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Dynatronics Headquarters

Our Company

The Leader in Advanced Rehab Technology & Equipment

Dynatronics manufactures, markets and distributes advanced-technology medical devices, treatment tables and rehabilitation equipment as well as thousands of products and supplies.

Backed by a team of more than 100 highly experienced sales representatives, Dynatronics is leading the industry in client service. Our customers know when they have a question, concern or feedback, they'll enjoy expert service immediately.

Dynatronics has built a solid reputation over the past 37 years for competitive pricing, excellent customer service and unmatched clinical support. Our field support team handles everything from equipment setup to in-service training.

Dynatronics Product Being Used on Patient

Our Office Locations

Dynatronics Headquarters

7030 Park Centre Dr.
Salt Lake City, Utah 84121
Toll-Free: (800) 874-6251
Local: (801) 568-7000
Fax: (801) 568-7711

Dynatronics
Chattanooga

6607 Mountain View Rd.
Ooltewah, Tennessee 37363
Local: (423) 238-7900
Fax: (423) 238-7212

Dynatronics
Livermore

306 Lindbergh Ave.
Livermore, California 94551
Toll-Free: (800) 874-6251
Fax: (888) 754-1230
Contact Us

Dynatronic’s Leadership Team

Kelvyn H. Cullimore, Jr

Chairman, President, and CEO

Bryan Alsop

Vice President of Information Technology

Kelvyn Cullimore, Sr

National Sales Manager - Aesthetics

Jeff Gephart

Executive Vice President of Sales

Douglas Sampson

Vice President of Production and R&D

David Wirthlin

Chief Financial Officer

Kelvyn H. Cullimore, Jr

Chairman, President, and CEO

Erin S. Enright

Director

R. Scott Ward

Director

David B. Holtz

Director

Brian M. Larkin

Director

Scott A. Klosterman

Director

A Message From CEO Kelvyn Cullimore, Jr.—Fiscal Year 2015

In fiscal year 2015 we opened a new chapter in the story of Dynatronics. This chapter began near the end of fiscal year 2014. After experiencing consecutive years of declining sales in fiscal years 2013 and 2014, management determined it was necessary to take aggressive actions to change the direction of the company.

Over our more than 30 years in business, we have shown an ability to make strategic adjustments to changing market conditions. This began in the 1980s when issues with the FDA prevented the introduction of our original laser product. We adapted by developing the first microprocessor-based electrotherapy and ultrasound equipment in the physical therapy market. In the 1990s our market showed a trend toward consolidation of physical therapy clinics on a regional and national basis.

Kelvyn Cullimore, Jr.

We responded by making acquisitions that allowed us to broaden our product offering and become a more complete supplier to the market. When a large competitor began buying up distribution in our market at the beginning of the new millennium, we responded by securing our distribution channels by acquiring the best dealers and distributors in our market. Recently, faced with changing market conditions related to healthcare reform and recessionary pressures, we felt it was once again time to adapt. But this time the change is much more significant.

During the early part of the fiscal year, we embarked on a strategy to acquire a new, exciting technology with the goal of leveraging our sales force and expanding our presence into the orthopedic market. This acquisition was terminated after the completion of our due diligence revealed insurmountable incompatibilities. However, during that process, we became acquainted with Prettybrook Partners. When we terminated the acquisition, Prettybrook indicated a willingness to consider funding a new growth strategy for Dynatronics.

We are approached almost weekly by firms willing to provide capital to the company … at a cost, of course. While Prettybrook was willing to invest funds, the attraction was far greater than simply receiving an infusion of capital for Dynatronics. The principals of Prettybrook have a proven track record of growth, knowledge of capital markets and clear access to additional capital and deal flow. Months of due diligence and negotiation culminated on June 30, 2015, when we closed on the sale of Series A Preferred Convertible Stock to affiliates of Prettybrook Partners.

