Financial Performance - Revenue for the three months ended December 31, 2023, totaled $8,151,351, a decrease of 25.1% compared to $10,882,557 for the same period in 2022 [49]. - Net sales decreased by $2,732,000, or 25.1%, to $8,151,000 for the quarter ended December 31, 2023, compared to $10,883,000 for the same quarter in 2022 [57]. - Gross profit for the quarter ended December 31, 2023, decreased by $1,242,000, or about 40.6%, to $1,820,000, representing 22.3% of net sales [59]. - Net loss for the quarter ended December 31, 2023, was $1,011,000, compared to a net loss of $841,000 for the same quarter in 2022 [65]. - The company recorded a net other expense of $110,000 for the quarter ended December 31, 2023, compared to $37,000 for the same quarter in 2022 [62]. Assets and Liabilities - As of December 31, 2023, the Company had inventories valued at $4,734,308 in raw materials, $53,813 in work in process, and $2,550,560 in finished goods [40]. - As of December 31, 2023, working capital was $3,721,000, down from $4,478,000 as of June 30, 2023 [70]. - The company has $401,000 in cash and cash equivalents as of December 31, 2023, compared to $399,000 as of June 30, 2023 [69]. - Cash and cash equivalents and restricted cash increased by $2,000 to $555,000 as of December 31, 2023, compared to $553,000 as of June 30, 2023 [82]. - Trade accounts receivable increased by approximately $16,000 or 0.4%, to $3,738,000 as of December 31, 2023, from $3,722,000 as of June 30, 2023 [83]. - Inventories decreased by $650,000 or 8.8%, to $6,753,000 as of December 31, 2023, compared to $7,403,000 as of June 30, 2023 [84]. - Accounts payable decreased by approximately $555,000 or 12.3%, to $3,975,000 as of December 31, 2023, from $4,530,000 as of June 30, 2023 [85]. - Finance lease liability totaled approximately $1,877,000 as of December 31, 2023, down from $2,018,000 as of June 30, 2023 [87]. - Operating lease liability decreased to approximately $3,134,000 as of December 31, 2023, from $3,630,000 as of June 30, 2023 [88]. - A full valuation allowance was recorded against net deferred income tax assets as of December 31, 2023, indicating uncertainty in realizability [89]. Financing and Capital Structure - The Company had a line of credit of $1,897,322 as of December 31, 2023, compared to $0 as of June 30, 2023 [42]. - The Company entered into a Loan Agreement on August 1, 2023, with a maximum availability of $7,500,000 for operating capital, bearing interest at SOFR plus 5.00% [43]. - The outstanding balance of the line of credit was $1,897,000 as of December 31, 2023, compared to $0 as of June 30, 2023 [86]. - The Company paid $191,244 in preferred stock dividends during January 2024, issuing 341,384 shares of common stock for the three months ended December 31, 2023 [39]. - Approximately $449,000 remained of the stock repurchase plan authorization as of December 31, 2023, with no purchases made since September 2011 [90]. - The company plans to raise up to $3,875,000 through an equity distribution agreement for potential liquidity needs [72]. Related-Party Transactions and Other Matters - Related-party transactions for the three months ended December 31, 2023, amounted to $332,989, an increase from $249,366 in the same period of 2022 [47]. - The net rebate liability increased to $360,314 as of December 31, 2023, from $191,459 as of June 30, 2023 [48]. - The Company adopted ASU 2016-13 on July 1, 2023, which did not have a material impact on its condensed consolidated financial statements [33]. - A proposed reverse stock split ratio between one-for-five to one-for-ten was approved by shareholders on December 7, 2023 [81]. - There were no off-balance sheet arrangements as of December 31, 2023 [91].

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Dynatronics Corporation's unaudited condensed consolidated financial statements for Q3 2023, highlighting decreased net sales, reduced net loss, and a new line of credit [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to **$30.3 million** as of September 30, 2023, driven by a new **$1.8 million** line of credit, while working capital and stockholders' equity decreased Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | September 30, 2023 (USD) | June 30, 2023 (USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $432,689 | $398,797 | | Inventories, net | $6,838,485 | $7,403,194 | | Total current assets | $13,224,504 | $12,418,875 | | Total assets | $30,347,169 | $30,062,875 | | **Liabilities & Equity** | | | | Line of credit | $1,803,906 | $0 | | Total current liabilities | $8,903,491 | $7,940,992 | | Total liabilities | $13,802,124 | $13,206,349 | | Total stockholders' equity | $16,545,045 | $16,856,526 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Despite a **22.4% decrease in net sales**, the company reduced its net loss to **$330,654** for Q3 2023, primarily due to a **38.2% reduction in SG&A expenses** Three Months Ended September 30, (Unaudited) | Metric | 2023 (USD) | 2022 (USD) | Change | | :--- | :--- | :--- | :--- | | Net sales | $9,351,914 | $12,053,201 | -22.4% | | Gross profit | $2,306,067 | $3,642,840 | -36.7% | | Gross Margin | 24.7% | 30.2% | -5.5pp | | Selling, general, and administrative expenses | $2,545,556 | $4,117,832 | -38.2% | | Operating loss | ($239,489) | ($474,992) | +49.6% | | Net loss | ($330,654) | ($505,926) | +34.6% | | Net loss per common share (Basic and diluted) | ($0.12) | ($0.18) | +33.3% | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased to **$16.55 million** by September 30, 2023, primarily due to a net loss and preferred stock dividends, partially offset by stock-based compensation - Net loss of **$330,654**[14](index=14&type=chunk) - Preferred stock dividends paid in common stock valued at **$197,059**[14](index=14&type=chunk) - Stock-based compensation expense of **$19,173**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$1.67 million** for Q3 2023, a significant shift from the prior year, with a **$1.8 million** line of credit draw leading to a net cash increase of **$33,892** Cash Flow Summary - Three Months Ended September 30, (Unaudited) | Cash Flow Activity | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($1,665,272) | $364,247 | | Net cash used in investing activities | ($34,607) | ($19,785) | | Net cash provided by (used in) financing activities | $1,733,771 | ($90,965) | | **Net change in cash** | **$33,892** | **$253,497** | - The primary source of cash from financing activities was a net change in the line of credit of **$1,803,906**[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, business