<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended September 30, 1998.
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act for the
transition period from _________ to _________
Commission File Number: 0-12697
Dynatronics Corporation
------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Utah 87-0398434
------------------------- ---------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7030 Park Centre Drive, Salt Lake City, UT 84121
--------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 568-7000
-----------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
X Yes No
----- -----
The number of shares outstanding of the issuer's common stock, no par value,
as of November 9, 1998 is 8,672,314 shares.
Transitional Small Business Disclosure Format.
(Check One) : Yes No X
<PAGE>
DYNATRONICS CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page Number
-----------
Condensed Balance Sheet
September 30, 1998 1
Condensed Statements of Income
Three Months Ended September 30, 1998,
and September 30, 1997 2
Condensed Statements of Cash Flows
Three Months Ended September 30, 1998,
and September 30, 1997 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis
Or Plan of Operation 7
PART II. OTHER INFORMATION 13
<PAGE>
[CAPTION]
<TABLE>
DYNATRONICS CORPORATION
Condensed Balance Sheet
(Unaudited)
September 30
ASSETS 1998
------------
<S> <C>
Current assets:
Cash and cash equivalents $ 400,173
Trade accounts receivable, less allowance for doubtful
accounts of $106,363 3,818,300
Related party and other receivables 38,740
Inventories 4,236,034
Prepaid expenses 191,064
Deferred tax asset-current 119,614
---------------
Total current assets 8,803,925
Net property and equipment 3,641,979
Excess of cost over book value, net of accumulated amortization
of $334,776 1,129,398
Deferred tax asset-noncurrent 180,410
Other assets 573,756
---------------
$ 14,329,468
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 268,180
Line of credit 2,007,793
Accounts payable 1,513,627
Accrued expenses 984,420
---------------
Total current liabilities 4,774,020
Long-term debt, excluding current installments 2,782,156
Deferred compensation 552,135
---------------
Total long-term liabilities, excluding current installments 3,334,291
---------------
Total liabilities 8,108,311
Stockholders' equity:
Common stock, no par value. Authorized 50,000,000
shares; issued and outstanding 8,681,402 shares 2,230,278
Treasury stock, 35,584 shares (120,096)
Retained earnings 4,110,975
---------------
Total stockholders' equity 6,221,157
---------------
$ 14,329,468
===============
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
DYNATRONICS CORPORATION
Condensed Statements Of Income
(Unaudited)
Three Months Ended
September 30
1998 1997
------------ ------------
<S> <C> <C>
Net sales $ 4,911,225 3,027,779
Cost of sales 2,658,097 1,735,991
------------ -----------
Gross profit 2,253,128 1,291,788
Selling, general, and administrative expenses 1,319,304 843,016
Research and development expenses 165,383 123,402
------------ -----------
Operating income 768,441 325,370
Other income (expense):
Interest income 5,125 68
Interest expense (83,435) (44,468)
Other income, net 4,677 22,098
------------ -----------
Total other income (expense) (73,633) (22,302)
Income before income taxes 694,808 303,068
Income tax expense 277,156 110,843
------------ -----------
Net income $ 417,652 192,225
============ ===========
Basic and diluted net income per common share $ 0.05 0.02
------------ -----------
Weighted average basic and diluted common shares outstanding (note 2)
Basic 8,648,897 8,425,809
Diluted 9,122,760 8,529,826
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
DYNATRONICS CORPORATION
Statements of Cash Flows
(Unaudited)
Three Months Ended
September 30
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 417,652 192,225
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization of property and equipment 61,365 41,779
Other amortization 23,054 17,319
Provision for doubtful accounts 4,200 3,000
Provision for inventory obsolescence 39,000 28,500
Provision for warranty reserve 44,994 38,130
Deferred compensation 21,021 21,021
Decrease (increase) in operating assets:
Receivables (1,617,062) (169,695)
Inventories (1,551,884) (42,304)
Prepaid expenses and other assets 125,384 (26,483)
Deferred tax assets 0 (58,456)
Increase (decrease) in operating liabilities:
Trade accounts payable and accrued expenses 1,016,201 (88,784)
Income taxes payable 256,481 (2,401)
----------- ---------
Net cash used in operating activities (1,159,594) (46,149)
----------- ---------
Cash flows from investing activities:
Capital expenditures (119,503) (46,314)
