Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 08, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Dynatronics Corporation | |
Entity Central Index Key | 0000720875 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 17,732,440 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 0-12697 | |
Entity Incorporation State Country Code | UT | |
Entity Tax Identification Number | 87-0398434 | |
Entity Address Address Line 1 | 1200 Trapp Road | |
Entity Address City Or Town | Eagan | |
Entity Address State Or Province | MN | |
Entity Address Postal Zip Code | 55121 | |
City Area Code | 801 | |
Local Phone Number | 568-7000 | |
Security 12b Title | Common Stock, no par value per share | |
Trading Symbol | DYNT | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 5,341,968 | $ 6,102,447 |
Restricted cash | 151,197 | 151,197 |
Trade accounts receivable, less allowance for doubtful accounts of $349,252 and $398,887 as of September 30, 2021 and June 30, 2021, respectively | 6,094,695 | 5,643,016 |
Other receivables | 1,301,575 | 1,201,888 |
Inventories, net | 7,188,705 | 6,526,095 |
Prepaid expenses | 1,702,559 | 1,281,223 |
Total current assets | 21,780,699 | 20,905,866 |
Property and equipment, net | 3,165,588 | 3,328,185 |
Operating lease assets | 2,237,653 | 2,456,539 |
Intangible assets, net | 4,752,400 | 4,928,875 |
Goodwill | 7,116,614 | 7,116,614 |
Other assets | 404,779 | 403,916 |
Total assets | 39,457,733 | 39,139,995 |
Current liabilities: | ||
Accounts payable | 4,379,533 | 3,737,930 |
Accrued payroll and benefits expense | 1,495,230 | 1,656,311 |
Accrued expenses | 1,074,309 | 1,485,123 |
Warranty reserve | 196,707 | 196,707 |
Line of credit | 0 | 0 |
Current portion of long-term debt | 13,610 | 13,448 |
Current portion of finance lease liability | 340,508 | 335,444 |
Current portion of deferred gain | 150,448 | 150,448 |
Current portion of operating lease liability | 876,094 | 864,081 |
Other liabilities | 33,194 | 33,194 |
Total current liabilities | 8,559,633 | 8,472,686 |
Long-term debt, net of current portion | 1,998 | 5,362 |
Finance lease liability, net of current portion | 2,173,641 | 2,260,815 |
Deferred gain, net of current portion | 1,040,598 | 1,078,210 |
Operating lease liability, net of current portion | 1,373,831 | 1,605,477 |
Other liabilities | 205,472 | 203,920 |
Total liabilities | 13,355,173 | 13,626,470 |
Stockholders' equity: | ||
Preferred stock, no par value: Authorized 50,000,000 shares; 3,351,000 shares issued and outstanding as of September 30, 2021 and June 30, 2021, respectively | 7,980,788 | 7,980,788 |
Common stock, no par value: Authorized 100,000,000 shares; 17,604,296 shares and 17,364,654 shares issued and outstanding as of September 30, 2021 and June 30, 2021, respectively | 32,914,949 | 32,621,471 |
Accumulated deficit | (14,793,177) | (15,088,734) |
Total stockholders' equity | 26,102,560 | 25,513,525 |
Total liabilities and stockholders' equity | $ 39,457,733 | $ 39,139,995 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 |
Condensed Consolidated Balance Sheets | ||
Allowance for doubtful accounts | $ 349,252 | $ 398,887 |
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 3,351,000 | 3,351,000 |
Preferred stock, shares outstanding | 3,351,000 | 3,351,000 |
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 17,604,296 | 17,364,654 |
Common stock, shares outstanding | 17,604,296 | 17,364,654 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Condensed Consolidated Statements of Operations (Unaudited) | ||
Net sales | $ 12,300,896 | $ 12,132,768 |
Cost of sales | 8,636,590 | 8,230,815 |
Gross profit | 3,664,306 | 3,901,953 |
Selling, general, and administrative expenses | 4,096,622 | 4,245,627 |
Operating loss | (432,316) | (343,674) |
Other income (expense): | ||
Interest expense, net | (40,100) | (39,943) |
Other income, net | 955,056 | 5,913 |
Net other income (expense) | 914,956 | (34,030) |
Income (loss) before income taxes | 482,640 | (377,704) |
Income tax (provision) benefit | 0 | 0 |
Net income (loss) | 482,640 | (377,704) |
Preferred stock dividend, in common stock, issued or to be issued | (187,083) | (194,226) |
Net income (loss) attributable to common stockholders | $ 295,557 | $ (571,930) |
Net income (loss) per common share | ||
Basic and diluted | $ 0.02 | $ (0.04) |
Weighted-average common shares outstanding | ||
Basic and diluted | 17,565,211 | 14,080,361 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Total | Common Stock | Preferred Stock | Retained Earnings (Accumulated Deficit) |
Balance, shares at Jun. 30, 2020 | 13,803,855 | 3,681,000 | ||
Balance, amount at Jun. 30, 2020 | $ 19,895,881 | $ 27,474,411 | $ 8,770,798 | $ (16,349,328) |
Stock-based compensation, shares | 84,661 | |||
Stock-based compensation, amount | 47,470 | $ 47,470 | 0 | 0 |
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, amount | 194,226 | $ 194,226 | 0 | (194,226) |