operations, and financial items, including a **1-for-5 reverse stock split**, a new **$7.5 million** asset-based loan, and declining revenue across product categories - The company designs, manufactures, and sells a broad range of products for physical therapy, rehabilitation, orthopedics, pain management, and athletic training[19](index=19&type=chunk) - A **1-for-5 reverse stock split** was effective on February 1, 2023, with all common share and per-share amounts retroactively adjusted[20](index=20&type=chunk)[21](index=21&type=chunk) - On August 1, 2023, the company secured a new three-year, asset-based revolving line of credit for up to **$7.5 million** with Gibraltar Business Capital[39](index=39&type=chunk) Revenue by Major Product Category (Three Months Ended Sep 30) | Product Category | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | Physical Therapy and Rehabilitation Products | $4,829,737 | $6,298,070 | | Orthopedic Soft Bracing Products | $4,499,683 | $5,733,105 | | Other | $22,494 | $22,026 | | **Total** | **$9,351,914** | **$12,053,201** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **22.4% decline in net sales** to customer acquisition and reduced demand, while a **38.2% reduction in SG&A expenses** improved net loss, supported by a new **$7.5 million** line of credit [Results of Operations](index=13&type=section&id=Results%20of%20Operations) Net sales declined **22.4%** to **$9.4 million** for Q3 2023, and gross profit fell **36.7%**, but a **38.2% reduction in SG&A expenses** led to a smaller net loss of **$331,000** - Net sales decreased by **$2.7 million (22.4%)** year-over-year, primarily due to a competitor acquiring a customer, reduced OEM volume, and lower demand for orthopedic soft bracing products[54](index=54&type=chunk) - Gross profit margin decreased from **30.2% to 24.7%** year-over-year, attributed two-thirds to reduced net sales and one-third to lower product margin[56](index=56&type=chunk) - SG&A expenses decreased by **$1.6 million (38.2%)** year-over-year, led by a **$1.3 million** reduction in salaries and benefits[57](index=57&type=chunk) - Net loss decreased by **$175,000** year-over-year, as the **$1.6 million** decrease in SG&A more than offset the **$1.3 million** decrease in gross profit[60](index=60&type=chunk) [Liquidity and Capital Resources](index=15&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds **$433,000** in cash and **$4.3 million** in working capital, bolstered by a new **$7.5 million** asset-based line of credit, and anticipates sufficient liquidity for the next 12 months - The company believes cash from operations, current capital resources, and potential equity sales will provide sufficient liquidity for the next 12 months[64](index=64&type=chunk) - An equity distribution agreement is in place for "at the market offerings" of up to **$3.875 million**, though no sales have commenced under the current ATM prospectus[65](index=65&type=chunk) - On August 1, 2023, the company secured a new three-year, asset-based revolving line of credit for up to **$7.5 million**, with an outstanding balance of **$1.8 million** as of September 30, 2023[67](index=67&type=chunk)[78](index=78&type=chunk) - Inventories decreased by **7.6%** to **$6.8 million** due to adjusting inventory management to match demand[76](index=76&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=20&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the company's market risk from the information presented in the Annual Report on Form 10-K for the fiscal year ended June 30, 2023 - No material changes from the information presented for the year ended June 30, 2023[86](index=86&type=chunk) [Controls and Procedures](index=20&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2023, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[88](index=88&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[89](index=89&type=chunk) [PART II. OTHER INFORMATION](index=21&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=21&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[91](index=91&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended June 30, 2023 - The risk factors described in the Annual Report on Form 10-K for the year ended June 30, 2023 have not materially changed[92](index=92&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=21&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[93](index=93&type=chunk) [Defaults Upon Senior Securities](index=21&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[94](index=94&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable as the company has no mining operations - None[95](index=95&type=chunk) [Other Information](index=21&type=section&id=Item%205.%20Other%20Information) The company reported no other information required to be disclosed under this item - None[96](index=96&type=chunk) [Exhibits](index=22&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including new employment and consulting agreements, CEO and CFO certifications, and XBRL data files - Employment Agreement with Brian D. Baker (CEO)[98](index=98&type=chunk) - Consulting Agreement with JKrier LLC[98](index=98&type=chunk) - Employment Agreement with Gabe Ellwein (CFO)[98](index=98&type=chunk) - CEO and CFO certifications (Rule 13a-14(a) and Section 906)[98](index=98&type=chunk) - Inline XBRL documents[98](index=98&type=chunk)

Dynatronics Corporation (NASDAQ:DYNT) Q1 2024 Earnings Conference Call November 9, 2023 11:00 AM ET Company Participants Brian Baker - Chief Executive Officer John Krier - President, Chief Executive Officer and Principal Financial Officer Gabe Ellwein - Chief Financial Officer Conference Call Participants Brooks O'Neil - Lake Street Capital Markets Jeffrey Cohen - Ladenburg Thalmann Scott Henry - ROTH Capital Operator Good morning ladies and gentlemen and welcome to the Dynatronics First Quarter Results for ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 . or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ____________. Commission file number 0-12697 Dynatronics Corporation (Exact name of registrant as specified in its charter) (State or other jurisdictio ...

| --- | --- | --- | |-------|-------------------------------------|-------| | | Dynatronics Corporation | | | | Reset in the Transformation Journey | | | | May 11, 2023 \| NASDAQ:DYNT | | | | | | This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Those statements include references to the company's expectations and similar statements. Such forward-looking statements reflect the views of ...

