UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant|_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
DYNATRONICS CORPORATION
-----------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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and 0-11.
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computed pursuant to Exchange Act Rule 0-11 ( (set forth the
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Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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(4) Date Filed:
DYNATRONICS CORPORATION
7030 Park Centre Drive
Salt Lake City, Utah 84121
(801) 568-7000
October 23, 2006
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Dynatronics Corporation that will be held on Tuesday, November 28, 2006 at 4:00
p.m., at the corporate headquarters located at 7030 Park Centre Drive, Salt Lake
City, Utah.
The formal notice of the Annual Meeting and the Proxy Statement have been made a
part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return at your
earliest convenience the enclosed proxy in the enclosed envelope to ensure that
your shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN,
DATE, AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of Dynatronics Corporation's Annual Report to Shareholders is also
enclosed.
The Board of Directors and management look forward to seeing you at the meeting.
Sincerely yours,
/s/ Kelvyn H. Cullimore, Jr.
Kelvyn H. Cullimore, Jr.
Chairman, President and CEO
DYNATRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held November 28, 2006
TO THE SHAREHOLDERS OF DYNATRONICS CORPORATION:
The Annual Meeting of Shareholders of Dynatronics Corporation, a Utah
corporation (the "Company" or "Dynatronics"), will be held at the corporate
headquarters located at 7030 Park Centre Drive, Salt Lake City, Utah, on
Tuesday, November 28, 2006, at 4:00 p.m. for the following purposes, all as more
fully described in the accompanying Proxy Statement:
1. To elect seven directors to hold office until the next Annual
Meeting of Shareholders and thereafter until their respective
successors have been elected or appointed and qualified;
2. To ratify the appointment of Tanner LC as Dynatronics' independent
registered public accountants for the fiscal year ending June 30,
2007; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Shareholders of record owning shares of common stock at the close of
business on Monday, October 9, 2006 are entitled to notice of and to vote at
this Annual Meeting and any adjournment thereof. A complete list of shareholders
entitled to vote at the Annual Meeting will be maintained and available for
inspection at the corporate offices of the Company for at least ten days prior
to the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Bob Cardon
--------------
Bob Cardon, Secretary/Treasurer
Salt Lake City, Utah
October 23, 2006
IMPORTANT
Whether or not you expect to attend the Annual Meeting, we urge you to complete,
date, sign and return the enclosed proxy without delay in the enclosed envelope
so that your shares are represented at the Annual Meeting. Your proxy will not
be used if you are present at the meeting and desire to vote your shares
personally. Even if you have given your proxy, you may still vote in person if
you attend the meeting. Please note, however, that if your shares are held of
record by a broker, bank or other nominee and you wish to vote at the meeting,
you must obtain from the record holder a proxy issued in your name. Your proxy
is revocable in accordance with the procedures set forth in the Proxy Statement.
PROXY STATEMENT
DYNATRONICS CORPORATION
7030 Park Centre Drive
Salt Lake City, Utah 84121
This Proxy Statement is furnished to you and other shareholders of Dynatronics
Corporation, a Utah corporation (the "Company" or "Dynatronics"), pursuant to
Regulation 14A under the Securities Exchange Act of 1934 in connection with the
solicitation of proxies in the enclosed form for use in voting at the Annual
Meeting of Shareholders and any adjournment thereof. The Annual Meeting is
scheduled to be held at 4:00 p.m. on Tuesday, November 28, 2006, at the
corporate headquarters of the Company located at 7030 Park Centre Drive, Salt
Lake City, Utah.
Solicitation of Proxies
The accompanying proxy is solicited by and on behalf of the Board of
Directors of the Company in connection with the Annual Meeting to be held at
Dynatronics Corporation, 7030 Park Centre Drive, Salt Lake City, Utah, on
November 28, 2006, at 4:00 p.m., Mountain Time, or any adjournment thereof. This
Proxy Statement, the Notice of Annual Meeting, the accompanying form of proxy,
and the Annual Report to Shareholders will be mailed on or about October 24,
2006 to shareholders of record as of October 9, 2006.