----------- ---------
Net cash used in investing activities (119,503) (46,314)
----------- ---------
Cash flows from financing activities:
Principal payments under capital lease obligations 0 (1,825)
Principal payments on long-term debt (62,747) (37,817)
Net change in line of credit 892,152 (257,911)
Proceeds from sale of common stock 101,766 0
----------- ---------
Net cash provided by (used in) financing activities 931,171 (297,553)
----------- ---------
Net decrease in cash and cash equivalents (347,926) (390,016)
Cash and cash equivalents at beginning of period 748,099 544,615
----------- ---------
Cash and cash equivalents at end of period $ 400,173 154,599
=========== =========
Supplemental cash flow information
Cash paid for interest (net of amounts capitalized) 75,386 44,468
Cash paid for income taxes 23,475 171,700
Supplemental Disclosure of Non-cash Investing and Financing Activities
Treasury stock acquired in consideration for common stock issued
as a result of a cashless stock option exercise. 120,096 0
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
DYNATRONICS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
NOTE 1. PRESENTATION
The financial statements as of September 30, 1998 and for the three months
then ended were prepared by the Company without audit pursuant to the
rules and regulations of the Securities and Exchange Commission (SEC).
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations. In the opinion of management, all necessary
adjustments to the financial statements have been made to present fairly
the financial position and results of operations and cash flows. All
adjustments were of a normal recurring nature. The results of operations
for the respective periods presented are not necessarily indicative of the
results for the respective complete years. The Company has previously
filed with the SEC an annual report on Form 10-KSB which included audited
financial statements for the two years ended June 30, 1998. It is
suggested that the financial statements contained in this filing be read
in conjunction with the statements and notes thereto contained in the
Company's 10-KSB filing.
NOTE 2. NET INCOME PER COMMON SHARE
The Company adopted Statement of Financial Accounting Standard No.
128 ("SFAS 128"), "Earnings Per Share," effective January 1, 1998. SFAS
128 establishes a different method of computing the net income per common
share than was previously required under the provisions of Accounting
Principles Board Opinion No. 15. Net income per common share is computed
based on the weighted-average number of common shares and, as appropriate,
dilutive common stock equivalents outstanding during the period. Stock
options are considered to be common stock equivalents.
Basic net income per common share is the amount of net income for the
period available to each share of common stock outstanding during the
reporting period. Diluted net income per common share is the amount of
net income for the period available to each share of common stock
outstanding during the reporting period and to each share that would have
been outstanding assuming the issuance of common shares for all dilutive
potential common shares outstanding during the period.
In calculating net income per common share, the net income was the same
for both the basic and diluted calculation. A reconciliation between the
<PAGE>
basic and diluted weighted-average number of common shares for the three
months ended September 30, 1998 and 1997 is summarized as follows:
Three Months Ended
September 30,
1998 1997
---------- ----------
Basic weighted average number
of common shares outstanding
during the period 8,648,897 8,425,809
Weighted-average number of dilutive
common stock options outstanding
during the period 473,863 104,019
Diluted weighted average number _________ _________
of common and common equivalent
shares outstanding during the period 9,122,760 8,529,826
========= =========
Common stock equivalents of 3,661 outstanding during the three month
period ended September 30, 1997 that could potentially dilute basic net
income per share in the future were not included in the computation of
diluted net income per share because to do so would have been antidilutive
for the period.
NOTE 3. COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standard No. 130
("SFAS 130"), "Reporting Comprehensive Income," effective July 1, 1998.
SFAS 130 establishes standards for reporting and display of comprehensive
income and its components in financial statements. For the periods ending
September 30, 1998 and 1997, comprehensive income was equal to the net
income as presented in the accompanying condensed statements of income.
