Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2021 | May 05, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | DYNATRONICS CORP | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | false | |
Entity Central Index Key | 0000720875 | |
Current Fiscal Year End Date | --06-30 | |
Entity Common Stock, Shares Outstanding | 17,364,654 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | UT | |
Entity File Number | 0-12697 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 4,500,323 | $ 2,215,665 |
Restricted cash | 150,636 | 100,636 |
Trade accounts receivable, less allowance for doubtful accounts of $167,394 and $184,713 as of March 31, 2021 and June 30, 2020, respectively | 5,803,466 | 4,893,861 |
Other receivables | 1,576,541 | 2,080 |
Inventories, net | 6,852,204 | 8,371,842 |
Assets held for sale, net | 845,858 | 0 |
Prepaid expenses | 1,363,463 | 490,624 |
Total current assets | 21,092,491 | 16,074,708 |
Property and equipment, net | 3,497,758 | 4,941,517 |
Operating lease assets | 2,677,885 | 3,347,378 |
Intangible assets, net | 5,139,703 | 5,682,991 |
Goodwill | 7,116,614 | 7,116,614 |
Other assets | 391,992 | 433,109 |
Total assets | 39,916,443 | 37,596,317 |
Current liabilities: | ||
Accounts payable | 3,806,595 | 3,013,949 |
Accrued payroll and benefits expense | 1,676,365 | 1,204,964 |
Accrued expenses | 1,285,791 | 768,117 |
Warranty reserve | 221,854 | 221,854 |
Line of credit | 0 | 1,012,934 |
Current portion of long-term debt | 3,054,755 | 108,713 |
Current portion of finance lease liability | 330,293 | 316,103 |
Current portion of deferred gain | 150,448 | 150,448 |
Current portion of operating lease liability | 857,839 | 852,419 |
Income tax payable | 33,345 | 29,196 |
Total current liabilities | 11,417,285 | 7,678,697 |
Long-term debt, net of current portion | 446,672 | 3,496,222 |
Finance lease liability, net of current portion | 2,346,984 | 2,597,525 |
Deferred gain, net of current portion | 1,115,822 | 1,228,658 |
Operating lease liability, net of current portion | 1,833,811 | 2,505,232 |
Other liabilities | 201,763 | 194,102 |
Total liabilities | 17,362,337 | 17,700,436 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, no par value: Authorized 50,000,000 shares; 3,351,000 shares and 3,681,000 shares issued and outstanding as of March 31, 2021 and June 30, 2020, respectively | 7,980,788 | 8,770,798 |
Common stock, no par value: Authorized 100,000,000 shares; 17,205,108 shares and 13,803,855 shares issued and outstanding as of March 31, 2021 and June 30, 2020, respectively | 32,413,161 | 27,474,411 |
Accumulated deficit | (17,839,843) | (16,349,328) |
Total stockholders' equity | 22,554,106 | 19,895,881 |
Total liabilities and stockholders' equity | $ 39,916,443 | $ 37,596,317 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 167,394 | $ 184,713 |
Preferred stock, par value | $ .00 | $ .00 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 3,351,000 | 3,681,000 |
Preferred stock, shares outstanding | 3,351,000 | 3,681,000 |
Common stock, par value | $ .00 | $ .00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 17,205,108 | 13,803,855 |
Common stock, shares outstanding | 17,205,108 | 13,803,855 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||||
Net sales | $ 11,460,415 | $ 13,706,319 | $ 35,561,084 | $ 45,292,860 |
Cost of sales | 8,155,454 | 9,761,864 | 25,013,197 | 31,608,541 |
Gross profit | 3,304,961 | 3,944,455 | 10,547,887 | 13,684,319 |
Selling, general, and administrative expenses | 3,905,055 | 4,907,363 | 12,088,520 | 14,450,155 |
Operating loss | (600,094) | (962,908) | (1,540,633) | (765,836) |
Other income (expense): | ||||
Interest expense, net | (62,518) | (110,101) | (166,091) | (351,382) |
Other income (expense), net | 780,821 | (18,193) | 784,218 | (12,809) |
Net other income (expense) | 718,303 | (128,294) | 618,127 | (364,191) |
Income (loss) before income taxes | 118,209 | (1,091,202) | (922,506) | (1,130,027) |
Income tax (provision) benefit | 0 | 0 | (9,821) | 0 |
Net income (loss) | 118,209 | (1,091,202) | (932,327) | (1,130,027) |
Deemed dividend on convertible preferred stock and accretion of discount | 0 | (65,219) | (51,352) | (173,758) |
Preferred stock dividend, in common stock, issued or to be issued | (181,877) | (168,356) | (558,188) | (537,509) |