Net loss | (377,704) | $ 0 | $ 0 | (377,704) |
Balance, shares at Sep. 30, 2020 | 14,096,252 | 3,681,000 | ||
Balance, amount at Sep. 30, 2020 | 19,565,647 | $ 27,716,107 | $ 8,770,798 | (16,921,258) |
Stock-based compensation, shares | 16,940 | |||
Stock-based compensation, amount | 50,781 | $ 50,781 | 0 | 0 |
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, amount | 0 | $ 182,085 | 0 | (182,085) |
Net loss | (672,832) | $ 0 | $ 0 | (672,832) |
Preferred stock converted to common stock, shares | 330,000 | (330,000) | ||
Preferred stock converted to common stock, amount | 0 | $ 790,010 | $ (790,010) | 0 |
Preferred stock beneficial conversion and accretion of discount | 51,352 | 0 | 51,352 | 0 |
Dividend of beneficial conversion and accretion of discount | (51,352) | $ 0 | $ (51,352) | 0 |
Balance, shares at Dec. 31, 2020 | 14,719,711 | 3,351,000 | ||
Balance, amount at Dec. 31, 2020 | 18,943,596 | $ 28,738,983 | $ 7,980,788 | (17,776,175) |
Stock-based compensation, amount | 30,106 | $ 30,106 | 0 | 0 |
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, amount | 0 | $ 181,877 | 0 | (181,877) |
Net loss | 118,209 | $ 0 | 0 | 118,209 |
Issuance of common stock, net of issuance costs of $137,547, shares | 2,230,600 | |||
Issuance of common stock, net of issuance costs of $137,547, amount | 3,462,195 | $ 3,462,195 | $ 0 | 0 |
Balance, shares at Mar. 31, 2021 | 17,205,108 | 3,351,000 | ||
Balance, amount at Mar. 31, 2021 | 22,554,106 | $ 32,413,161 | $ 7,980,788 | (17,839,843) |
Preferred stock dividend, in common stock, issued or to be issued, shares | 159,546 | |||
Preferred stock dividend, in common stock, issued or to be issued, amount | 0 | $ 182,467 | 0 | (182,467) |
Net loss | 2,933,576 | 0 | 0 | 2,933,576 |
Stock-based compensation | 25,843 | $ 25,843 | $ 0 | 0 |
Balance, shares at Jun. 30, 2021 | 17,364,654 | 3,351,000 | ||
Balance, amount at Jun. 30, 2021 | 25,513,525 | $ 32,621,471 | $ 7,980,788 | (15,088,734) |
Stock-based compensation, shares | 85,002 | |||
Stock-based compensation, amount | 106,395 | $ 106,395 | 0 | 0 |
Preferred stock dividend, in common stock, issued or to be issued, shares | 154,640 | |||
Preferred stock dividend, in common stock, issued or to be issued, amount | 187,083 | $ 187,083 | 0 | (187,083) |
Net loss | 482,640 | $ 0 | $ 0 | 482,640 |
Balance, shares at Sep. 30, 2021 | 17,604,296 | 3,351,000 | ||
Balance, amount at Sep. 30, 2021 | $ 26,102,560 | $ 32,914,949 | $ 7,980,788 | $ (14,793,177) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 482,640 | $ (377,704) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Depreciation and amortization of property and equipment | 181,934 | 244,353 |
Amortization of intangible assets | 176,475 | 181,096 |
Amortization of other assets | 4,644 | 6,402 |
Gain on sale of property and equipment | 0 | (6,240) |
Stock-based compensation | 106,395 | 47,470 |
Change in allowance for doubtful accounts receivable | (49,635) | 33,566 |
Change in allowance for inventory obsolescence | (202,854) | (76,246) |
Amortization deferred gain on sale/leaseback | (37,612) | (37,612) |
Change in operating assets and liabilities: | ||
Trade accounts receivable | (402,044) | (749,186) |
Inventories | (459,756) | 1,299,498 |
Prepaid expenses and other receivables | (521,023) | (327,001) |
Other assets | (5,507) | 7,154 |
Accounts payable, accrued expenses, and other current liabilities | 71,260 | 878,249 |
Net cash (used in) provided by operating activities | (655,083) | 1,123,799 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (20,084) | (16,034) |
Net cash used in investing activities | (20,084) | (16,034) |
Cash flows from financing activities: | ||
Principal payments on long-term debt | (3,202) | (42,964) |
Principal payments on finance lease liability | (82,110) | (77,578) |
Net change in line of credit | 0 | (1,012,934) |
Net cash used in financing activities | (85,312) | (1,133,476) |
Net change in cash and cash equivalents and restricted cash | (760,479) | (25,711) |
Cash and cash equivalents and restricted cash at beginning of the period | 6,253,644 | 2,316,301 |
Cash and cash equivalents and restricted cash at end of the period | 5,493,165 | 2,290,590 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 40,100 | 39,930 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Preferred stock dividend, in common stock, issued or to be issued | $ 187,083 | $ 194,227 |
Presentation and Summary of Sig
Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Sep. 30, 2021 | |
Presentation and Summary of Significant Accounting Policies | |