<PAGE>
NOTE 4. INVENTORIES
Inventories consisted of the following:
September 30
1998
-------------
Raw Material $ 3,008,258
Finished Goods 1,342,936
Inventory Reserve (115,160)
-------------
$ 4,236,034
=============
NOTE 5. PROPERTY AND EQUIPMENT
Property and equipment were as follows:
September 30
1998
------------
Land $ 354,744
Buildings 2,800,751
Machinery and equipment 1,579,306
------------
4,734,801
Less accumulated depreciation
and amortization 1,092,822
------------
$ 3,641,979
============
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Condensed
Financial Statements and Notes thereto appearing elsewhere in this Form
10-QSB.
Results of Operations
During the quarter ended September 30, 1998, the Company recorded record
sales and net income. Sales for the quarter ended September 30, 1998 was
$4,911,225, up 62 percent compared to $3,027,779 in the same period of the
prior year. Net income for the reporting period increased 117 percent to
$417,652 compared to $192,225 in the prior year period. These increases are
attributed primarily to increased sales of medical supplies and soft goods
and initial sales of the Company's new Synergie Lifestyle System product
line which began shipping in July 1998.
The Synergie AMS device, which is part of the Synergie Lifestyle System,
provides non-invasive massage treatments to skin and subcutaneous tissues
in common problem areas where heredity, inactive lifestyle, or poor diet
tend to create undesirable effects for women. As part of the Synergie
Lifestyle System, the Company, with the assistance of knowledgeable
consultants, developed and introduced a line of 19 nutritional supplements
which are marketed through clinics offering Synergie AMS treatments, and
by other professionals interested in quality nutritional supplements.
Other components of the Synergie product line include treatment body
suits, treatment tables, a photo station and other related accessories.
Total gross profit for the quarter ended September 30, 1998 increased 74
percent to $2,253,128 as compared to $1,291,788, in the prior year period.
This increase is directly attributable to the increased sales of medical
supplies and soft goods and sales of the new Synergie product line as
mentioned above. Gross margins as a percentage of sales increased to 45.9
percent for the reporting quarter compared to 42.7 percent in the same
quarter in the prior year. The increase in gross margins as a percentage
of sales reflects the higher margins associated with the new Synergie
product line.
Selling, general and administrative (SG&A) expenses for the three month
period ended September 30, 1998, increased to $1,319,304, as compared to
$843,016 in the same period last year. This increase is related primarily
to increased sales, advertising and marketing expenses together with the
additional staffing needs required to support the new Synergie product
line.
Research and development (R&D) expenses in the three month period ended
September 30, 1998 totaled $165,383, compared to $123,402 in the prior
year period. The increase in R&D expenses for the reporting period was
associated with development efforts on the new Synergie product line. The
Company expects R&D expenses as a percentage of sales to continue at
approximately the same level as prior periods through the remainder of
fiscal year 1999.
<PAGE>
Income before tax for the quarter ended September 30, 1998 increased 129
percent to $694,808 compared to $303,068 during the same period of the
prior year. As a percentage of sales, pre-tax income increased from 10
percent for the prior year quarter to 14.1 percent in the current
reporting quarter.
Income tax expense for the three month period ended September 30, 1998 was
$277,156, as compared to $110,843, in the prior year period. The
effective tax rate for the reporting quarter was 39.9 percent compared to
36.5 percent for the same quarter last year. The current period rate was
impacted by the growth of the Company's inventories during the quarter and
from the creation of tax reserves.
Net income for the first quarter of fiscal year 1999 increased 117 percent
to $417,652 compared to $192,225 in the prior year period. Net income per
share for the reporting quarter increased to $.05 compared to $.02 in the
prior year period. Net income as a percentage of sales increased from 6.3
percent for the quarter ended September 30, 1997 to 8.5 percent for the
current reporting quarter. The increase in sales volumes and higher gross
margins associated with the Synergie product line together with lower SG&A
and R&D expenses as a percentage of sales resulted in the increase in net
income.
Liquidity and Capital Resources
The Company expects revenues from operations, together with amounts
available under the Company's bank line of credit will be adequate to meet
its working capital needs related to its business and its planned capital
expenditures for the upcoming operating year.