Net loss attributable to common stockholders | $ (63,668) | $ (1,324,777) | $ (1,541,867) | $ (1,841,294) |
Net loss per common share: | ||||
Basic and diluted | $ 0 | $ (0.13) | $ (0.10) | $ (0.20) |
Weighted-average common shares outstanding: | ||||
Basic and diluted | 15,827,808 | 10,168,596 | 14,829,216 | 9,216,027 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock | Preferred Stock | Accumulated Deficit | Total |
Beginning balance, shares at Jun. 30, 2019 | 8,417,793 | 4,899,000 | ||
Beginning balance at Jun. 30, 2019 | $ 21,320,106 | $ 11,641,816 | $ (12,206,213) | $ 20,755,709 |
Stock-based compensation, shares | 135,244 | |||
Stock-based compensation | $ 129,793 | 129,793 | ||
Preferred stock dividend, in common stock, issued or to be issued, shares | 126,194 | |||
Preferred stock dividend, in common stock, issued or to be issued | $ 166,904 | (166,904) | 0 | |
Net income (loss) | 98,838 | 98,838 | ||
Ending balance, shares at Sep. 30, 2019 | 8,679,231 | 4,899,000 | ||
Ending balance at Sep. 30, 2019 | $ 21,616,803 | $ 11,641,816 | (12,274,279) | 20,984,340 |
Beginning balance, shares at Jun. 30, 2019 | 8,417,793 | 4,899,000 | ||
Beginning balance at Jun. 30, 2019 | $ 21,320,106 | $ 11,641,816 | (12,206,213) | 20,755,709 |
Stock-based compensation | 233,374 | |||
Net income (loss) | (1,130,027) | |||
Ending balance, shares at Mar. 31, 2020 | 10,407,775 | 3,681,000 | ||
Ending balance at Mar. 31, 2020 | $ 24,962,007 | $ 8,770,798 | (13,873,749) | 19,859,056 |
Beginning balance, shares at Sep. 30, 2019 | 8,679,231 | 4,899,000 | ||
Beginning balance at Sep. 30, 2019 | $ 21,616,803 | $ 11,641,816 | (12,274,279) | 20,984,340 |
Stock-based compensation, shares | 5,446 | |||
Stock-based compensation | $ 58,238 | 58,238 | ||
Preferred stock dividend, in common stock, issued or to be issued, shares | 165,251 | |||
Preferred stock dividend, in common stock, issued or to be issued | $ 202,249 | (202,249) | 0 | |
Preferred stock converted to common stock, shares | 760,000 | (760,000) | ||
Preferred stock converted to common stock | $ 1,791,320 | $ (1,791,320) | 0 | |
Preferred stock beneficial conversion and accretion of discount | 108,539 | 108,539 | ||
Dividend of beneficial conversion and accretion of discount | (108,539) | (108,539) | ||
Net income (loss) | (137,663) | (137,663) | ||
Ending balance, shares at Dec. 31, 2019 | 9,609,928 | 4,139,000 | ||
Ending balance at Dec. 31, 2019 | $ 23,668,610 | $ 9,850,496 | (12,614,191) | 20,904,915 |
Stock-based compensation, shares | 96,195 | |||
Stock-based compensation | $ 45,343 | 45,343 | ||
Preferred stock dividend, in common stock, issued or to be issued, shares | 243,652 | |||
Preferred stock dividend, in common stock, issued or to be issued | $ 168,356 | (168,356) | 0 | |
Preferred stock converted to common stock, shares | 458,000 | (458,000) | ||
Preferred stock converted to common stock | $ 1,079,698 | $ (1,079,698) | 0 | |
Preferred stock beneficial conversion and accretion of discount | 65,219 | 65,219 | ||
Dividend of beneficial conversion and accretion of discount | (65,219) | (65,219) | ||
Net income (loss) | (1,091,202) | (1,091,202) | ||
Ending balance, shares at Mar. 31, 2020 | 10,407,775 | 3,681,000 | ||
Ending balance at Mar. 31, 2020 | $ 24,962,007 | $ 8,770,798 | (13,873,749) | 19,859,056 |
Stock-based compensation | $ 45,342 | 45,342 | ||
Preferred stock dividend, in common stock, issued or to be issued, shares | 195,495 | |||
Preferred stock dividend, in common stock, issued or to be issued | $ 180,123 | $ (180,123) | 0 | |
Issuance of common stock, net of issuance costs, shares | 3,200,585 | |||
Issuance of common stock, net of issuance costs | $ 2,286,939 | $ 2,286,939 | ||
Reduction in equity retained for aquisition holdback | (2,295,456) | (2,295,456) | ||
Ending balance, shares at Jun. 30, 2020 | 13,803,855 | 3,681,000 | ||
Ending balance at Jun. 30, 2020 | $ 27,474,411 | $ 8,770,798 | $ (16,349,328) | $ 19,895,881 |
Stock-based compensation, shares | 84,661 | |||
Stock-based compensation | $ 47,470 | 47,470 | ||
Preferred stock dividend, in common stock, issued or to be issued, shares | 207,736 | |||
Preferred stock dividend, in common stock, issued or to be issued | $ 194,226 | (194,226) | 0 | |
Net income (loss) | (377,704) | (377,704) | ||
