is scheduled to mature, April 29, 2022, two years from the date of initial disbursement under the Note and is payable in 18 equal monthly payments of principal and interest beginning six months from the date of initial disbursement. The Note may be prepaid at any time prior to maturity without penalty. The Note contains customary provisions related to events of default, including, among others, failure to make payments, bankruptcy, breaches of representations, significant changes in ownership, and material adverse effects. The occurrence of an event of default may result in the collection of all amounts owing under the Note, and/or filing suit and obtaining judgment against the Company. The Company’s obligations under the Note are not secured by any collateral or personal guarantees.

Note 11. Accrued Payroll and Be

Note 11. Accrued Payroll and Benefits Expense	9 Months Ended
	Mar. 31, 2020
Accrued Liabilities [Abstract]
Note 11. Accrued Payroll and Benefits Expense	As of March 31, 2020 and June 30, 2019, the accrued payroll and benefits expense balance included $294,662 and $310,903, respectively, of accrued severance expense. The Company recognized $311,701 and $54,778 in severance expense during the three months ended March 31, 2020 and 2019, respectively, and $464,787 and $185,831 in severance expense during the nine months ended March 31, 2020 and 2019, respectively. The severance expense was incurred in connection with reductions of the Company's workforce to better align its resources with the needs of the business and cost-reduction initiatives. Severance expense is included in selling, general, and administrative expenses.

Note 12. Revenue

Note 12. Revenue	9 Months Ended
	Mar. 31, 2020
Disaggregation of Revenue [Abstract]
Note 12. Revenue	As of March 31, 2020 and June 30, 2019, the rebate liability was $289,841 and $287,430, respectively. The rebate liability is included in accrued expenses in the accompanying Condensed Consolidated Balance Sheets. As of March 31, 2020 and June 30, 2019, the allowance for sales discounts was $14,500. The allowance for sales discounts is included in trade accounts receivable, less allowance for doubtful accounts in the accompanying Condensed Consolidated Balance Sheets. The following table disaggregates revenue by major product category for the three and nine months ended March 31: Three Months Ended March 31 Nine Months Ended March 31 2020 2019 2020 2019 Orthopedic Soft Bracing Products $ 5,510,461 $ 17,416,245 $ 17,182,340 Physical Therapy and Rehabilitation Products 8,342,162 8,973,207 27,662,899 29,576,820 Other 60,911 67,851 213,716 298,160 $ 13,706,319 $ 14,551,519 $ 45,292,860 $ 47,057,320 This report, including the disclosures contained in Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation, contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include, but are not limited to: any projections of net sales, earnings, or other financial items; any statements of the strategies, plans and objectives of management for future operations; any statements concerning proposed new products or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements can be identified by their use of such words as “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” or “anticipate” and similar references to future periods. We have based our forward-looking statements on management’s current expectations and assumptions about future events and trends affecting our business and industry that are subject to risks and uncertainties. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our future business, financial condition, results of operations or performance to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this report. These risks and uncertainties include, but are not limited to, the uncertainty regarding the impact or duration of the Novel Coronavirus Disease 2019 ("COVID-19") virus pandemic that is rapidly spreading globally and adversely affecting communities and businesses, including ours, as well as those factors described in the section “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the SEC, as well as in our other public filings with the SEC. Actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. You should read this report in its entirety, together with the documents that we file as exhibits to this report and the documents that we incorporate by reference into this report, with the understanding that our future results may be materially different from what we currently expect. The forward-looking statements contained in this report are made as of the date of this report and we assume no obligation to update them after the date hereof to revise or conform such statements to actual results or to changes in our opinions or expectations. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections. We qualify all of our forward-looking statements by these cautionary statements. The terms “we,” “us,” “Dynatronics,” or the “Company” refer collectively to Dynatronics Corporation and its wholly-owned subsidiaries, unless otherwise stated.