The Company continues to maintain a liquid position. The Company's
current ratio at September 30, 1998 was 1.8 to 1. Current assets
represent 61 percent of total assets.
Trade accounts receivable are from the Company's dealer network and are
generally considered to be within term. All accounts payable are within
term with the Company continuing its policy of taking advantage of any and
all payment discounts available.
Subsequent to quarter-end, the Company amended its loan agreement for a
revolving line of credit with a commercial bank and increased the maximum
loan amount to $3,500,000. The outstanding balance on the line of credit
at September 30, 1998 was $2,007,793. The line is secured by a commercial
security agreement covering inventory and accounts receivable and now
bears interest at the bank's "Prime Rate," currently 8 percent per annum.
The Company may also elect to lock in fixed rates on this agreement for 30
to 90 day periods at a rate equal to the London Interbank Offered Rate
(LIBOR) plus 2.70% per annum.
Inventory levels, net of reserves, at September 30, 1998 totaled
$4,236,034 while net accounts receivable were $3,818,300. During the
reporting quarter, inventories and receivables increased significantly to
support the Company's introduction of the Synergie Lifestyle System. In
addition, management has made a stronger effort to reduce backorders by
increasing inventory quantities. Financing for these increases has been
provided through net profits from operations together with the Company's
line of credit facility.
<PAGE>
Long-term debt excluding current installments at September 30, 1998
totaled $2,782,156 comprised primarily of the mortgage loans on the
Company's office and manufacturing facilities and the note payable
associated with the May 1996 acquisition of Superior Orthopaedic Supplies.
The principal balance on the mortgage loans is approximately $2.27 million
with monthly principal and interest payments of $26,900. In addition,
recent acquisitions of capital equipment during fiscal year 1998 to
improve manufacturing efficiencies have added approximately $376,200 of
long-term debt.
Business Plan
With the introduction of the new Synergie Lifestyle System product line
during the reporting quarter, the Company is expanding its distribution
network and opening new markets in the fields of plastic surgery,
dermatology, and related non-medical aesthetic markets. The first direct
mail piece advertising the new product line generated over 4,000 requests
for information. This level of interest, coupled with strong indications
of interest from the dealer network, led management to gear up for
significantly more sales than have initially been realized. As a result,
inventory levels are currently higher than would normally be carried. As
sales of the new products begin to ramp up, the Company expects
inventories to decrease to more traditional levels. The Company believes
the main reason sales have not reached expected levels is the sheer
newness of the technology. Interest, however, remains very strong, as
indicated by over 3,000 responses recently received from a second direct
mail campaign. The Company is launching marketing programs to educate the
market as to the benefits and effectiveness of this new technology. As
the market gains more confidence and becomes more familiar with this
exciting new product line, the Company believes that sales will
accelerate. Consequently, the Company anticipates that fiscal year 1999
has the potential to be the most profitable year in the Company's history,
due in large part to the anticipated success of the new Synergie product
line.
In recent years the popularity of nutritional supplements has grown
significantly. In conjunction with knowledgeable consultants in the field
of nutritional supplements, the Company has developed a line of 19
nutritional supplements. These supplements, which were initially
developed as an integral part of the Synergie Lifestyle System, include
such items as a multivitamin/mineral compound, a St John's Wort
formulation, an antioxidant complex, an herbal calmative, and a calcium
formula. The Company is now exploring ways to broaden the marketing of
these products. With public interest in nutritional supplements at an
all-time high, the Company believes that the high quality of the Synergie
Nutritional Supplements will be attractive to many professional
practitioners who in the past have not made nutritional supplements a part
of their practice.
Since the acquisition of Superior Orthopaedic Supplies in May 1996, the
Company has doubled sales of soft goods and medical supplies compared to
pre-acquisition levels. The start-up of the treatment table and
<PAGE>
rehabilitation products manufacturing operation in South Carolina has
further broadened the Company's product line. The Company intends to make
additional acquisitions in upcoming quarters that will further expand
manufacturing operations and add new products to a growing line of
products. The Company believes that offering a broad product line is of
strategic importance as clinics continue to consolidate and develop
centralized purchasing policies that favor single source suppliers for
their medical device and supplies needs. There can be no assurance that
other acquisitions or dispositions of businesses, products or technologies
by the Company in the future will not result in substantial charges or
other expenses that may cause fluctuations in the Company's operating
results.