Ending balance, shares at Sep. 30, 2020 | 14,096,252 | 3,681,000 | ||
Ending balance at Sep. 30, 2020 | $ 27,716,107 | $ 8,770,798 | (16,921,258) | 19,565,647 |
Beginning balance, shares at Jun. 30, 2020 | 13,803,855 | 3,681,000 | ||
Beginning balance at Jun. 30, 2020 | $ 27,474,411 | $ 8,770,798 | (16,349,328) | 19,895,881 |
Stock-based compensation | 128,357 | |||
Net income (loss) | (932,327) | |||
Ending balance, shares at Mar. 31, 2021 | 17,205,108 | 3,351,000 | ||
Ending balance at Mar. 31, 2021 | $ 32,413,161 | $ 7,980,788 | (17,839,843) | 22,554,106 |
Beginning balance, shares at Sep. 30, 2020 | 14,096,252 | 3,681,000 | ||
Beginning balance at Sep. 30, 2020 | $ 27,716,107 | $ 8,770,798 | (16,921,258) | 19,565,647 |
Stock-based compensation, shares | 16,940 | |||
Stock-based compensation | $ 50,781 | 50,781 | ||
Preferred stock dividend, in common stock, issued or to be issued, shares | 276,519 | |||
Preferred stock dividend, in common stock, issued or to be issued | $ 182,085 | (182,085) | 0 | |
Preferred stock converted to common stock, shares | 330,000 | (330,000) | ||
Preferred stock converted to common stock | $ 790,010 | $ (790,010) | 0 | |
Preferred stock beneficial conversion and accretion of discount | 51,352 | 51,352 | ||
Dividend of beneficial conversion and accretion of discount | (51,352) | (51,352) | ||
Net income (loss) | (672,832) | (672,832) | ||
Ending balance, shares at Dec. 31, 2020 | 14,719,711 | 3,351,000 | ||
Ending balance at Dec. 31, 2020 | $ 28,738,983 | $ 7,980,788 | (17,776,175) | 18,943,596 |
Stock-based compensation, shares | 30,000 | |||
Stock-based compensation | $ 30,106 | 30,106 | ||
Preferred stock dividend, in common stock, issued or to be issued, shares | 224,797 | |||
Preferred stock dividend, in common stock, issued or to be issued | $ 181,877 | (181,877) | 0 | |
Issuance of common stock, net of issuance costs, shares | 2,230,600 | |||
Issuance of common stock, net of issuance costs | $ 3,462,195 | 3,462,195 | ||
Net income (loss) | 118,209 | 118,209 | ||
Ending balance, shares at Mar. 31, 2021 | 17,205,108 | 3,351,000 | ||
Ending balance at Mar. 31, 2021 | $ 32,413,161 | $ 7,980,788 | $ (17,839,843) | $ 22,554,106 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (932,327) | $ (1,130,027) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization of property and equipment | 662,945 | 763,197 |
Amortization of intangible assets | 543,288 | 543,287 |
Amortization of other assets | 19,209 | 27,007 |
Loss on sale of property and equipment | 27,192 | 18,878 |
Stock-based compensation | 128,357 | 233,374 |
Change in allowance for doubtful accounts receivable | (17,319) | 13,962 |
Change in allowance for inventory obsolescence | (207,030) | (22,694) |
Amortization deferred gain on sale/leaseback | (112,836) | (112,835) |
Change in operating assets and liabilities: | ||
Trade accounts receivable | (892,286) | 848,682 |
Inventories | 355,276 | 227,328 |
Prepaid expenses and other receivables | (1,075,908) | (132,195) |
Other assets | 21,908 | (117,481) |
Income tax payable | 4,149 | (9,400) |
Accounts payable, accrued expenses, and other current liabilities | 1,789,383 | 1,397,879 |
Net cash provided by operating activities | 314,001 | 2,548,962 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (88,745) | (249,617) |
Net cash used in investing activities | (88,745) | (249,617) |
Cash flows from financing activities: | ||
Principal payments on long-term debt | (103,508) | (132,354) |
Principal payments on finance lease liability | (236,351) | (221,348) |
Payment of acquisition earn-out liability and holdbacks | 0 | (500,000) |
Net change in line of credit | (1,012,934) | (172,080) |
Proceeds from issuance of common stock, net | 3,462,195 | 0 |
Net cash provided by (used in) financing activities | 2,109,402 | (1,025,782) |
Net change in cash and cash equivalents and restricted cash | 2,334,658 | 1,273,563 |
Cash and cash equivalents and restricted cash at beginning of the period | 2,316,301 | 256,030 |
Cash and cash equivalents and restricted cash at end of the period | 4,650,959 | 1,529,593 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 143,693 | 362,595 |
Supplemental disclosure of non-cash investing and financing activity: | ||
Deemed dividend on convertible preferred stock and accretion of discount | 51,352 | 173,758 |