Dynatronics Corporation (NASDAQ:DYNT) Q3 2023 Earnings Conference Call May 11, 2023 8:00 AM ET Company Participants John Krier - President, Chief Executive Officer and Principal Financial Officer Conference Call Participants Brooks O'Neil - Lake Street Capital Markets Jeffrey Cohen - Ladenburg Thalmann & Co. Inc. Scott Henry - ROTH Capital Partners, LLC Operator Thank you for standing by. This is the conference operator. Welcome to the Dynatronics Third Quarter Results for Fiscal 2023 Conference Call. As a ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, notes on accounting policies, reverse stock split impact, and disaggregated revenue Condensed Consolidated Balance Sheets (Unaudited) Total assets and stockholders' equity decreased, while total liabilities increased, driven by changes in current assets and lease liabilities | Category | March 31, 2023 | June 30, 2022 | Change | % Change | | :-------------------------------- | :------------- | :------------ | :----- | :------- | | **Assets** | | | | | | Total current assets | **$15,733,092** | **$19,225,966** | **$(3,492,874)** | **-18.17%** | | Property and equipment, net | **$2,623,953** | **$2,911,420** | **$(287,467)** | **-9.87%** | | Operating lease assets | **$3,842,905** | **$1,565,530** | **$2,277,375** | **145.47%** | | Total assets | **$33,439,549** | **$35,433,995** | **$(1,994,446)** | **-5.63%** | | **Liabilities** | | | | | | Total current liabilities | **$8,589,202** | **$9,935,345** | **$(1,346,143)** | **-13.55%** | | Operating lease liability, net | **$2,812,375** | **$727,310** | **$2,085,065** | **286.68%** | | Total liabilities | **$14,224,073** | **$13,735,437** | **$488,636** | **3.56%** | | **Stockholders' Equity** | | | | | | Total stockholders' equity | **$19,215,476** | **$21,698,558** | **$(2,483,082)** | **-11.44%** | - Trade accounts receivable **decreased by** **$1,049,091 (19.4%)** **from** **$5,416,044** at June 30, 2022, **to** **$4,366,953** at March 31, 2023, **primarily due to** **reduced revenue and timing of collections**[9](index=9&type=chunk)[69](index=69&type=chunk) - Inventories, net, **decreased by** **$2,368,179 (19.6%)** **from** **$12,071,292** at June 30, 2022, **to** **$9,703,113** at March 31, 2023, **reflecting adjustments to inventory management in response to supply chain impacts and demand**[9](index=9&type=chunk)[70](index=70&type=chunk) [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Net sales decreased, but gross profit margin improved, leading to a reduced net loss for the quarter, while the nine-month net loss increased | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net sales | **$9,236,037** | **$10,316,253** | **$32,171,794** | **$33,147,001** | | Cost of sales | **$7,027,630** | **$8,005,146** | **$23,258,363** | **$25,090,927** | | Gross profit | **$2,208,407** | **$2,311,107** | **$8,913,431** | **$8,056,074** | | Selling, general, and administrative expenses | **$3,429,001** | **$3,746,646** | **$11,408,537** | **$11,324,798** | | Operating loss | **$(1,220,594)** | **$(1,435,539)** | **$(2,495,106)** | **$(3,268,724)** | | Net loss | **$(1,245,493)** | **$(1,471,550)** | **$(2,592,286)** | **$(2,427,476)** | | Net loss attributable to common stockholders | **$(1,420,366)** | **$(1,653,630)** | **$(3,110,863)** | **$(2,978,792)** | | Basic and diluted net loss per common share | **$(0.36)** | **$(0.46)** | **$(0.82)** | **$(0.84)** | - Net sales **decreased by** **$1,080,000 (10.5%)** for the three months ended March 31, 2023, and **by** **$975,000 (2.9%)** for the nine months ended March 31, 2023, **primarily due to the acquisition of a competitor by a rehabilitation product category customer, reduction in overall volume for OEM customers, and a general reduction in demand for the orthopedic soft bracing product category**[13](index=13&type=chunk)[49](index=49&type=chunk) - **Gross profit as a percentage of net sales increased to** **23.9%** for the three months ended March 31, 2023 (**from** **22.4%** in 2022) and **to** **27.7%** for the nine months ended March 31, 2023 (**from** **24.3%** in 2022), **driven by net price realization, product mix, reduced freight-in expenses, and stabilized raw material costs**[13](index=13&type=chunk)[51](index=51&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) Stockholders' equity decreased due to accumulated deficits from net losses, partially offset by common stock increases from compensation and dividends | Item | June 30, 2022 | March 31, 2023 | Change | | :--------------------- | :------------ | :------------- | :----- | | Common stock (Amount) | **$33,533,003** | **$34,160,784** | **$627,781** | | Preferred stock (Amount) | **$7,980,788** | **$7,980,788** | **$0** | | Accumulated deficit | **$(19,815,233)** | **$(22,926,096)** | **$(3,110,863)** | | Total stockholders' equity | **$21,698,558** | **$19,215,476** | **$(2,483,082)** | - **The accumulated deficit increased by** **$3,110,863** **from** June 30, 2022, **to** March 31, 2023, **reflecting** the net losses incurred during the period[16](index=16&type=chunk) - **Common stock shares outstanding increased from** **3,639,663** at June 30, 2022, **to** **3,890,526** at March 31, 2023, **partly due to preferred stock dividends paid in common stock and stock-based compensation**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Operating cash flow turned positive, while investing and financing activities remained stable, resulting in a net decrease in cash and equivalents | Cash Flow Activity | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by (used in) operating activities | **$404,289** | **$(3,258,932)** | | Net cash used in investing activities | **$(177,086)** | **$(261,358)** | | Net cash used in financing activities | **$(258,923)** | **$(260,507)** | | Net change in cash and cash equivalents and restricted cash | **$(31,720)** | **$(3,780,797)** | | Cash and cash equivalents and restricted cash at end of period | **$669,597** | **$2,472,847** | - **The shift to positive cash flow from operating activities in 2023 was significantly influenced by** changes in working capital, **including a substantial increase in cash from inventories and trade accounts receivable**[18](index=18&type=chunk) - **The primary use of cash for the nine months ended March 