Dynatronics will pay the cost of preparing and disseminating this
information. In addition to the solicitation of proxies by use of the mails, the
directors, officers and employees of Dynatronics, without receiving additional
compensation therefore, may solicit proxies personally or by telephone or
facsimile. Arrangements will be made with brokerage firms and other custodians,
nominees and fiduciaries for the forwarding of solicitation materials to the
beneficial owners of the shares of common stock held by such persons, and
Dynatronics will reimburse such brokerage firms, custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in connection
therewith.
Each proxy executed and returned by a shareholder may be revoked at any
time thereafter by written notice to the Company's Secretary/Treasurer prior to
the Annual Meeting, by execution of a written proxy bearing a later date, or by
attending the Annual Meeting and voting in person. No such revocation will be
effective, however, with respect to any matter or matters upon which, prior to
such revocation, a vote shall have been cast pursuant to the authority conferred
by such proxy.
Voting
The matters to be considered and voted upon at the Annual Meeting will
be:
1. Election of seven directors to serve until the next Annual Meeting
of Shareholders and thereafter until their successors are elected
and qualified;
2. Ratification of the selection of Tanner LC as the independent
registered public accountants of Dynatronics for the fiscal year
ending June 30, 2007; and
3. Such other business as may properly come before the Annual Meeting
and at any adjournment thereof.
It is important that you act promptly to vote, sign, date, and return
the enclosed proxy in the enclosed self-addressed envelope. Where instructions
are indicated, proxies will be voted in accordance with the instructions
indicated therein. If no instructions are indicated, proxies will be voted "FOR"
the election of each of the seven nominees for director, "FOR" the ratification
of the appointment of Tanner LC as the independent registered public accountants
of Dynatronics for the fiscal year ending June 30, 2007, and, in the discretion
of the proxy holder, as to any other matters that may properly come before the
Annual Meeting.
1
The Board of Directors has fixed the close of business on October 9,
2006 as the "Record Date" for determining shareholders entitled to receive
notice of and to vote at the Annual Meeting. At the close of business on the
Record Date, there were 9,054,566 shares of the Company's common stock, no par
value, issued and outstanding, each such share entitled to one vote. Cumulative
voting by shareholders in connection with the election of directors will not be
allowed. A quorum of shareholders, present in person or by proxy, consists of
the holders of a majority of the outstanding shares as of the Record Date for
purposes of conducting any business at the Annual Meeting. Abstentions and
broker non-votes will be counted as "represented" for the purpose of determining
the presence or absence of a quorum, but will not be counted for any other
purpose. Under Utah law, once a quorum is established, shareholder approval with
respect to a particular proposal is generally obtained when the votes cast in
favor of the proposal exceed the votes cast against the proposal.
PROPOSAL 1 - ELECTION OF DIRECTORS
Directors are elected at each Annual Meeting of the Shareholders and
hold office until the next Annual Meeting when their respective successors are
duly elected and qualified. The persons named in the enclosed proxy intend to
vote for the election of the seven nominees listed below, unless instructions to
the contrary are given in the proxy. The seven nominees have indicated that they
are able and willing to continue to serve as directors. The Board of Directors
has no reason to believe that any nominee named herein will be unable or
unwilling to serve. However, if some unexpected occurrence should require the
substitution of some other person or persons for any one or more of the
nominees, the proxy holder will vote for such nominee or nominees as the Board
of Directors may select. The affirmative vote of a plurality of votes cast at
the Annual Meeting is required to elect each nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE.