Preferred stock dividend, in common stock, issued or to be issued | 558,188 | 537,509 |
Conversion of preferred stock to common stock | 790,010 | 2,871,018 |
Finance lease obligations incurred to obtain ROU assets | 0 | 12,509 |
Operating lease obligations incurred to obtain ROU assets | $ 0 | $ 3,749,809 |
Note 1. Presentation and Summar
Note 1. Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
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, 2020 (the “Annual Report”) filed with the SEC on September 24, 2020. The Condensed Consolidated Balance Sheet at June 30, 2020, 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, 2021 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 2021” and “fiscal year 2020” refer to the Company’s fiscal year ending June 30, 2021 and the fiscal year ended June 30, 2020, 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. Assets Held for Sale Assets held for sale include our Tennessee building and land that have met the criteria of “held for sale” accounting, as specified by Accounting Standards Codification 360, Property, Plant, and Equipment Employee Retention Credit The CARES Act provided an employee retention credit which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act extended and expanded the availability of the employee retention credit through June 30, 2021. Subsequently, the American Rescue Plan Act of 2021, extended the availability of the employee retention credit through December 31, 2021. This new legislation amended the employee retention credit to be equal to 70% of qualified wages paid to employees after December 31, 2020, and before January 1, 2022. During calendar year 2021, a maximum of $10,000 in qualified wages for each employee per qualifying calendar quarter may be counted in determining the 70% credit. Therefore, the maximum tax credit that can be claimed by an eligible employer is $7,000 per employee per qualifying calendar quarter of 2021. The Company qualified for the credit beginning on January 1, 2021 and received credits for qualified wages through March 31, 2021. The Company will qualify for the employee retention credit for quarters that experience a significant decline in gross receipts defined as quarterly gross receipts that are less than 80 percent of its gross receipts for the same calendar quarter in 2019. During the three months ended March 31, 2021, the Company recorded an employee retention credit totaling $963,000, of which, $75,000, $98,000, and $790,000 was recorded within cost of sales, selling, general, and administrative, and other income, respectively, on the Company’s condensed consolidated statements of operations. Other Receivables Other receivables consist of amounts due from the U.S. federal government for the employee retention credit and amounts due from our contract manufacturer for raw materials components provided for use in the production of our products. Payments are due from our contract manufacturer based on the usage of raw material components. As of March 31, 2021, other receivables include $747,000 due from the employee retention credit and $830,000 due from our contract manufacturer. Recent Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes Simplifying the Accounting for Income Taxes In August 2020, the FASB issued ASU 2020-06, Debt— Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
Note 2. Net Loss per Common Sha
Note 2. Net Loss per Common Share | 9 Months Ended |
Mar. 31, 2021 | |
Net loss per common share: | |
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. For the three months ended March 31, 2021, and 2020, shares underlying such options, warrants, and convertible preferred stock totaled 10,187,500 and 10,946,022, respectively, and for the nine months ended March 31, 2021, and 2020, totaled 10,337,390 and 11,452,544, respectively. |
Note 3. Convertible Preferred S