To capitalize on its broader product line, the Company published its first
full-line catalog in January 1997. In February 1998, the Company
introduced a new version of its catalog with twice the number of products
as the first catalog. This new catalog continues to stimulate sales
growth of the Company's products.
Although approval to market products in Japan was received during fiscal
year 1997, sales in Japan have developed slowly. However, with sustained
effort, the Company anticipates sales in Japan will continue to grow.
Initial marketing efforts in Europe are expected to be undertaken this
fiscal year, continuing the Company's international expansion. In
conjunction with this effort, the Company believes its "50 Series Plus"
line of products will qualify for the CE Mark during fiscal year 1999.
This mark makes it possible to market the product line in all European
Union member states. In addition, the Company is making progress in its
efforts to meet the requirements for ISO 9001 certification which is a
validation of the Company's quality manufacturing practices. This
certification is also expected to be completed in fiscal year 1999.
International markets are more difficult to develop and subject to risks
such as currency fluctuations, political and economic instability and
regulatory barriers to entry by foreign manufacturers. For instance,
sales of Company products in Asian markets have been significantly
diminished over the past year, while certain markets such as South Africa
and South America are showing more strength.
The Company recognizes the need to continually upgrade and re-engineer
existing products as well as introduce new products if it is to remain
competitive. The Company believes its continuing commitment to research
and development enables the Company to be a technological leader in the
market. New products and engineering improvements are constantly being
evaluated and developed.
To better meet growing demand for its products, during fiscal year 1998
the Company completed a $1.2 million capital improvement campaign to
increase space and efficiencies primarily at its operations in Columbia,
South Carolina, and Chattanooga, Tennessee. This capital improvement
campaign has doubled the space at the Chattanooga facility and increased
space at the Columbia facility by 40 percent. New manufacturing equipment
has also been purchased which has improved manufacturing capabilities and
efficiencies.
The Company is aware of the risks associated with the operation of
information technology and non-information technology systems as the
millenium (year 2000) approaches. The "Year 2000" problem is pervasive
<PAGE>
and complex, with the possibility that it will affect many technology
systems and is the result of the rollover of the two digit year value from
"99" to "00". Such systems that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary
inability to complete manufacturing, process transactions, send invoices,
or engage in similar normal business activities.
The Company is in the process of assessing its state of readiness,
including the readiness of third parties with which the Company interacts,
with respect to the Year 2000 problem. The assessment will also include
an evaluation of the costs to the Company to correct Year 2000 problems
related to its own systems, which, if uncorrected, could have a material
adverse effect on the business, financial condition or results of
operations of the Company. As a part of this assessment, the Company
will also determine the known risks related to the consequences of failure
to correct any Year 2000 problems identified by the Company and
contingency plans, if any, that should be adopted by the Company should
any identified Year 2000 problems not be corrected. The Company intends
to use both internal and external resources to reprogram, or replace and
test its software for Year 2000 modifications as needed. However, if such
modifications or conversions are not made, or are not completed timely,
the Year 2000 problem could have a material impact on the operations of
the Company. The Company is in the process of initiating formal
communications with all of its significant suppliers to determine the
extent to which the Company is vulnerable to those third parties' failure
to remediate their own 2000 problems.
The Company is presently not aware of any Year 2000 issues that have been
encountered by any such third party which could materially affect the
Company's operations. Based on the most recent assessment, the Company
believes that with modifications to existing software and conversions to
new software, any Year 2000 problems that it may have with its own systems
can be mitigated without significant expense. Notwithstanding the
foregoing, there can be no assurance that the Company will not experience
operational difficulties as a result of Year 2000 issues, either arising
out of internal operations, or caused by third-party service providers,
which individually or collectively could have an adverse impact on
business operations or require the Company to incur unanticipated expenses
to remedy any problems.
