Mail Stop 6010
February 23, 2006
VIA U.S. MAIL AND FACSIMILE (801) 568-7711
Terry Atkinson
Chief Financial Officer
Dynatronics Corporation
7030 Park Centre Drive
Salt Lake City, Utah 84121-6618
Re: Dynatronics Corporation
Form 10-KSB for the fiscal year ended June 30, 2005
Filed September 28, 2005
File No. 000-12697
Dear Mr. Atkinson:
We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your documents. Where indicated, we think you should
revise your future filings in response to these comments. If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-KSB for the fiscal year ended June 30, 2005
Item 1. Description of the Business
1. You disclose that you manufacture only 20% of physical medicine
products and 16% of aesthetic products in your product line. You
also state that during fiscal years 2005 and 2004, 75% and 96% of
your sales were self-manufactured physical medicine and aesthetic
products, respectively, with the balance being sold as a
distributor.
Please clarify in your response and in future filings the nature
of
the products that would result in the majority of your revenue
being
generated from products that you manufactured while your product
line
is comprised of mostly products manufactured by third parties.
Item 6. Management`s Discussion and Analysis of Financial
Condition
and Results of Operation, page 9
Fiscal Year 2005 Compared to Fiscal Year 2004, page 10
Net Sales
2. In future filings, please revise this section to identify and
describe each of the components resulting in the change in net
sales.
For example, we see that sales of aesthetic products experienced a
42% increase in sales over the prior year yet you do not describe
the
factors that were responsible for the increase. You also state
that
Solaris product revenue increased without any additional
information.
In addition, you disclose that sales of your legacy 50 Series
products declined yet do not quantify the amount of the decline
and
do not explain why the decrease in sales occurred. In general,
MD&A
both should identify significant factors responsible for changes
in
financial statement items and describe why those factors arose or
occurred.
Consolidated Financial Statements
Note 1. Basis of Presentation and Summary of Significant
Accounting
Policies, page F-7
(g) Revenue Recognition
3. We note from your disclosure on page 12 that you have sales
incentive programs. Please tell us the nature of your sales
incentive programs and how you account for such programs under
EITF
01-09. Unless insignificant, please revise future filings to
discuss
your accounting policy for incentive programs.
Note 11. Common Stock
4. We see from your statement of stockholder`s equity that you
issued
25,000 common stock options for services during fiscal year 2005.
Please tell us and revise future filings to include footnote
disclosure of the nature of the underlying transactions, including
a
description of the service you received in return. In addition,
please disclose how you determined the fair value of the
transaction
and the amount recognized as expense.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed decision. Since the company and
its management are in possession of all facts relating to a
company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Kristin Lochhead at (202) 551-3664 or me at
(202) 551-3676 if you have questions. In this regard, please do
not
hesitate to contact Martin James, Senior Assistant Chief
Accountant,
at (202) 551-3671 with any other questions.
Sincerely,
Brian Cascio
Accounting Branch Chief
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Mr. Atkinson
Dynatronics Corporation
February 23, 2006
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