31, 2023, was to pay down existing vendor payables**[68](index=68&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Notes detail business, reverse stock split impact, accounting policies, net loss per share, preferred stock, inventory, related parties, and revenue - **Dynatronics Corporation is a medical device company** that designs, manufactures, and sells restorative products for physical therapy, rehabilitation, orthopedics, pain management, and athletic training[20](index=20&type=chunk) - **A 1-for-5 reverse stock split became effective on** February 1, 2023, converting every five issued and outstanding common shares into one, with **proportionate adjustments to per share amounts and equity instruments**. **All common shares and per share amounts in the financial statements have been retroactively adjusted**[21](index=21&type=chunk)[22](index=22&type=chunk) Inventories Breakdown | Category | March 31, 2023 | June 30, 2022 | | :--------------- | :------------- | :------------ | | Raw materials | **$5,548,618** | **$6,536,951** | | Work in process | **$98,619** | **$313,549** | | Finished goods | **$4,434,840** | **$5,599,997** | | Inventory reserve | **$(378,964)** | **$(379,205)** | | **Total Inventories, net** | **$9,703,113** | **$12,071,292** | Revenue Disaggregation by Product Category | Product Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Physical Therapy and Rehabilitation Products | **$4,735,741** | **$4,810,043** | **$17,399,296** | **$16,934,423** | | Orthopedic Soft Bracing Products | **$4,476,849** | **$5,476,469** | **$14,698,238** | **$16,126,728** | | Other | **$23,447** | **$29,741** | **$74,260** | **$85,850** | | **Total Net Sales** | **$9,236,037** | **$10,316,253** | **$32,171,794** | **$33,147,001** | [Cautionary Note Regarding Forward-Looking Statements](index=12&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section warns that forward-looking statements are subject to risks and uncertainties, and the company assumes no obligation to update them - Forward-looking statements are **identified by words like 'may,' 'will,' 'estimate,' 'intend,' 'continue,' 'believe,' 'expect,' or 'anticipate' and similar references to future periods**[42](index=42&type=chunk) - These statements are **subject to substantial risks and uncertainties**, **including those related to the broader economic environment and factors described in the company's Annual Report on Form 10-K**[43](index=43&type=chunk) - The company **assumes no obligation to update forward-looking statements** **after the report date to revise or conform them to actual results or changes in opinions or expectations**[44](index=44&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, covering business overview, revenue, gross profit, expenses, net loss, liquidity, capital resources, and balance sheet changes [Overview](index=13&type=section&id=Overview) Dynatronics provides high-quality restorative medical devices for physical therapy, rehabilitation, orthopedics, pain management, and athletic training - **Dynatronics is a leading medical device company** providing high-quality restorative products for clinical use in physical therapy, rehabilitation, orthopedics, pain management, and athletic training[48](index=48&type=chunk) - The company **markets its products to orthopedists, physical therapists, chiropractors, athletic trainers, sports medicine practitioners, clinics, and hospitals**[48](index=48&type=chunk) - **Key product brands include Bird & Cronin®, Solaris™, Hausmann®, and PROTEAM™**[48](index=48&type=chunk) [Results of Operations](index=13&type=section&id=Results%20of%20Operations) Net sales decreased, but gross profit margin improved; SG&A decreased, reducing quarterly net loss, while nine-month net loss increased due to other expenses Key Financial Performance Indicators (YoY Change) | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | YoY Change (3M) | 9 Months Ended March 31, 2023 | 9 Months Ended March 31, 2022 | YoY Change (9M) | | :------------------------------------------ | :---------------------------- | :---------------------------- | :-------------- | :---------------------------- | :---------------------------- | :-------------- | | Net Sales | **$9,236,000** | **$10,316,000** | **-10.5%** | **$32,172,000** | **$33,147,000** | **-2.9%** | | Gross Profit | **$2,208,000** | **$2,311,000** | **-4.5%** | **$8,913,000** | **$8,056,000** | **+10.6%** | | Gross Profit Margin | **23.9%** | **22.4%** | **+1.5 pp** | **27.7%** | **24.3%** | **+3.4 pp** | | SG&A Expenses | **$3,429,000** | **$3,747,000** | **-8.5%** | **$11,409,000** | **$11,325,000** | **+0.7%** | | Net Other Income (Expense) | **$(25,000)** | **$(36,000)** | **+$11,000** | **$(93,000)** | **$841,000** | **-$934,000** | | Net Loss | **$(1,246,000)** | **$(1,472,000)** | **-$226,000** | **$(2,592,000)** | **$(2,427,000)** | **+$165,000** | | Net Loss Attributable to Common Stockholders | **$(1,420,000)** | **$(1,654,000)** | **-$234,000** | **$(3,111,000)** | **$(2,979,000)** | **+$132,000** | | Basic and Diluted Net Loss Per Common Share | **$(0.36)** | **$(0.46)** | **-$0.10** | **$(0.82)** | **$(0.84)** | **-$0.02** | - The **decrease in net sales was primarily due to the acquisition of a competitor by a rehabilitation product category customer, reduction in overall volume for OEM customers, and a general reduction in demand for the orthopedic soft bracing product category**[49](index=49&type=chunk) - The **increase in net other expense for the nine months ended March 31, 2023, was primarily due to a $943,000 employee retention credit received in the prior year that did not recur**[54](index=54&type=chunk) [Liquidity and Capital Resources](index=15&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and working capital decreased; management expects sufficient liquidity from current resources and planned equity sales, despite supply chain and personnel risks Liquidity Metrics | Metric | March 31, 2023 | June 30, 2022 | Change | | :------------------------------------------ | :------------- | :------------ | :----- | | Cash and cash equivalents and restricted cash | **$670,000** | **$701,000** | **$(31,000)** | | Working capital | **$7,144,000** | **$9,291,000** | **$(2,147,000)** | | Current ratio | **1.8 to 1** | **1.9 