The nominees are: Kelvyn H. Cullimore Jr., Kelvyn H. Cullimore, Larry
K. Beardall, E. Keith Hansen, Howard L. Edwards, Val J. Christensen and Joseph
H. Barton.
Executive Officers and Directors
The following table contains information concerning the Company's
directors and executive officers at October 9, 2006:
Director
or Officer Position
Name Age Since with Company
------------------------ --- ---------- ----------------------------
Kelvyn H. Cullimore, Jr. 50 1983 Chairman, President, and CEO
Kelvyn H. Cullimore 71 1983 Former Chairman of the Board
(returning from leave of
absence)
Larry K. Beardall 50 1986 Executive Vice President of
Sales and Marketing and
Director
E. Keith Hansen, M.D.* 66 1983 Director
Howard L. Edwards** 75 1997 Director
Val J. Christensen** 53 1999 Director
Joseph H. Barton** 78 2004 Director
Ronald J. Hatch 62 2002 Vice President of R&D
Terry M. Atkinson, CPA 53 2005 Chief Financial Officer
Robert J. Cardon 43 1992 Secretary/Treasurer
---------------
* Member of Compensation Committee of the Board of Directors.
** Member of Audit and Compensation Committees of the Board of Directors.
Kelvyn H. Cullimore, Jr. was named Chairman of the Board of Directors
in January 2005. He continues to serve as the Company's President & CEO,
positions he has held since 1992. He had previously served as
Secretary/Treasurer from 1983 to 1992 and as Administrative Vice President from
1988 to 1992. He has served as a Director of the Company and its predecessors
2
since 1979. Mr. Cullimore graduated cum laude from Brigham Young University in
1980 with a degree in Financial and Estate Planning. In addition to his
involvement with Dynatronics, Mr. Cullimore served as Executive VP and a
director of Dynatronics' former parent company. He currently serves on the board
of directors for ITEC Attractions, Inc. (ITEC), an entertainment, restaurant and
retail mall complex in Branson, MO. Additionally, he has served previously on
the boards of a printing company, lumber company and travel agency. Mr.
Cullimore is a member of the board of the Medical Device Manufacturer's
Association, a national medical device trade association headquartered in
Washington D.C. He also serves as the Mayor of Cottonwood Heights, Utah, a
suburb of Salt Lake City where Dynatronics corporate headquarters are located.
Kelvyn H. Cullimore served as Chairman of the Board of Dynatronics from
its incorporation in April 1983 until January 2005. From 1983 until 1992, Mr.
Cullimore served as President of Dynatronics. Mr. Cullimore received a B.S. in
Marketing from Brigham Young University in 1957, and following graduation,
worked for a number of years as a partner in a family-owned home furnishings
business in Oklahoma City, Oklahoma. Mr. Cullimore has participated in the
organization and management of various enterprises, becoming the president or
general partner in several business entities, including real estate, motion
picture, and equipment partnerships. From 1979 until 1992, Mr. Cullimore served
as Chairman of the Board of American Consolidated Industries, the former parent
company of Dynatronics. From 1986 until 1999, Mr. Cullimore served as President
of ITEC and from 1986 to 1997 he served as ITEC's Chairman, President and CEO.
Mr. Cullimore served on the board of directors of ITEC from 1986 until 2005.
From January 2005 until October 2006, he took a leave of absence from
Dynatronics to do humanitarian work in Asia. Kelvyn H. Cullimore is the father
of Kelvyn H. Cullimore, Jr. No other family relationships exist among officers
and directors.
Larry K. Beardall was appointed Executive Vice President of Dynatronics
in December of 1992. He has served as a Director and the Vice President of Sales
and Marketing for Dynatronics since July of 1986. Mr. Beardall joined
Dynatronics in February of 1986 as Director of Marketing. He graduated from
Brigham Young University with a degree in Finance in 1979. Prior to his
employment with Dynatronics, Mr. Beardall worked with GTE Corporation in Durham,
North Carolina as the Manager of Mergers and Acquisitions and then with Donzis
Protective Equipment, a supplier of protective sports equipment in Houston,
Texas as National Sales Manager. He also served on the board of directors of
Nielsen & Nielsen, Inc., the marketing arm for Donzis.