Note 1. Presentation and Summary of Significant Accounting Policies | 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, and hospitals. 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, 2021 (the “Annual Report”) filed with the SEC on September 23, 2021. The Condensed Consolidated Balance Sheet at June 30, 2021, 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 September 30, 2021 and its results of operations and its cash flows for the periods presented. The results of operations for the first three 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 2022” and “fiscal year 2021” refer to the Company’s fiscal year ending June 30, 2022 and the fiscal year ended June 30, 2021, 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. Employee Retention Credit The Coronavirus Aid, Relief, and Economic Security Act (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 qualifies 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. The Company qualified for the credit beginning on January 1, 2021 and received credits for qualified wages through September 30, 2021. During the quarter ended September 30, 2021, the Company recorded an employee retention credit totaling $1,143,000, of which, $97,000, $103,000, and $943,000 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 September 30, 2021, other receivables include $556,000 due from the employee retention credit and $746,000 due from our contract manufacturer. Reclassification Certain amounts in the September 30, 2020 condensed consolidated statement of cash flows have been reclassified for comparative purposes to conform to the presentation in the September 30, 2021 condensed consolidated statement of cash flows. 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 |
Net Income (Loss) per Common Sh
Net Income (Loss) per Common Share | 3 Months Ended |
Sep. 30, 2021 | |
Net income (loss) per common share | |
Note 2. Net Income (Loss) per Common Share | Note 2. Net Income (Loss) per Common Share Net income (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 income (loss) per common share does not assume exercise or conversion of securities that would have an anti-dilutive effect. Basic net income (loss) per common share is the amount of net income (loss) for the period available to each weighted-average share of common stock outstanding during the reporting period. Diluted net income (loss) per common share is the amount of net income (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 income (loss) per common share because they are anti-dilutive, which for the three months ended September 30, 2021, and 2020, totaled 7,714,500 and 11,777,500, respectively. |
Convertible Preferred Stock
Convertible Preferred Stock | 3 Months Ended |
Sep. 30, 2021 | |
Convertible Preferred Stock | |
Note 3. Convertible Preferred Stock | Note 3. As of September 30, 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 3,451,000 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 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 October 2021, the Company paid approximately $187,000 of preferred stock dividends with respect to the Series A Preferred and Series B Preferred that accrued during the three months ended September 30, 2021, by issuing 128,144 shares of common stock. |
Comprehensive Income
Comprehensive Income | 3 Months Ended |
Sep. 30, 2021 | |
Comprehensive Income | |
Note 4. Comprehensive Income | Note 4. Comprehensive Income For the three months ended September 30, 2021 and 2020, comprehensive income (loss) was equal to the net income (loss) as presented in the accompanying condensed consolidated statements of operations. |
Inventories
Inventories | 3 Months Ended |
Sep. 30, 2021 | |
Inventories | |
Note 5. Inventories | Note 5. Inventories Inventories consisted of the following: September 30, 2021 June 30, 2021 Raw materials $ 4,606,488 $ 3,863,212 Work in process 610,717 784,460 Finished goods 2,395,623 2,505,399 Inventory obsolescence reserve (424,123 ) (626,976 ) $ 7,188,705 $ 6,526,095 |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Sep. 30, 2021 | |
Related-Party Transactions | |
Note 6. Related-Party Transactions | Note 6. 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 $248,953 and $264,703 for the three months ended September 30, 2021 and 2020, respectively. |
Line of Credit
Line of Credit | 3 Months Ended |
Sep. 30, 2021 | |
Line of Credit | |
Note 7. Line of Credit | Note 7. Line of Credit Borrowings on the Line of Credit were $0 as of September 30, 2021 and June 30, 2021, respectively. As of September 30, 2021, there was approximately $5,200,000 available to borrow. |
Revenue
Revenue | 3 Months Ended |
Sep. 30, 2021 | |
Revenue | |
Note 8. Revenue | Note 8. Revenue As of September 30, 2021 and June 30, 2021, the rebate liability was $300,763 and $219,591, respectively. The rebate liability is included in accrued expenses in the accompanying condensed consolidated balance sheets. As of September 30, 2021 and June 30, 2021, the allowance for sales discounts was $14,167 and $9,000, 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 months ended September 30: 2021 2020 Orthopedic Soft Bracing Products $ 5,573,474 $ 5,559,918 Physical Therapy and Rehabilitation Products 6,698,356 6,497,230 Other 29,066 75,620 $ 12,300,896 $ 12,132,768 |