Note 1. Presentation and Summ_2

Note 1. Presentation and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Basis of Presentation	The accompanying unaudited condensed consolidated financial statements (the “Condensed Consolidated Financial Statements”) have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. As such, these Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2019 (the “Annual Report”) filed with the SEC on September 25, 2019. The Condensed Consolidated Balance Sheet at June 30, 2019, has been derived from the Annual Report. The accounting policies followed by the Company are set forth in Part II, Item 8, Note 1, Basis of Presentation and Summary of Accounting Policies, of the Notes to Financial Statements included in the Company’s Annual Report. In the opinion of management, the Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2020 and its results of operations and its cash flows for the periods presented. 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 Company’s fiscal year begins on July 1 and ends on June 30 and references made to “fiscal year 2020” and “fiscal year 2019” refer to the Company’s fiscal year ending June 30, 2020 and the fiscal year ended June 30, 2019, respectively.
Use of Estimates	The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates and assumptions.
Reclassification	Certain amounts in the prior year's Financial Statements have been reclassified for comparative purposes to conform to the presentation in the current year's Financial Statements.
Risks and Uncertainties	The pandemic caused by an outbreak of the Novel Coronavirus Disease 2019 (“COVID-19”) has resulted, and is likely to continue to result, in significant national and global economic disruption and has adversely affected and may continue to adversely affect the Company’s business. However, the Company is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, suppliers, industry, and workforce. Certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer orders, and reduced operations.
Recent Accounting Pronouncements	In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02, Leases In December 2019, the FASB issued ASU 2019-12, Income Taxes Simplifying the Accounting for Income Taxes

Note 7. Inventories (Tables)

Note 7. Inventories (Tables)	9 Months Ended
	Mar. 31, 2020
Inventory Disclosure [Abstract]
Schedule of inventory	March 31, 2020 June 30, 2019 Raw materials $ 5,765,534 $ 5,830,140 Work in process 553,470 706,128 Finished goods 5,160,985 5,129,806 Inventory obsolescence reserve (157,102 ) (138,553 ) $ 11,322,887 $ 11,527,521

Note 8. Leases (Tables)

Note 8. Leases (Tables)	9 Months Ended
	Mar. 31, 2020
Leases [Abstract]
Other Information relating to lease	Classification on the Balance Sheet March 31, 2020 Lease Assets Operating lease assets Operating lease assets, net $ 3,045,883 Finance lease assets Property and equipment, net $ 2,630,542 Lease Liabilities Current Operating Current portion of operating lease liability $ 902,476 Finance Current portion of finance lease liability $ 311,073 Noncurrent Operating Operating lease liability, net of current portion $ 2,143,407 Finance Finance lease liability, net of current portion $ 2,679,110 March 31, 2020 Weighted Average Remaining Lease Term Operating leases 3.3 years Finance leases 8.8 years Weighted Average Discount Rate Operating leases 4.6% Finance leases 5.7%
Components of lease expense	Classification on the Statement of Operations Three Months Ended March 31, 2020 Nine Months Ended March 31, 2020 Operating lease cost Operating lease cost Cost of sales $ 70,515 $ 211,545 Operating lease cost Selling, general, and administrative expenses 188,256 564,188 Short term lease cost Selling, general, and administrative expenses 15,750 47,250 Finance lease cost Amortization of finance lease assets Cost of sales $ 35,670 $ 107,010 Amortization of finance lease assets Selling, general, and administrative expenses 54,968 152,923 Interest on finance lease liabilities Interest expense, net 43,477 133,566 Total lease cost $ 408,636 $ 1,216,482
Supplemental cash flow information related to leases	Three Months Ended March 31, 2020 Nine Months Ended March 31, 2020 ROU assets obtained in exchange for lease liabilities: Operating leases - 3,749,809 Financing leases 9,423 12,509
Future minimum lease payments	Operating Leases Finance Leases Year ending June 30, 2020 (excluding the nine months ended March 31, 2020) $ 257,916 $ 114,028 2021 959,721 465,624 2022 150,000 472,874 2023 - 445,280 2024 - 384,754 Thereafter - 2,113,348 Total future minimum lease payments $ 1,367,637 $ 3,995,908 Imputed interest 815,566 Deferred rent 190,160

Note 10. Revenue (Tables)

Note 10. Revenue (Tables)	9 Months Ended
	Mar. 31, 2020
Disaggregation of Revenue [Abstract]
Disaggregation of revenue	Three Months Ended March 31 Nine Months Ended March 31 2020 2019 2020 2019 Orthopedic Soft Bracing Products $ 5,510,461 $ 17,416,245 $ 17,182,340 Physical Therapy and Rehabilitation Products 8,342,162 8,973,207 27,662,899 29,576,820 Other 60,911 67,851 213,716 298,160 $ 13,706,319 $ 14,551,519 $ 45,292,860 $ 47,057,320