E. Keith Hansen, M.D. has been a Director of Dynatronics since 1983 and
served as a director of the Company's predecessor from 1979 to 1983. Dr. Hansen
obtained a Bachelor of Arts degree from the University of Utah in 1966 and an
M.D. degree from Temple University in 1972. He has been in private practice in
Sandy, Utah since 1976. Dr. Hansen was also a director of American Consolidated
Industries until 1992 and a director of Mountain Resources Corporation from 1980
to 1988. Dr. Hansen served on the board of directors of Alta View Hospital from
1982 to 1990 where he also served as the hospital's first chief of staff.
Howard L. Edwards was elected a Director in January 1997. From 1968 to
1995 Mr. Edwards served in various capacities at Atlantic Richfield Company
(ARCO) and its predecessor, the Anaconda Company, including corporate secretary,
vice president, treasurer and general attorney. In addition, Mr. Edwards was a
partner in the law firm of VanCott, Bagley, Cornwall and McCarthy, in Salt Lake
City, Utah. He graduated from the George Washington University School of Law in
1959 and received a bachelor's degree in Finance and Banking from Brigham Young
University in 1955.
Val J. Christensen became a member of the Board in January 1999. In
2006, Mr. Christensen became the Executive Vice President and General Counsel of
EnergySolutions LLC. He previously served as Executive Vice President of
Franklin Covey Company since 1996, and as in-house General Counsel since 1990.
He was a member of Franklin's board of directors from 1991 to 1997. Prior to
joining Franklin, Mr. Christensen was engaged in the private practice of law
with the international law firm of LeBoeuf, Lamb, Leiby & MacRae, specializing
in general business and business litigation matters. Following graduation from
law school in 1980, Mr. Christensen served as a law clerk to the Honorable James
K. Logan of the United States Tenth Circuit Court of Appeals. He is an honors
graduate of the J. Rueben Clark Law School at Brigham Young University and
served as articles editor of the BYU Law Review.
Joseph H. Barton was elected a Director in September 2004. Mr. Barton
previously served on the Company's board of directors from 1996 to 2002. Mr.
Barton received a Civil Engineering degree from the University of California at
Berkeley and has held various executive positions including President of J.H.
Barton Construction Company, Senior Vice President of Beverly Enterprises, and
President of KB Industries, a building and land development company. Most
recently, Mr. Barton served as Senior Vice President of GranCare, Inc. from 1989
to 1994.
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Ronald J. Hatch currently serves as Vice President of R&D. From 2002
until 2006, he served as Vice President of Operations and R&D. Prior to joining
Dynatronics in June 2002, Mr. Hatch worked with Lineo, Inc. as a Senior Project
Manager from 1999 to 2002. From 1972 to 1998, he served in various management
responsibilities at Philips Semiconductors - Signetics. He graduated from
Brigham Young University with a degree in Electronics Engineering Technology in
1970 and received an MBA degree from the University of Phoenix (in Salt Lake
City) in 1991.
Terry M. Atkinson, CPA was elected Chief Financial Officer in January
2005. He previously served as the Company's controller from 1994 to 2004. Prior
to joining the Company, Mr. Atkinson worked as the controller of Southern
American Insurance Company from 1988 to 1994. From 1985 to 1988, he served as
the controller at Doxey-Hatch Medical Center. From 1980 to 1985, Mr. Atkinson
worked in public accounting with the CPA firms of Gothard and Company and
Wursten Lewis & Bunker in Salt Lake City. He received his CPA license in 1983.
Robert J. Cardon was appointed Corporate Secretary of the Company in
1992 and was named Treasurer of the Company in 2004. From 1992 until 2005, Mr.
Cardon also served as Secretary/Treasurer of ITEC Attractions. From 1987 to
1988, Mr. Cardon was employed as a registered representative of an
investment-banking firm. He received his BA degree in 1987 and his MBA degree in
1990, both from Brigham Young University.
Directors hold office until the next Annual Meeting of Shareholders and
until their successors have been elected or appointed and duly qualified.
Executive officers are appointed by the Board of Directors at the first meeting
after each Annual Meeting of Shareholders and hold office until their successors
are elected or appointed and duly qualified. Vacancies on the Board which are
created by the retirement, resignation or removal of a director, or by an
increase in the number of directors, may be filled by the vote of the remaining
members of the Board, with such new director serving the remainder of the term
or until his successor shall be elected and qualify.