to 1** | **-0.1** | | Current assets as % of total assets | **47.0%** | **54.3%** | **-7.3 pp** | - The company has an **equity distribution agreement** to sell up to **$2,671,513** of common stock through an 'at the market offering' (ATM) to raise additional funds, with **no sales commenced** as of the report date[63](index=63&type=chunk) - **Operating lease liability significantly increased from** **$1,574,000** at June 30, 2022, **to** **$3,843,000** at March 31, 2023, **primarily due to exercising a third option** to extend an operating lease for an additional five years in New Jersey[75](index=75&type=chunk) - A **full valuation allowance is recorded** against net deferred income tax assets, indicating **significant uncertainty** about their realizability, resulting in **no reported income tax expense** for the periods[76](index=76&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=19&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk disclosures from the prior Annual Report on Form 10-K - **No material changes** **from** the market risk information presented for the year ended June 30, 2022[81](index=81&type=chunk) [Item 4. Controls and Procedures](index=19&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective and no material changes occurred in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=19&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023 - **Disclosure controls and procedures are designed to ensure required information is recorded, processed, summarized, and reported within SEC specified time periods**[82](index=82&type=chunk) - **As of March 31, 2023, the principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective at a reasonable assurance level**[83](index=83&type=chunk) [Changes in Internal Control over Financial Reporting](index=19&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023 - **No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023**[84](index=84&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=20&type=section&id=Item%201.%20Legal%20Proceedings) No legal proceedings were reported for the period - There are **no legal proceedings to report**[87](index=87&type=chunk) [Item 1A. Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) Risk factors from the prior Annual Report on Form 10-K have not materially changed - The risk factors previously described in the Annual Report on Form 10-K for the year ended June 30, 2022, have **not materially changed**[88](index=88&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=20&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported - There were **no unregistered sales of equity securities or use of proceeds to report**[89](index=89&type=chunk) [Item 3. Defaults Upon Senior Securities](index=20&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - There were **no defaults upon senior securities to report**[90](index=90&type=chunk) [Item 4. Mine Safety Disclosures](index=20&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported for the period - There are **no mine safety disclosures to report**[91](index=91&type=chunk) [Item 5. Other Information](index=20&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period - There is **no other information to report**[92](index=92&type=chunk) [Item 6. Exhibits](index=21&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including amendments, stock certificates, leases, and executive certifications - **Key exhibits include** Articles of Amendment to Amended and Restated Articles of Incorporation, Specimen Stock Certificate, Lease Agreements, and Certifications under Rule 13a-14(a)/15d-14(a) and Section 906 of the Sarbanes-Oxley Act[94](index=94&type=chunk) [Signatures](index=22&type=section&id=Signatures) The report is signed by John A. Krier, President, CEO, and CFO of Dynatronics Corporation - **The report was signed by John A. Krier, President, Chief Executive Officer, and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer) on May 11, 2023**[98](index=98&type=chunk)

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, including balance sheets, operations, equity, cash flows, and accounting notes [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) | Metric | December 31, 2022 | June 30, 2022 | Change ($) | Change (%) | | :-------------------------- | :------------------ | :---------------- | :--------- | :--------- | | Total Assets | $34,986,694 | $35,433,995 | $(447,301) | (1.3%) | | Total Liabilities | $14,548,573 | $13,735,437 | $813,136 | 5.9% | | Total Stockholders' Equity | $20,438,121 | $21,698,558 | $(1,260,437) | (5.8%) | | Inventories, net | $10,745,937 | $12,071,292 | $(1,325,355) | (11.0%) | | Trade accounts receivable, net | $5,230,843 | $5,416,044 | $(185,201) | (3.4%) | | Operating lease liability, net | $2,321,167 | $727,310 | $1,593,857 | 219.1% | [Condensed Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Three Months Ended December 31 | Metric | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :--------- | | Net sales | $10,882,557 | $10,529,853 | $352,704 | 3.3% | | Gross profit | $3,062,186 | $2,080,661 | $981,525 | 47.2% | | Operating loss | $(799,520) | $(1,400,868) | $601,348 | (42.9%) | | Net loss | $(840,867) | $(1,441,267) | $600,400 | (41.7%) | | Net loss per common share (Basic and diluted) | $(0.27) | $(0.46) | $0.19 | (41.3%) | Six Months Ended December 31 | Metric | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :--------- | | Net sales | $22,935,758 | $22,830,748 | $105,010 | 0.5% | | Gross profit | $6,705,026 | $5,744,966 | $960,060 | 16.7% | | Operating loss | $(1,274,513) | $(1,833,230) | $558,717 | (30.5%) | | Net loss | $(1,346,793) | $(958,627) | $(388,166) | 40.5% | | Net loss per common share (Basic and diluted) | $(0.45) | $(0.38) | $(0.07) | 18.4% | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) Stockholders' Equity Changes (June 30, 2022 to December 31, 2022) | Item | June 30, 2022 | December 31, 2022 | Change | | :-------------------------------- | :-------------- | :------------------ | :------- | | Common stock (shares) | 3,639,663 | 3,796,610 | +156,947 | | Common stock (amount) | $33,533,003 | $33,963,063 | +$430,060 | | Preferred stock (shares) | 3,351,000 | 3,351,000 | 0 | | Preferred stock (amount) | $7,980,788 | $7,980,788 | $0 | | Accumulated deficit | $(19,815,233) | $(21,505,730) | $(1,690,497) | | Total stockholders' equity | $21,698,558 | $20,438,121 | $(1,260,437) | - Stock-based compensation for the six months ended December 31, 2022, totaled **$86,356**[16](index=16&type=chunk)[18](index=18&type=chunk) - Preferred stock dividends paid in common stock for the six months ended December 31, 2022, amounted to **$343,704**[16](index=16&type=chunk)[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Cash Flows for Six Months Ended December 31 | Activity | 2022 | 2021 | Change | | :--------------------------------------- | :----------- | :----------- | :----------- | | Net cash provided by (used in) operating activities | $291,662 | $(2,409,692) | $2,701,354 | | Net cash used in investing activities | $(126,465) | $(98,351) | $(28,114) | | Net cash used in financing activities | $(181,020) | $(172,170) | $(8,850) | | Net change in cash and cash equivalents and restricted cash | $(15,823) | $(2,680,213) | $2,664,390 | | Cash and cash equivalents and restricted cash at end of period | $685,494 | $3,573,431 | $(2,887,937) | - Operating lease right-of-use assets obtained in exchange for lease obligations totaled **$2,148,738** for the six months ended December 31, 2022[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Note 1. Presentation and Summary of Significant Accounting Policies](index=6&type=section&id=Note%201.%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) - Dynatronics Corporation is a medical device company providing high-quality restorative products for physical therapy, rehabilitation, orthopedics, pain management, and athletic training[22](index=22&type=chunk) - A **1-for-5 reverse stock split** became effective on February 1, 2023, converting every five issued and outstanding common shares into one, with proportionate adjustments to equity-linked securities[23](index=23&type=chunk) - The company recorded an Employee Retention Credit totaling **$1,143,000** during the quarter ended September 30, 2021, with **$943,000** recognized in other income[30](index=30&type=chunk) - The company is evaluating ASU 2020-06, effective for fiscal year 2025, which simplifies accounting for convertible instruments and contracts in an entity's own equity[32](index=32&type=chunk) [Note 2. Net Loss per Common Share](index=7&type=section&id=Note%202.%20Net%20Loss%20per%20Common%20Share) - All outstanding options, warrants, and convertible preferred stock were anti-dilutive and thus excluded from the computation of diluted net loss per common share[36](index=36&type=chunk) Anti-Dilutive Securities Excluded from Diluted EPS | Period | Number of Securities | | :-------------------------------- | :------------------- | | Three months ended Dec 31, 2022 | 1,555,615 | | Three months ended Dec 31, 2021 | 1,559,900 | | Six months ended Dec 31, 2022 | 1,562,900 | | Six months ended Dec 31, 2021 | 1,551,400 | [Note 3. Convertible Preferred Stock](index=8&type=section&id=Note%203.%20Convertible%20Preferred%20Stock) - As of December 31, 2022, the company had **1,992,000** shares of Series A 8% Convertible Preferred Stock and **1,359,000** shares of Series B Convertible Preferred Stock outstanding, totaling **3,351,000** shares convertible into common stock[37](index=37&type=chunk) - Dividends on preferred shares accrue at **8%** per year, payable quarterly in stock or cash. In January 2023, **$173,128** of preferred stock dividends for Q4 2022 were paid by issuing **68,838** common shares[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 4. Inventories](index=8&type=section&id=Note%204.%20Inventories) Inventories, Net | Category | December 31, 2022 | June 30, 2022 | Change ($) | Change (%) | | :------------- | :------------------ | :---------------- | :--------- | :--------- | | Raw materials | $6,052,541 | $6,536,951 | $(484,410) | (7.4%) | | Work in process | $278,664 | $313,549 | $(34,885) | (11.1%) | | Finished goods | $4,718,633 | $5,599,997 | $(881,364) | (15.7%) | | Inventory reserve | $(303,901) | $(379,205) | $75,304 | (19.9%) | | **Total** | **$10,745,937** | **$12,071,292** | **$(1,325,355)** | **(11.0%)** | [Note 5. Related-Party Transactions](index=8&type=section&id=Note%205.%20Related-Party%20Transactions) Related-Party Lease Expenses | Period | 2022 | 2021 | | :-------------------------------- | :----------- | :----------- | | Three months ended Dec 31 | $249,366 | $248,952 | | Six months ended Dec 31 | $498,732 | $497,905 | [Note 6. Revenue](index=8&type=section&id=Note%206.%20Revenue) Revenue by Major Product Category | Product Category | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Physical Therapy and Rehabilitation Products | $6,365,220 | $5,426,025 | $12,663,556 | $12,124,380 | | Orthopedic Soft Bracing Products | $4,488,550 | $5,076,785 | $10,221,389 | $10,650,259 | | Other | $28,787 | $27,043 | $50,813 | $56,109 | | **Total Net Sales** | **$10,882,557** | **$10,529,853** | **$22,935,758** | **$22,830,748** | - The net rebate receivable (liability) shifted from a liability of **($217,158)** at June 30, 2022, to a receivable of **$51,606** at December 31, 2022[41](index=41&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=9&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements based on management's current expectations and assumptions, which are subject to substantial risks and uncertainties[44](index=44&type=chunk)[45](index=45&type=chunk) - Risks include the impact or duration of the COVID-19 pandemic and other factors detailed in the Annual Report on Form 10-K[45](index=45&type=chunk) - The company assumes no obligation to update forward-looking statements after the report date[46](index=46&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=9&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of financial condition, operations, liquidity, capital resources, and reverse stock split [Overview](index=9&type=section&id=MD%26A%20-%20Overview) - Dynatronics is a leading medical device company providing high-quality restorative products for clinical use in physical therapy, rehabilitation, orthopedics, pain management, and athletic training[49](index=49&type=chunk) - The company markets products under brands including Bird & Cronin®, Solaris™, Hausmann®, and PROTEAM™[50](index=50&type=chunk) [Results of