Forward-Looking Statements and Risks Affecting the Company
The statements contained in this Report on Form 10-QSB that are not purely
historical are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and Section 21E of the
Securities Exchange Act. These statements regard the Company's
expectations, hopes, beliefs, anticipations, commitments, intentions and
strategies regarding the future. They may be identified by the use of
words or phrases such as "believes," "expects," "anticipates," "should,"
"plans," "estimates," "intends," and "potential," among others. Forward-
looking statements include, but are not limited to, statements contained
in Management's Discussion and Plan of Operation regarding the Company's
financial performance, revenue and expense levels in the future and the
sufficiency of its existing assets to fund future operations and capital
spending needs. Actual results could differ materially from the
<PAGE>
anticipated results or other expectations expressed in such forward-
looking statements for the reasons detailed in the Company's Annual Report
on Form 10-KSB under the headings "Description of Business" and "Risk
Factors." The fact that some of the risk factors may be the same or
similar to the Company's past reports filed with the Securities and
Exchange Commission means only that the risks are present in multiple
periods. The Company believes that many of the risks detailed here and in
the Company's SEC filings are part of doing business in the industry in
which the Company operates and competes and will likely be present in all
periods reported. The fact that certain risks are endemic to the industry
does not lessen their significance.
The forward-looking statements contained in this report are made as of the
date of this Report and the Company assumes no obligation to update them
or to update the reasons why actual results could differ from those
projected in such forward-looking statements. Among others, risks and
uncertainties that may affect the business, financial condition,
performance, development, and results of operations of the Company
include:
- - market acceptance of the Company's technologies, particularly the new
Synergie Lifestyle System product line and other new or re-designed
products;
- - the ability to hire and retain the services of trained personnel at
cost-effective rates;
- - rigorous government scrutiny or the possibility of additional
government regulation of the industry in which the Company markets its
products;
- - potential effects of adverse publicity regarding nutritional
supplements;
- - reliance on key management personnel;
- - foreign government regulation of the Company's products and
manufacturing practices that may bar or significantly increase the
expense of expanding to foreign markets;
- - economic and political risks related to the Company's expansion into
international markets;
- - failure of the Company to sustain or manage growth including the
failure to continue to develop new products or to meet demand for
existing products;
- - the Company's reliance on information technology;
- - the timing and extent of research and development expenses;
- - the Company's ability to keep pace with technological advances, which
can occur rapidly;
- - the loss of product market share to competitors;
- - potential adverse effect of taxation;
- - the ability of the Company to obtain required financing to meet changes
or other risks described above; or
- - the Company's inability or failure to identify and to manage its Year
2000 risks
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings pending to which the
Company or any of its subsidiaries is a party or of which any
of their property is the subject which require disclosure in
this statement.
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits
No. Description
-------- -----------
27 Financial Data Schedul
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DYNATRONICS CORPORATION
-----------------------
Registrant
Date 11/13/98 /s/ Kelvyn H. Cullimore, Jr.
----------------- ----------------------------
Kelvyn H. Cullimore, Jr.
President
Chief Executive Officer
Date 11/13/98 /s/ John L. Hales
----------------- -----------------------------
John L. Hales
Chief Financial Officer and
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 400,173
<SECURITIES> 0
<RECEIVABLES> 3,924,663
<ALLOWANCES> 106,363
<INVENTORY> 4,236,034
<CURRENT-ASSETS> 8,803,925
<PP&E> 4,734,801
<DEPRECIATION> 1,092,822
<TOTAL-ASSETS> 14,329,468
<CURRENT-LIABILITIES> 4,774,020
<BONDS> 3,334,291
0
0
<COMMON> 2,110,182
<OTHER-SE> 4,110,975
<TOTAL-LIABILITY-AND-EQUITY> 14,329,468
<SALES> 4,911,225
<TOTAL-REVENUES> 4,911,225
<CGS> 2,658,097
<TOTAL-COSTS> 2,658,097
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,000
<INTEREST-EXPENSE> 83,435
<INCOME-PRETAX> 694,808
<INCOME-TAX> 277,156
<INCOME-CONTINUING> 417,652
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 417,652
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