That investment in Dynatronics’ preferred stock raised $4,025,000 of new capital. The preferred stock was purchased at $2.50 per share and is convertible into common on a one-to-one basis. The stock earns an 8 percent dividend payable in cash or stock. Each share of preferred stock was coupled with a warrant to purchase another 1.5 shares of common stock at $2.75 per share. The preferred stock also features certain voting rights. The preferred shareholders as a group may appoint up to three members of the company’s seven-member board of directors. We believe these were equitable terms to not only help strengthen our company, but more importantly, to link us with new partners who had excellent ideas for strategic growth and a proven record to perform on those strategies. Stuart Essig, one of Prettybrook’s principals, guided Integra Life Sciences from less than $20 million in sales in the late 1990s to more than $928 million in 2014. In that process, he shepherded over 50 acquisitions. He remains chairman of the board of Integra. Erin Enright, the other principal of Prettybrook, spent 10 years as managing director of Equity Capital Markets for Citigroup and many years as an executive of medtech companies. The business experience and credibility of these partners is of much greater value than the financial capital they have supplied. Our growth strategy is simple. We will utilize the new investment to fund initiatives for the legacy business and pursue opportunities for new growth through mergers and acquisitions (“M&A”). The legacy management team has the vision and ability to execute on organic growth. The new investors, led by Prettybrook, bring the M&A expertise.

This new strategy will not materialize overnight. In the early stages, costs will be incurred to build the platform for growth. M&A activity is unpredictable, but we conservatively anticipate doing an acquisition sometime in calendar year 2016 and closing one acquisition each year thereafter. While there can be no assurance we will hit these targets, they remain the objectives we will work toward.

This is a significant strategic change in the direction of the company. However, it is a change we feel is important not only to preserve, but to assure future growth and enhancement of shareholder value. It helps us break out of the historical trends and provide new interest in the future of the company.

The financial statements presented for fiscal year 2015 reflect the financial outcomes and related disclosures associated with our initial investment in this change in strategic direction.

The nature of the investment by the preferred shareholders created what is known as a “beneficial conversion feature.” A beneficial conversion feature arises when the conversion price of a convertible instrument, such as the convertible preferred stock we issued, is less than the per-share trading value of the underlying stock into which it is converted on the date of the transaction. The approximate $2.9 million difference in value was recorded as a non-cash dividend that increased the net loss applicable to common shareholders in fiscal year 2015.

Also, at the end of fiscal year 2015, we decided to write down inventories by $830,000 in addition to the $120,000 we had accrued during the year. These write-downs were taken as a result of changing strategic plans finalized in the fourth quarter of the year associated with the sale of preferred stock, which resulted in some product lines such as the Synergie line, Quad 7 and others being discontinued, de-emphasized or re-evaluated.

In addition to the “beneficial conversion feature” and the write-down of inventories, our 2015 results were affected by a required valuation allowance against the deferred tax assets recorded during the fourth quarter. Because we had incurred several years of operating losses and a significant loss for the fourth quarter, GAAP deems such losses to be substantial evidence that we may never be able to utilize net operating losses and other tax attributes which had previously been recorded as deferred tax assets. Therefore, in 2015 we recorded a 100 percent reserve (totaling approximately $1.4 million) against all deferred tax assets resulting in approximately $849,000 in a deferred income tax expense. If we achieve profitability in the future, this reserve will be removed and the value of the deferred tax assets will be restored.

 Finally, we recorded expenses of approximately $260,000 during the year, associated with the terminated acquisition mentioned earlier.

These extraordinary items contributed to a net loss of $2.3 million and a $5.1 million net loss applicable to common shareholders for fiscal year 2015. It is ironic that such a loss actually bodes well for our future. In reality, when the one-time adjustments are pushed aside, the loss before tax for the year was about $300,000 compared to $400,000 last year. This improvement was due to a 6 percent sales growth in fiscal year 2015 after two consecutive years of 7 percent sales declines.

With the dust of healthcare reform settling, sales improving and new capital investment in the company, we believe we are poised to see new growth that is potentially unprecedented in our history. That growth is made possible by combining our core infrastructure, management, innovative products and sales force with the experience, capital and access to deal flow of Prettybrook Partners. It is an explosive combination that creates significant optimism for our future – a future with many more chapters left to write.

Sincerely,

Kelvyn H. Cullimore, Jr.
Chairman, President and CEO