Note 3. Convertible Preferred Stock | 9 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Convertible Preferred Stock | As of March 31, 2021, the Company had issued and outstanding a total of 1,992,000 shares of Series A 8% Convertible Preferred Stock (“Series A Preferred”) and 1,359,000 shares of Series B Convertible Preferred Stock ("Series B Preferred"). The Series A Preferred and Series B Preferred are convertible into a total of 3,351,000 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 its 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. In November 2020, the Company issued 330,000 shares of common stock upon conversion of 230,000 shares of Series C Non-Voting Convertible Preferred Stock and 100,000 shares of Series B Preferred. In April 2021, the Company paid approximately $182,000 of preferred stock dividends with respect to the Series A Preferred and Series B Preferred that accrued during the three months ended March 31, 2021, by issuing 159,546 shares of common stock. |
Note 4. Comprehensive Income
Note 4. Comprehensive Income | 9 Months Ended |
Mar. 31, 2021 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Comprehensive Income | For the three and nine months ended March 31, 2021 and 2020, comprehensive income (loss) was equal to the net income (loss) as presented in the accompanying condensed consolidated statements of operations. |
Note 5. Inventories
Note 5. Inventories | 9 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following: March 31, 2021 June 30, 2020 Raw materials $ 3,387,745 $ 4,798,489 Work in process 619,436 427,744 Finished goods 3,206,076 3,713,692 Inventory obsolescence reserve (361,053 ) (568,083 ) $ 6,852,204 $ 8,371,842 |
Note 6. Related-Party Transacti
Note 6. Related-Party Transactions | 9 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 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 $264,702 and $261,666 for the three months ended March 31, 2021 and 2020, respectively, and $794,108 and $784,999 for the nine months ended March 31, 2021 and 2020, respectively. |
Note 7. Line of Credit
Note 7. Line of Credit | 9 Months Ended |
Mar. 31, 2021 | |
Line of Credit Facility [Abstract] | |
Line of Credit | Borrowings on the Line of Credit were $0 and $1,012,934 as of March 31, 2021 and June 30, 2020, respectively. As of March 31, 2021, there was approximately $4,456,000 available to borrow. |
Note 8. Revenue
Note 8. Revenue | 9 Months Ended |
Mar. 31, 2021 | |
Disaggregation of Revenue [Abstract] | |
Revenue | As of March 31, 2021 and June 30, 2020, the rebate liability was $203,460 and $247,388, respectively. The rebate liability is included in accrued expenses in the accompanying condensed consolidated balance sheets. As of March 31, 2021 and June 30, 2020, the allowance for sales discounts was $14,500 and $8,000, 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 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 2021 2020 2021 2020 Orthopedic Soft Bracing Products $ 4,794,787 $ 5,303,246 $ 15,437,188 $ 17,416,245 Physical Therapy and Rehabilitation Products 6,581,598 8,342,162 19,902,877 27,662,899 Other 84,030 60,911 221,019 213,716 $ 11,460,415 $ 13,706,319 $ 35,561,084 $ 45,292,860 |
Note 9. Common Stock
Note 9. Common Stock | 9 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Common Stock | The Company maintains an equity incentive plan for the benefit of employees. Incentive and nonqualified stock options, restricted common stock, stock appreciation rights, and other share-based awards may be granted under the plans including performance-based awards. On December 10, 2020, shareholders approved a new 2020 equity incentive plan (“2020 Equity Plan”), setting aside 1,000,000 shares of common stock. The Company can grant awards under the 2020 Plan or under the Dynatronics 2018 Equity Incentive Award Plan (the “2018 Plan”) until the shares of common stock available for awards and issuance under the 2018 Plan have been exhausted. In March 2020, The Company entered into an equity distribution agreement with Canaccord Genuity LLC and Roth Capital Partners LLC, pursuant to which the Company arranged to offer and sell shares of common stock in an at-the-market offering (“ATM”) under a registration statement previously filed on Form S-3 with the Securities and Exchange Commission. On March 13, 2020, the Company filed a Prospectus Supplement amending the registration statement and commenced the ATM. Under the terms of the equity distribution agreement, the Company may sell shares of common stock in an aggregate amount of up to $10,000,000, with Canaccord Genuity LLC and Roth Capital Partners LLC acting as our sales agents at the market prices prevailing on