Independence of the Board
The Board of Directors has determined, after considering all of the
relevant facts and circumstances, that each of Dr. Hansen, Mr. Edwards, Mr.
Christensen and Mr. Barton is an "independent director" within the meaning of
the Nasdaq Marketplace Rules. This means that the Board has determined that none
of those directors (1) is an officer or employee of the Company or its
subsidiaries or (2) has any direct or indirect relationship with the Company
that would interfere with the exercise of his independent judgment in carrying
out the responsibilities of a director. As a result, the Board of Directors has
determined that the Company has a majority of independent directors as required
by the Nasdaq Marketplace Rules.
Committees of the Board of Directors
The Board of Directors has two standing committees: the Compensation
Committee and the Audit Committee. The Board does not have a standing nominating
committee or other committee that recommends qualified candidates to the Board
of Directors for nomination or election as directors. For further information on
director nominations, see "Director Nominations" below.
The Compensation Committee reviews and approves compensation matters
for executive officers and has oversight responsibility for all benefit plans,
including the Company's stock option plans. Members of the Compensation
Committee are: Val J. Christensen (committee chairman), E. Keith Hansen, Howard
L. Edwards, and Joseph H. Barton. The Board of Directors has determined that
each member of the Compensation Committee is an "independent director" under the
Nasdaq Marketplace Rules. The Compensation Committee held two meetings during
the fiscal year ended June 30, 2006.
The Audit Committee, which has been established in accordance with
requirements of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, is
comprised of: Howard L. Edwards (committee chairman), Joseph H. Barton and Val
J. Christensen. The Board of Directors has determined that each member of the
Audit Committee is an "independent director" and meets the financial literacy
requirements of the Nasdaq Marketplace Rules, that each member of the Audit
Committee meets the enhanced independence standards established by the
Securities and Exchange Commission ("SEC") and that Mr. Edwards qualifies as an
"audit committee financial expert" as that term is defined in the rules and
regulations established by the SEC. The Audit Committee held four meetings
during fiscal year 2006. According to its charter as adopted by the Board of
Directors, the functions of the Audit Committee include (1) reviewing and
approving the selection of, and all services performed by, the independent
4
auditors, (2) reviewing and evaluating the Company's internal controls, and (3)
reviewing and reporting to the Board of Directors with respect to the scope of
audit procedures, accounting practices and internal accounting and financial
controls of the Company.
Meetings of the Board of Directors
There were six regular meetings of the Board of Directors held during
the fiscal year ended June 30, 2006. No director attended fewer than 75% of the
aggregate of all meetings of the Board of Directors during the fiscal year and
all meetings held by committees of the Board of Directors on which such Director
served.
Although the Board of Directors does not have a formal policy regarding
director attendance at annual meetings, the Board encourages the attendance of
all directors and director nominees at each annual meeting and historically more
than a majority have done so.
Executive Sessions of Independent Directors
The independent directors meet in executive session at scheduled times
during the year. Mr. Christensen presides at these meetings as lead independent
director. If Mr. Christensen is unable to participate, another non-management
director designated by the remaining non-management directors will preside at
these meetings.
Communications with the Board of Directors
Shareholders may communicate with the Board of Directors by writing to
the Board in care of the Company's Secretary/Treasurer, Dynatronics Corporation,
7030 Park Centre Drive, Salt Lake City, Utah 84121. The Secretary/Treasurer will
forward the communication to the director or directors to whom it is addressed,
except for communications that are (1) advertisements or promotional
communications, (2) solely related to complaints with respect to ordinary course
of business customer service and satisfaction issues or (3) clearly unrelated to
the Company's business, industry, management or Board or committee matters.