Operations](index=10&type=section&id=MD%26A%20-%20Results%20of%20Operations) [Net Sales](index=10&type=section&id=MD%26A%20-%20Net%20Sales) - Net sales increased by **$353,000 (3.3%)** to **$10,883,000** for the quarter ended December 31, 2022, and by **$105,000 (0.5%)** to **$22,936,000** for the six months ended December 31, 2022[51](index=51&type=chunk) - The increase is primarily due to higher customer demand compared to the prior year, which was impacted by COVID-19 precautions[51](index=51&type=chunk) [Gross Profit](index=10&type=section&id=MD%26A%20-%20Gross%20Profit) - Gross profit increased by **$981,000 (47.1%)** to **$3,062,000 (28.1% of net sales)** for the quarter, and by **$960,000 (16.7%)** to **$6,705,000 (29.2% of net sales)** for the six months ended December 31, 2022[52](index=52&type=chunk) - The increase in gross profit percentage was driven by net price realization, overall product mix, reduced freight-in expenses, and stabilized raw material costs[52](index=52&type=chunk) [Selling, General and Administrative Expenses](index=10&type=section&id=MD%26A%20-%20Selling,%20General%20and%20Administrative%20Expenses) - SG&A expenses increased by **$380,000 (10.9%)** to **$3,862,000** for the quarter and by **$402,000 (5.3%)** to **$7,980,000** for the six months ended December 31, 2022[53](index=53&type=chunk)[54](index=54&type=chunk) - The increase was primarily due to higher marketing program expenses and salaries in selling, partially offset by a decrease in general and administrative expenses from reduced professional services and salaries[53](index=53&type=chunk)[54](index=54&type=chunk) [Net Other Income (Expense)](index=10&type=section&id=MD%26A%20-%20Net%20Other%20Income%20(Expense)) - Net other expense for the quarter ended December 31, 2022, was **$37,000**, a slight decrease from **$40,000** in the prior year, due to lower interest expense[55](index=55&type=chunk) - For the six months, net other expense was **$68,000**, compared to net other income of **$875,000** in the prior year, primarily due to the absence of a **$943,000** employee retention credit received in 2021[55](index=55&type=chunk) [Income Tax Provision](index=10&type=section&id=MD%26A%20-%20Income%20Tax%20Provision) - Income tax provision was **$4,000** for both the three and six months ended December 31, 2022, compared to **$0** in the prior year periods[56](index=56&type=chunk) - A full valuation allowance against net deferred income tax assets resulted in no reported income tax expense associated with operating profit[73](index=73&type=chunk) [Net Loss](index=10&type=section&id=MD%26A%20-%20Net%20Loss) - Net loss decreased by **$600,000** to **$841,000** for the quarter ended December 31, 2022, primarily due to a **$981,000** increase in gross profit, partially offset by increased SG&A[57](index=57&type=chunk) - Net loss increased by **$388,000** to **$1,347,000** for the six months ended December 31, 2022, mainly due to a **$954,000** increase in other expense (absence of ERC) and increased SG&A, despite a **$960,000** increase in gross profit[57](index=57&type=chunk)[58](index=58&type=chunk) [Net Loss Attributable to Common Stockholders](index=11&type=section&id=MD%26A%20-%20Net%20Loss%20Attributable%20to%20Common%20Stockholders) - Net loss attributable to common stockholders decreased by **$609,000** to **$1,014,000** for the quarter ended December 31, 2022, resulting in basic and diluted EPS of **$(0.27)**[59](index=59&type=chunk) - For the six months, net loss attributable to common stockholders increased by **$362,000** to **$1,690,000**, with basic and diluted EPS of **$(0.45)**[60](index=60&type=chunk) [Liquidity and Capital Resources](index=11&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) [Overall Liquidity](index=11&type=section&id=MD%26A%20-%20Overall%20Liquidity) - Cash and cash equivalents and restricted cash decreased slightly to **$685,000** as of December 31, 2022, from **$701,000** as of June 30, 2022[61](index=61&type=chunk) - Working capital was **$8,287,000** as of December 31, 2022, down from **$9,291,000** as of June 30, 2022, while the current ratio remained stable at **1.9 to 1**[62](index=62&type=chunk) - Management believes current liquidity is sufficient for the next 12 months, but acknowledges potential adverse effects from the COVID-19 pandemic on the global supply chain and higher personnel costs[63](index=63&type=chunk) [Equity Distribution Agreement](index=11&type=section&id=MD%26A%20-%20Equity%20Distribution%20Agreement) - The company has an at-the-market (ATM) offering program to sell common stock up to an aggregate amount of **$10,000,000**[64](index=64&type=chunk) - A replacement registration statement filed in May 2021 provides for potential future sales of up to **$2,677,997** in common stock under the ATM[65](index=65&type=chunk) [Reverse Stock Split](index=11&type=section&id=MD%26A%20-%20Reverse%20Stock%20Split) - A **1-for-5 reverse stock split** became effective on February 1, 2023, converting every five issued and outstanding common shares into one[66](index=66&type=chunk) - The split resulted in proportionate adjustments to the exercise price and/or number of shares for stock options, restricted stock, and warrants, and increased the conversion price of preferred stock[66](index=66&type=chunk) - The reverse stock split did not affect the company's authorized shares of common or preferred stock, or the number of preferred shares outstanding[66](index=66&type=chunk) [Cash and Cash Equivalents](index=12&type=section&id=MD%26A%20-%20Cash%20and%20Cash%20Equivalents) - Cash and cash equivalents and restricted cash decreased by **$16,000** to **$685,000** as of December 31, 2022, from **$701,000** as of June 30, 2022[67](index=67&type=chunk) - The primary use of cash for the six months ended December 31, 2022, was to pay down existing vendor payables[67](index=67&type=chunk) [Accounts Receivable](index=12&type=section&id=MD%26A%20-%20Accounts%20Receivable) - Trade accounts receivable, net, decreased by approximately **$185,000 (3.4%)** to **$5,231,000** as of December 31, 2022, primarily due to differences in the timing of collections[68](index=68&type=chunk) [Inventories](index=12&type=section&id=MD%26A%20-%20Inventories) - Inventories, net, decreased by **$1,325,000 (11.0%)** to **$10,746,000** as of December 31, 2022, reflecting adjustments to inventory management in response to global supply chain impacts and demand[69](index=69&type=chunk) [Accounts Payable](index=12&type=section&id=MD%26A%20-%20Accounts%20Payable) - Accounts payable decreased by approximately **$123,000 (2.0%)** to **$6,046,000** as of December 31, 2022, mainly due to a decrease in inventory purchases and timing of payments[70](index=70&type=chunk) [Debt](index=12&type=section&id=MD%26A%20-%20Debt) - Long-term debt decreased by **$5,118** to **$244** as of December 31, 2022, primarily consisting of loans related to equipment[71](index=71&type=chunk) [Finance Lease Liability](index=12&type=section&id=MD%26A%20-%20Finance%20Lease%20Liability) - Finance lease liability totaled approximately **$2,170,000** as of December 31, 2022, primarily related to the Utah building lease[72](index=72&type=chunk) - A deferred gain of **$1,003,000** from the sale and leaseback of the Utah building is being recognized at approximately **$150,000** per year[72](index=72&type=chunk) [Operating Lease Liability](index=13&type=section&id=MD%26A%20-%20Operating%20Lease%20Liability) - Operating lease liability increased significantly to approximately **$3,256,000** as of December 31, 2022, from **$1,574,000** as of June 30, 2022[72](index=72&type=chunk) - The increase was primarily due to the company exercising its third option to extend its New Jersey operating lease for an additional five years[72](index=72&type=chunk) [Deferred Income Tax Assets](index=13&type=section&id=MD%26A%20-%20Deferred%20Income%20Tax%20Assets) - The company recorded a full valuation allowance against its net deferred income tax assets due to uncertainty regarding their realizability, resulting in no reported income tax expense for the periods presented[73](index=73&type=chunk) [Stock Repurchase Plans](index=13&type=section&id=MD%26A%20-%20Stock%20Repurchase%20Plans) - Approximately **$449,000** remained authorized under the stock repurchase plan as of December 31, 2022, with no purchases made since September 2011[74](index=74&type=chunk) [Off-Balance Sheet Arrangements](index=13&type=section&id=MD%26A%20-%20Off-Balance%20Sheet%20Arrangements) - As of December 31, 2022, the company had no off-balance sheet arrangements[75](index=75&type=chunk) [Critical Accounting Policies](index=13&type=section&id=MD%26A%20-%20Critical%20Accounting%20Policies) - There have been no material changes to the critical accounting policies previously disclosed in the company's Annual Report on Form 10-K for the year ended June 30, 2022[76](index=76&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=13&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures from the prior Annual Report on Form 10-K - No material changes from the information presented for the year ended June 30, 2022[78](index=78&type=chunk) [Item 4. Controls and Procedures](index=13&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective; no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=13&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2022[80](index=80&type=chunk) [Changes in Internal Control over Financial Reporting](index=13&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were no changes in internal control over financial reporting during the quarter ended December 31, 2022, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[81](index=81&type=chunk) [PART II. OTHER INFORMATION](index=14&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=14&type=section&id=Item%201.%20Legal%20Proceedings) No legal proceedings were reported - No legal proceedings were reported[83](index=83&type=chunk) [Item 1A. Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the prior Annual Report on Form 10-K - The risk factors described in the Annual Report on Form 10-K for the year ended June 30, 2022, have not materially changed[84](index=84&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=14&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported - No unregistered sales of equity securities and use of proceeds were reported[85](index=85&type=chunk) [Item 3. Defaults Upon Senior Securities](index=14&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - No defaults upon senior securities were reported[86](index=86&type=chunk) [Item 4. Mine Safety Disclosures](index=14&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported - No mine safety disclosures were reported[87](index=87&type=chunk) [Item 5. Other Information](index=14&type=section&id=Item%205.%20Other%20Information) No other information requiring disclosure was reported - No other information requiring disclosure was reported[88](index=88&type=chunk) [Item 6. Exhibits](index=14&type=section&id=Item%206.%20Exhibits) Lists exhibits filed as part of Form 10-Q, including amendments, certifications, and XBRL documents Exhibits Filed | Exhibit No. | Description | | :---------- | :---------- | | 3.1 | Articles of Amendment to Amended and Restated Articles of Incorporation | | 4.1 | Specimen Stock Certificate | | 31.1 | Certification under Rule 13a-14(a)/15d-14(a) of principal executive officer | | 31.2 | Certification under Rule 13a-14(a)/15d-14(a) of principal financial officer | | 32.1 | Certification under Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS | Inline XBRL Instance Document | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File | [Signatures](index=15&type=section&id=Signatures) - The report was signed by John A. Krier, President, Chief Executive Officer, and Chief Financial Officer, on February 9, 2023[93](index=93&type=chunk)

Dynatronics Corporation (OTCQB:DYNT) Q1 2023 Earnings Conference Call November 10, 2022 8:00 AM ET Company Participants John Krier - President, Chief Executive Officer and Chief Financial Officer Conference Call Participants Jeffrey Cohen - Ladenburg Thalmann Brooks O’Neil - Lake Street Capital Markets Scott Henry - ROTH Capital Operator Good morning, ladies and gentlemen and welcome to Dynatronics First Quarter Fiscal Year 2023 Earnings Call. As a reminder, this conference call is being recorded today, Nov ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number: 0-12697 Dynatronics Corporation (Exact name of registrant as specified in its charter) | --- | --- | --- | --- ...