Presentation and Summary of S_2
Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2021 | |
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, and hospitals. |
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, 2021 (the “Annual Report”) filed with the SEC on September 23, 2021. The Condensed Consolidated Balance Sheet at June 30, 2021, 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 September 30, 2021 and its results of operations and its cash flows for the periods presented. The results of operations for the first three 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 2022” and “fiscal year 2021” refer to the Company’s fiscal year ending June 30, 2022 and the fiscal year ended June 30, 2021, 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. |
Employee Retention Credit | The Coronavirus Aid, Relief, and Economic Security Act (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 qualifies 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. The Company qualified for the credit beginning on January 1, 2021 and received credits for qualified wages through September 30, 2021. During the quarter ended September 30, 2021, the Company recorded an employee retention credit totaling $1,143,000, of which, $97,000, $103,000, and $943,000 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 September 30, 2021, other receivables include $556,000 due from the employee retention credit and $746,000 due from our contract manufacturer. |
Reclassification | Certain amounts in the September 30, 2020 condensed consolidated statement of cash flows have been reclassified for comparative purposes to conform to the presentation in the September 30, 2021 condensed consolidated statement of cash flows. |
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 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Inventories | |
Inventory | September 30, 2021 June 30, 2021 Raw materials $ 4,606,488 $ 3,863,212 Work in process 610,717 784,460 Finished goods 2,395,623 2,505,399 Inventory obsolescence reserve (424,123 ) (626,976 ) $ 7,188,705 $ 6,526,095 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Revenue | |
Disaggregation of revenue | 2021 2020 Orthopedic Soft Bracing Products $ 5,573,474 $ 5,559,918 Physical Therapy and Rehabilitation Products 6,698,356 6,497,230 Other 29,066 75,620 $ 12,300,896 $ 12,132,768 |
Presentation and Summary of S_3
Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Due from the employee retention credit | $ 556,000 | |
Due from our contract manufacturer | 746,000 | |
Selling, general, and administrative | 4,096,622 | $ 4,245,627 |
Other income | 955,056 | $ 5,913 |
Economic Security Act [Member] | ||
Employee retention credit | 1,143,000 | |
Cost of sales | 97,000 | |
Selling, general, and administrative | 103,000 | |
Other income | $ 943,000 |
Net Income (Loss) per Common _2
Net Income (Loss) per Common Share (Details Narrative) - shares | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Net income (loss) per common share | ||
Antidilutive securities excluded from computation of earnings per share | 7,714,500 | 11,777,500 |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended |
Oct. 31, 2021 | Sep. 30, 2021 | |
Common stock shares issuing | 128,144 | |
Preferred stock upon conversion of common stock | 3,451,000 | |
Preferred stock dividends | $ 187,000 | |
Series A Preferred | ||
Convertible Preferred Stock shares issued | 1,992,000 | |
Series B Preferred | ||
Convertible Preferred Stock shares issued | 1,359,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 |
Inventories | ||
Raw materials | $ 4,606,488 | $ 3,863,212 |
Work in process | 610,717 | 784,460 |
Finished goods | 2,395,623 | 2,505,399 |
Inventory reserve | (424,123) | (626,976) |
Inventories, net | $ 7,188,705 | $ 6,526,095 |
Related-Party Transactions (Det
Related-Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Related-Party Transactions | ||
Related-party transaction expenses | $ 248,953 | $ 264,703 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 |
Line of Credit | ||
Line of credit | $ 0 | $ 0 |
Line of credit facility, current borrowing capacity | $ 5,200,000 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Net sales | $ 12,300,896 | $ 12,132,768 |
Other | ||
Net sales | 29,066 | 75,620 |
Physical Therapy and Rehabilitation Products | ||
Net sales | 6,698,356 | 6,497,230 |
Orthopedic Soft Bracing Products | ||
Net sales | $ 5,573,474 | $ 5,559,918 |
Revenue (Details Narrative)
Revenue (Details Narrative) - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 |
Revenue | ||
Rebate liability | $ 300,763 | $ 219,591 |
Allowance for sales discounts | $ 14,167 | $ 9,000 |