Code of Conduct and Ethics
The Company has established a Code of Business Ethics that applies to
its officers, directors and employees. The Code of Business Ethics contains
general guidelines for conducting the business of the Company consistent with
the highest standards of business ethics, and is intended to qualify as a "code
of ethics" within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002
and the rules promulgated there under and as a "code of business conduct and
ethics" within the meaning of the Nasdaq Marketplace Rules. The Code of Business
Ethics is available on the Company's website at www.dynatronics.com. A copy may
also be obtained from the Secretary/Treasurer at Dynatronics Corporation, 7030
Park Centre Drive, Salt Lake City, Utah 84121.
Director Nominations
The Board of Directors does not have a nominating committee or other
committee that recommends qualified candidates to the Board for nomination or
election as directors. The Board of Directors believes that, because of the
Company's size and the Board's relatively small size, and because of the
historically few and infrequent vacancies on the Board, it is in the best
interest of the Company to permit all of the independent directors to fully
participate in the director nomination process. The Board of Directors has
adopted a nominations process that provides that the Company's independent
directors (as defined under the Nasdaq Marketplace Rules), acting by a majority
vote, are authorized to recommend individuals to the Board of Directors for the
Board's selection as director nominees.
The independent directors are responsible for reviewing and
interviewing qualified candidates to serve on the Board of Directors, for making
recommendations to the full Board for nominations to fill vacancies on the Board
and for selecting the management nominees for the directors to be elected by the
Company's shareholders at each annual meeting.
Director Qualifications
The independent directors have established certain criteria they
consider as guidelines in considering nominations to the Board of Directors. The
criteria include: (a) personal characteristics, including such matters as
integrity, age, education, diversity of background and experience, absence of
5
potential conflicts of interest with the Company or its operations, and the
availability and willingness to devote sufficient time to the duties of a
director of the Company; (b) experience in corporate management, such as serving
as an officer or former officer of a publicly held company; (c) experience in
the Company's industry and with relevant social policy concerns; (d) experience
as a board member of another publicly-held company; (e) academic expertise in an
area of the Company's operations; and (f) practical and mature business
judgment. The criteria are not exhaustive and the independent directors and the
full Board of Directors may consider other qualifications and attributes they
believe are appropriate in evaluating the ability of an individual to serve as a
member of the Board of Directors. The independent directors seek to assemble a
Board of Directors that brings to the Company a variety of perspectives and
skills derived from high-quality business and professional experience.
Identification and Evaluation of Nominees
The independent directors may use multiple sources for identifying and
evaluating nominees for directors, including referrals from the Company's
current directors and management as well as input from third parties, including
executive search firms retained by the Board. The independent directors will
obtain background information about candidates, which may include information
from directors' and officers' questionnaires and background and reference
checks, and will then interview qualified candidates. The Company's other
directors will also have an opportunity to meet and interview qualified
candidates. The independent directors will then determine, based on the
background information and the information obtained in the interviews, whether
to recommend to the Board of Directors that a candidate be nominated to the
Board.
Shareholder Nominations
The independent directors may from time to time consider qualified
nominees recommended by shareholders, who may submit recommendations to the
independent directors through a written notice as described under "Shareholder
Proposals" below. Nominees for director who are recommended by shareholders will
be evaluated in the same manner as any other nominee for director.
Remuneration of Directors
Directors who are otherwise employed by and receive remuneration as
officers of the Company, are paid $100 per meeting for attendance at regular and
special director's meetings. Outside directors are paid an annual director's fee
of $14,000. In addition, independent directors each receive $1,000 annually for
participating on each board committee and $2,000 in restricted stock awards. The
chairman of the audit committee receives an additional $2,000 for serving as the
committee chairman and financial expert. Dynatronics pays all expenses incurred
by directors in connection with attendance at Board and committee meetings.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the executive officers and directors, and persons who own more than 10%
of a registered class of the Company's equity securities ("Reporting Persons")
to file initial reports of ownership and to report changes in ownership in
reports filed with the Securities and Exchange Commission. Reporting Persons are
required by regulation of the Securities and Exchange Commission to furnish
Dynatronics with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to
Dynatronics during and with respect to the fiscal year ended June 30, 2006,
Dynatronics believes that during fiscal year 2006 all Section 16(a) filings
applicable to these Reporting Persons were timely filed with the exception of a
Form 3 filing for James Woods which was filed late due to a clerical oversight.
