On June 21, 2019, Dynatronics Corporation and its subsidiaries (“Dynatronics” or the “Company”) entered into a fifth modification agreement (the “Modification”) to its existing Loan and Security Agreement (as amended, the “Credit Agreement”) with Bank of the West. The Modification was executed on June 21, 2019, effective as of May 31, 2019. The Company also modified its Commercial Card Agreement with Bank of the West.

The Modification includes, among other things, an amendment to certain provisions of the Credit Agreement, including the definitions of “Adjusted EBITDA,” “Borrowing Base,” “Liabilities,” and “Permitted Acquisition.” The Modification changes the financial covenants of the Credit Agreement, eliminating the consolidated leverage ratio and amending the minimum consolidated fixed charge coverage ratio. As modified, at any time that the excess availability amount under the Credit Agreement is less than the greater of $1,000,000 or 10% of the borrowing base for five consecutive business days, the Credit Agreement does not permit the consolidated fixed charge coverage ratio for the twelve month period then ended to be less than 1.10 to 1.00, until the excess availability amount is at least the greater of $1,000,000 or 10% of the borrowing base for thirty consecutive days, after which the ratio will cease to apply until triggered again as indicated above. The Modification also adjusts upward the permissible limits of senior funded indebtedness and capital expenditures. Capital expenditures are now capped at $1,000,000 annually, an increase from the prior limit of $450,000. Senior indebtedness, in addition to certain existing indebtedness, is limited to an aggregate of $750,000 from the date of the agreement. The Modification adds a restricted payments covenant, restricting the Company from making any dividend or other distribution to its shareholders, except for dividend payments with respect to the outstanding Dynatronics Series A 8% Convertible Preferred Stock and Series B Convertible Preferred Stock and to certain repurchases in connection with the exercise of stock options and restricted stock awards. In conjunction with the modification of the Commercial Card Agreement, the bank also increased the Company’s credit card limit from $800,000 to $1,500,000, providing additional working capital flexibility.

The foregoing is not a complete description of the Amendment and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein. In addition, the information set forth in this Item 1.01, including the Modification, should be read together with the information included in the Company’s other filings with the SEC, including the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits

DYNATRONICS CORP Exhibit
EX-10.1 2 dynt_ex101.htm FIFTH MODIFICATION AGREEMENT Blueprint   Exhibit 10.1   Fifth Modification Agreement   This Fifth Modification Agreement (this “Agreement”) is entered into as of June 21,…
To view the full exhibit click here

About Dynatronics Corporation (NASDAQ:DYNT)

Dynatronics Corporation is a manufacturer and distributor of physical medicine products. The Company’s products include a line of medical equipment for physical medicine applications, including therapy devices, medical supplies and soft goods, treatment tables and rehabilitation equipment. Its products are used by physical therapists, chiropractors, sports medicine practitioners, podiatrists, physicians and other physical medicine professionals. Its physical medicine products include therapeutic modalities, such as Dynatron Solaris, including electrotherapy and thermal therapy, and 25 Series, including electrotherapy and ultrasound; manufactured capital products, including traction systems and wood furniture; manufactured supplies, including cold packs, straps, wedges, bolsters and mats; distributed capital products, including hydrotherapy, weight training equipment and pilates, and distributed supplies, including clinical accessories, sports med and taping products, lotions and gels.