Dynatronics(DYNT) - 2025 Q2 - Quarterly Report

Financial Performance - Total net sales for the three months ended December 31, 2024, were $7,300,225, a decrease of 10.5% compared to $8,151,351 for the same period in 2023[12] - Gross profit for the six months ended December 31, 2024, was $3,625,330, down 12.1% from $4,125,921 in the same period of 2023[12] - Net loss attributable to common stockholders for the three months ended December 31, 2024, was $(960,439), compared to $(1,202,660) for the same period in 2023, showing a reduction of 20.2%[12] - Basic and diluted net loss per common share for the three months ended December 31, 2024, was $(0.13), an improvement from $(0.27) in the same period of 2023[12] - For the six months ended December 31, 2024, the net loss was $1,141,475, an improvement from a net loss of $1,342,070 in the same period of 2023, representing a decrease of approximately 15%[18] - Net loss for the quarter ended December 31, 2024, was $775,000, a decrease of $236,000 compared to a net loss of $1,011,000 for the same quarter in 2023[65] Assets and Liabilities - Total current assets increased to $11,100,204 as of December 31, 2024, compared to $10,557,635 as of June 30, 2024, reflecting a growth of 5.2%[9] - Total liabilities rose to $12,743,947 as of December 31, 2024, compared to $11,780,115 as of June 30, 2024, indicating an increase of 8.2%[10] - The accumulated deficit increased to $(30,402,994) as of December 31, 2024, from $(28,908,169) as of June 30, 2024[10] - The net working capital decreased from $2,853,000 as of June 30, 2024, to $1,890,000 as of December 31, 2024, raising concerns about the company's ability to continue as a going concern[27] - Total stockholders' equity decreased to $13,021,369 as of December 31, 2024, down from $14,160,444 as of June 30, 2024, a decline of 8.1%[10] Cash Flow and Liquidity - Cash and cash equivalents increased to $791,010 as of December 31, 2024, from $483,918 as of June 30, 2024, representing a growth of 63.5%[9] - Cash flows from operating activities provided $234,713, a significant recovery compared to a cash outflow of $1,523,339 in the prior year[18] - Cash and cash equivalents at the end of the period increased to $841,420 from $555,180 at the end of the previous year[18] - The company forecasts sufficient liquidity to meet its obligations for the next twelve months from the date of the financial statements' issuance[72] Inventory and Receivables - The company reported an increase in inventories to $6,537,981 as of December 31, 2024, up from $5,593,974 as of June 30, 2024[39] - Trade accounts receivable decreased by approximately $621,000 or 18.0%, to $2,824,000 as of December 31, 2024, driven by reduced overall revenue[81] - Inventories increased by $944,000 or 16.9%, to $6,538,000 as of December 31, 2024, due to increased inventory purchases for safety stock[82] Expenses and Cost Management - Selling, general and administrative (SG&A) expenses decreased by $411,000, or 15.1%, to $2,311,000 for the quarter ended December 31, 2024[60] - The company reduced expenses by approximately $400,000 for fiscal year 2025 and aims for an annualized reduction of $1,000,000 to improve liquidity[27] - The company expects to realize approximately $400,000 in expense reductions for fiscal year 2025 due to cost-control initiatives[71] - The company plans to optimize its operational footprint, potentially yielding cost savings of approximately $600,000 annually[27] Financing and Capital Structure - The Company entered into a Loan Agreement providing asset-based financing with a maximum availability of $7,500,000, bearing interest at SOFR plus 5.00%[75] - The line of credit increased to $2,354,509 as of December 31, 2024, compared to $2,121,667 as of June 30, 2024[40] - The outstanding balance of the line of credit was $2,355,000 as of December 31, 2024, compared to $2,122,000 as of June 30, 2024[84] - Finance lease liability totaled approximately $1,582,000 as of December 31, 2024, down from $1,732,000 as of June 30, 2024[85] - Operating lease liability was approximately $2,741,000 as of December 31, 2024, compared to $2,834,000 as of June 30, 2024[86] Stock and Dividends - Preferred stock dividends paid in common stock amounted to $185,612 during the three months ended December 31, 2024[38] - The company has 1,992,000 shares of Series A 8% Convertible Preferred Stock and 1,359,000 shares of Series B Convertible Preferred Stock outstanding as of December 31, 2024[37] - The Company has a stock repurchase plan with approximately $449,000 remaining as of December 31, 2024, with no purchases made since September 2011[88] Market Conditions - The year-over-year decrease in net sales is attributed to a reduction in overall volume for OEM customers and a general reduction in demand for the orthopedic soft bracing product category[58] - Gross profit for the quarter ended December 31, 2024, decreased by $175,000, or 9.6%, to $1,645,000, representing 22.5% of net sales[59] - The current ratio was 1.2 to 1 as of December 31, 2024, compared to 1.4 to 1 as of June 30, 2024[70]