ADDITIONAL INFORMATION ABOUT THE COMPANY
Voting Securities and Principal Shareholders
The following table contains information as of October 9, 2006 with
respect to beneficial ownership of shares of common stock, for (1) all persons
known to be holders of more than 5% of our voting securities; (2) each director,
(3) each executive officer named in the Summary Compensation Table of this Proxy
Statement (the "Named Executive Officers") holding office on October 9, 2006,
6
and (4) all executive officers and directors as a group. Unless noted otherwise,
Dynatronics believes each person named below has sole voting and investment
power with respect to the shares indicated. Unless otherwise indicated, the
address of the shareholder is Dynatronics' principal executive offices, 7030
Park Centre Drive, Salt Lake City, UT 84121.
Shares of common stock
Beneficially Owned as of
October 9, 2006 (1)
Name of Beneficial Owner Number of Shares Percent of Class
------------------------ ---------------- ----------------
Kelvyn H. Cullimore, Jr. 784,620 (2) 8.5%
Chairman, President & CEO
Kelvyn H. Cullimore 179,104 (3) 2.0%
Director nominee
E. Keith Hansen, M.D. 287,650 (4) 3.2%
Director
Larry K. Beardall 234,288 (5) 2.5%
Exec. V.P., Director
Howard L. Edwards 85,300 (6) *
Director
Joseph H. Barton 43,300 (7) *
Director
Val J. Christensen 43,300 (8) *
Director
Ronald J. Hatch 48,000 (9) *
Vice President of R&D
Terry M. Atkinson 40,000 (10) *
Chief Financial Officer
Robert J. Cardon 40,000 (11) *
Secretary/Treasurer
All executive officers and 1,785,562 18.5%
directors as a group (10 persons)
---------------
* Represents less than 1 percent of the outstanding shares of common
stock including shares issuable to such beneficial owner under options
which are presently exercisable or will become exercisable within 60
days.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Included in the computation of the
number of shares beneficially owned by a person and the percentage
ownership of that person are shares of common stock subject to options,
warrants, or other convertible instruments held by that person that are
exercisable or that become exercisable within 60 days of October 9,
2006. Such shares, however, are not deemed outstanding for purposes of
computing the percentage ownership of any other person.
(2) Includes 431,780 shares owned directly, 182,840 shares owned by Mr.
Cullimore's wife and minor children, and options for the purchase of
170,000 shares.
(3) Includes 149,104 shares owned directly and options for the purchase of
30,000 shares.
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(4) Includes 180,650 shares owned directly, 80,000 shares owned by a
pension plan as to which Dr. Hansen is a beneficiary and options for
the purchase of 27,000 shares.
(5) Includes 69,288 shares owned directly and options for the purchase of
165,000 shares.
(6) Includes 58,300 shares owned directly and options for the purchase of
27,000 shares.
(7) Includes 22,300 shares owned directly and options for the purchase of
21,000 shares.
(8) Includes 19,300 shares owned directly and options for the purchase of
24,000 shares.
(9) Includes options for the purchase of 48,000 shares.
(10) Includes options for the purchase of 40,000 shares.
(10) Includes options for the purchase of 40,000 shares.
Litigation Matters
------------------
There are no material legal proceedings to which any director or
executive officer is a party adverse to Dynatronics.
Certain Relationships and Related Transactions
----------------------------------------------
Kelvyn H. Cullimore is the father of Kelvyn H. Cullimore, Jr. No other
family relationships exist among the officers and directors.
Except as described in this Proxy Statement under the captions,
"Employment Contracts" and "Salary Continuation Plan," during the two years
ended June 30, 2006 Dynatronics was not a party to any transaction in which any
director, executive officer or shareholder holding more than 5% of the issued
and outstanding common stock had a direct or indirect material interest.