The Nasdaq Capital Market at the time of the sale of such shares. The Company will pay Canaccord Genuity LLC and Roth Capital Partners, LLC a fixed commission rate equal to 3.0% of the gross sale price per share of common stock sold. In February 2021, the Company sold an aggregate of 2,230,600 shares of common stock under the equity distribution agreement in the ATM. Offering costs were incurred totaling $137,547, inclusive of commissions paid to the sales agents at a fixed rate of 3.0%, together with legal, accounting and filing fees. Net proceeds from the sale of the shares totaled $3,462,195. Proceeds were used to strengthen the Company's liquidity and working capital position. In April 2021, the Company paid approximately $182,000 of preferred stock dividends with respect to the Series A Preferred and Series B Preferred that accrued during the three months ended March 31, 2021, by issuing 159,546 shares of common stock. |
Note 10. Subsequent Event
Note 10. Subsequent Event | 9 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Event | On April 2, 2021, the Company and Maple Leaf Realco II, LLC entered into a Purchase and Sale Agreement for the sale of Dynatronics’ former manufacturing facility building located at 6607 Mountainview Road, Ooltewah, Tennessee for a purchase price of $1.75 million USD. Consummation of the sale is subject to customary closing conditions and is anticipated in the quarter ending June 30, 2021. There can be no assurance that the sale will be consummated. The agreement also contains customary representations, warranties and covenants, and other terms and conditions. On April 22, 2021, the Company announced strategic actions taken and expected to be taken with the objective to improve the Company’s overall financial performance and to optimize its business. The Company will focus on higher margin manufactured products and eliminate approximately 1,600 SKUs of low-margin, third-party distributed products. The Company will streamline physical therapy and rehabilitation product sales exclusively to dealers, which it expects will reduce complexity and associated support costs. The Company expects to incur approximately $1.2 million in restructuring charges related to the optimization plan, of which $0.4 million is expected to result in cash expenditures. The Company expects to recognize the majority of these expenses during the fourth quarter of fiscal year 2021. No restructuring costs were incurred during the three months ended March 31, 2021. The Company anticipates that the elimination of its distributed products portfolio will result in an approximate $11 million reduction in annual net sales for fiscal year 2022 compared to fiscal year 2021, but that annual gross margin and operating income in fiscal year 2022 will improve relative to fiscal year 2021. |
Note 1. Presentation and Summ_2
Note 1. Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2021 | |
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, 2020 (the “Annual Report”) filed with the SEC on September 24, 2020. The Condensed Consolidated Balance Sheet at June 30, 2020, 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, 2021 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 2021” and “fiscal year 2020” refer to the Company’s fiscal year ending June 30, 2021 and the fiscal year ended June 30, 2020, 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. |
Assets Held for Sale | Assets held for sale include our Tennessee building and land that have met the criteria of “held for sale” accounting, as specified by Accounting Standards Codification 360, Property, Plant, and Equipment |
Employee Retention Credit | The CARES Act provided an employee retention credit which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act extended and expanded the availability of the employee retention credit through June 30, 2021. Subsequently, the American Rescue Plan Act of 2021, extended the availability of the employee retention credit through December 31, 2021. This new legislation amended the employee retention credit to be equal to 70% of qualified wages paid to employees after December 31, 2020, and before January 1, 2022. During calendar year 2021, a maximum of $10,000 in qualified wages for each employee per qualifying calendar quarter