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, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Net (loss) income per common share
Antidilutive securities excluded from computation of earnings per share	10,946,022	11,744,083	11,452,544	11,744,083

Note 7. Inventories (Details)

Note 7. Inventories (Details) - USD ($)	Mar. 31, 2020	Jun. 30, 2019
Inventory Disclosure [Abstract]
Raw Materials	$ 5,765,534	$ 5,830,140
Work in Process	553,470	706,128
Finished Goods	5,160,985	5,129,806
Inventory Obsolescence Reserve	(157,102)	(138,553)
Inventories, Net	$ 11,322,887	$ 11,527,521

Note 8. Leases (Details)

Note 8. Leases (Details) - USD ($)	Mar. 31, 2020	Jun. 30, 2019
Assets and liabilities - leased assets
Operating lease assets included in property and equipment	$ 3,045,883	$ 0
Finance lease assets included in property and equipment	2,630,542
Current portion of operating lease liability	902,476	0
Current portion of finance lease liability	311,073	283,781
Operating lease liability, net of current portion	2,143,407	0
Finance lease liability, net of current portion	$ 2,679,110	$ 2,915,241
Weighted Average Remaining Lease Term, Operating leases	3 years 3 months 18 days
Weighted Average Remaining Lease Term, Finance leases	8 years 9 months 18 days
Weighted Average Discount Rate, Operating leases	4.60%
Weighted Average Discount Rate, Finance leases	5.70%

Note 8. Leases (Details 1)

Note 8. Leases (Details 1) - USD ($)	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2020
Total lease cost	$ 408,636	$ 1,216,482
Cost of sales
Operating lease cost	70,515	211,545
Amortization of finance lease assets	35,670	107,010
Selling, general, and administrative expenses
Operating lease cost	188,256	564,188
Short term lease cost	15,750	47,250
Amortization of finance lease assets	54,968	152,923
Interest expense, net
Interest on finance lease liabilities	$ 43,477	$ 133,566

Note 8. Leases (Details 2)

Note 8. Leases (Details 2) - USD ($)	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2020
ROU assets obtained in exchange for lease liabilities:
Operating leases	$ 0	$ 3,749,809
Finance leases	$ 9,423	$ 12,509

Note 8. Leases (Details 3)

Note 8. Leases (Details 3)	Mar. 31, 2020USD ($)
Operating Leases
Operating Leases 2020 (excluding the nine months ended March 31, 2020)	$ 257,916
Operating Leases 2021	959,721
Operating Leases 2022	150,000
Operating Lease 2023	0
Operating Leases 2024	0
Operating Leases Thereafter	0
Operating Leases total future minimum lease payments	1,367,637
Finance Leases
2020 (excluding the nine months ended March 31, 2020)	114,028
2021	465,624
2022	472,874
2023	445,280
2024	384,754
Thereafter	2,113,348
Total future minimum lease payments	3,995,908
Imputed interest	815,566
Deferred rent	$ 190,160

Note 9. Line of Credit (Details

Note 9. Line of Credit (Details Narrative) - USD ($)	Mar. 31, 2020	Jun. 30, 2019
Line of Credit Facility [Abstract]
Line of credit	$ 6,368,559	$ 6,540,639
Line of credit facility, current borrowing capacity	$ 1,000,000

Note 10. Long-term Debt (Detail

Note 10. Long-term Debt (Details Narrative) - USD ($)	Mar. 31, 2020	Jun. 30, 2019
Debt Disclosure [Abstract]
Long-Term Debt	$ 170,995	$ 303,349

Note 11. Accrued Payroll and _2

Note 11. Accrued Payroll and Benefits Expense (Details Narrative) - USD ($)	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019
Accrued Liabilities [Abstract]
Accrued payroll and benefits expense	$ 294,662	$ 310,903	$ 0
Long-term accrued severance	$ 464,787	$ 0	$ 185,831

Note 10. Revenue (Details)

Note 10. Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Net sales	$ 13,706,319	$ 14,551,519	$ 45,292,860	$ 47,057,320
Orthopedic Soft Goods and Medical Supplies
Net sales	5,510,461	17,416,245	17,182,340	0
Physical Therapy and Rehabilitation Equipment
Net sales	8,342,162	8,973,207	27,662,899	29,576,820
Other
Net sales	$ 60,911	$ 67,851	$ 213,716	$ 298,160