may be counted in determining the 70% credit. Therefore, the maximum tax credit that can be claimed by an eligible employer is $7,000 per employee per qualifying calendar quarter of 2021. The Company qualified for the credit beginning on January 1, 2021 and received credits for qualified wages through March 31, 2021. The Company will qualify for the employee retention credit for quarters that experience a significant decline in gross receipts defined as quarterly gross receipts that are less than 80 percent of its gross receipts for the same calendar quarter in 2019. During the three months ended March 31, 2021, the Company recorded an employee retention credit totaling $963,000, of which, $75,000, $98,000, and $790,000 was recorded within cost of sales, selling, general, and administrative, and other income, respectively, on the Company’s condensed consolidated statements of operations. |
Other Receivables | Other receivables consist of amounts due from the U.S. federal government for the employee retention credit and amounts due from our contract manufacturer for raw materials components provided for use in the production of our products. Payments are due from our contract manufacturer based on the usage of raw material components. As of March 31, 2021, other receivables include $747,000 due from the employee retention credit and $830,000 due from our contract manufacturer. |
Recent Accounting Pronouncements | In December 2019, the FASB issued ASU 2019-12, Income Taxes Simplifying the Accounting for Income Taxes In August 2020, the FASB issued ASU 2020-06, Debt— Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
Note 5. Inventories (Tables)
Note 5. Inventories (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventory | March 31, 2021 June 30, 2020 Raw materials $ 3,387,745 $ 4,798,489 Work in process 619,436 427,744 Finished goods 3,206,076 3,713,692 Inventory obsolescence reserve (361,053 ) (568,083 ) $ 6,852,204 $ 8,371,842 |
Note 8. Revenue (Tables)
Note 8. Revenue (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Disaggregation of Revenue [Abstract] | |
Disaggregation of revenue | Three Months Ended March 31 Nine Months Ended March 31 2021 2020 2021 2020 Orthopedic Soft Bracing Products $ 4,794,787 $ 5,303,246 $ 15,437,188 $ 17,416,245 Physical Therapy and Rehabilitation Products 6,581,598 8,342,162 19,902,877 27,662,899 Other 84,030 60,911 221,019 213,716 $ 11,460,415 $ 13,706,319 $ 35,561,084 $ 45,292,860 |
Note 2. Net Loss per Common S_2
Note 2. Net Loss per Common Share (Details Narrative) - shares | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Net loss per common share: | ||||
Antidilutive securities excluded from computation of earnings per share | 10,187,500 | 10,946,022 | 10,337,390 | 11,452,544 |
Note 5. Inventories (Details)
Note 5. Inventories (Details) - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,387,745 | $ 4,798,489 |
Work in process | 619,436 | 427,744 |
Finished goods | 3,206,076 | 3,713,692 |
Inventory obsolescence reserve | (361,053) | (568,083) |
Inventories, net | $ 6,852,204 | $ 8,371,842 |
Note 6. Related-Party Transac_2
Note 6. Related-Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Related Party Transactions [Abstract] | ||||
Related-party transaction expenses | $ 264,702 | $ 261,666 | $ 794,108 | $ 784,999 |
Note 7. Line of Credit (Details
Note 7. Line of Credit (Details Narrative) - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
Line of Credit Facility [Abstract] | ||
Line of credit | $ 0 | $ 1,012,934 |
Line of credit facility, current borrowing capacity | $ 4,456,000 |
Note 8. Revenue (Details)
Note 8. Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Net sales | $ 11,460,415 | $ 13,706,319 | $ 35,561,084 | $ 45,292,860 |
Orthopedic Soft Bracing Products | ||||
Net sales | 4,794,787 | 5,303,246 | 15,437,188 | 17,416,245 |
Physical Therapy and Rehabilitation Products | ||||
Net sales | 6,581,598 | 8,342,162 | 19,902,877 | 27,662,899 |
Other | ||||
Net sales | $ 84,030 | $ 60,911 | $ 221,019 | $ 213,716 |
Note 8. Revenue (Details Narrat
Note 8. Revenue (Details Narrative) - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
Disaggregation of Revenue [Abstract] | ||
Rebate liability | $ 203,460 | $ 247,388 |
Allowance for sales discounts | $ 14,500 | $ 8,000 |