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table summarizes the compensation of the Company's Chief
Executive Officer and the two most highly paid executive officers at June 30,
2006, other than the Chief Executive Officer, whose total salary and bonus
exceeded $100,000 during the year then ended (collectively the "Named Executive
Officers") and the amounts earned by each of them during the past three fiscal
years:
8
Summary Compensation Table
Annual Compensation Long-Term Compensation
----------------------------------- ------------------------------------
Other Annual Securities
Compensation Underlying Options All Other
Position Year Salary ($) Bonus ($)(1) /SARs (#) Compensation ($)
------------------------- ---- ---------- -------- --------------------------------------------------
Kelvyn H. Cullimore, Jr. 2006 $154,000 $13,833 $ 13,596 30,000/0 $ -
Chairman & President 2005 $154,000 $57,409 $ 13,336 40,000/0 $ -
2004 $140,000 $71,341 $ 12,715 0/0 $ -
Larry K. Beardall 2006 $143,000 $13,833 $ 13,938 25,000/0 $ -
Executive Vice President 2005 $143,000 $57,409 $ 12,761 40,000/0 $ -
2004 $130,000 $71,341 $ 12,237 0/0 $ -
Ronald J. Hatch 2006 $ 95,000 $ 5,187 $ 4,574 0/0 $ -
Vice President 2005 $ 95,000 $21,527 $ 9,500 40,000/0 $ -
2004 $ 80,000 $26,753 $ 10,946 0/0 $ -
(1) Dynatronics provides automobiles or vehicle allowances for certain
executive officers and pays all vehicle operating expenses. Dynatronics
also provides life insurance for its officers, and Company matches of
employee contributions to 401(k) retirement plans. The amount of this
column includes the approximate value of these benefits to the Named
Executive Officer.
During the year ended June 30, 2006, Dynatronics made no awards under
any long-term incentive plan. Dynatronics has never granted stock appreciation
rights.
Employment Contracts
Dynatronics has entered into written employment contracts with two
executive officers, Kelvyn H. Cullimore, Jr., Chairman, President and Chief
Executive Officer, and Larry K. Beardall, Executive Vice President. The initial
terms of these contracts ran through the end of fiscal year 2003. Additional
contract extensions would extend each contract for up to an additional ten years
through the end of fiscal year 2013 (five renewal terms of two years each). The
compensation package under each contract includes a salary established by the
Compensation Committee, an auto allowance, an annual bonus based on pre-tax
operating profit (at rates established by the Compensation Committee), and stock
options granted under the Company's 2005 Equity Incentive Plan and the 1992
Stock Option Plan, as amended and restated. Each officer also participates in
the salary continuation plan and receives other welfare and employee benefits
that are standard in such agreements, including, by way of example, health
insurance and disability coverage, paid vacation and Company-paid life
insurance. The contracts also contain a provision granting the executives
certain rights and protections in the event of a change in control. Among other
things, the change of control provision of the contracts provides for severance
payments to the executives if their employment is discontinued as a result of a
change in control of Dynatronics.
The employment contracts described above terminate upon the death or
disability of the executive or termination of employment for cause. The
contracts also contain covenants of the executives that, during the term of
their employment and continuing for a specified period after the termination of
their employment for any reason, with or without cause, they will not compete
with Dynatronics or make use of or disclose confidential information of
Dynatronics.
Bonus Plan
Dynatronics maintains a discretionary incentive bonus plan administered
by the Compensation Committee. Pursuant to the plan, the Compensation Committee
granted incentive cash bonuses to certain officers and employees during the year
ended June 30, 2006. The total amount of bonuses paid for fiscal year 2006 was
$57,520, of which $32,853 was paid to the Named Executive Officers as a group.
The individual bonus amounts are included under the "Bonus" heading in the
Summary Compensation Table.
9
Salary Continuation Plan
During fiscal year 1988, the Board of Directors adopted a salary
continuation agreement for certain Named Executive Officers. This agreement
provides for a pre-retirement benefit to be paid to the officer's designated
beneficiary in the event he dies before reaching age 65 and a retirement benefit
to be paid upon reaching age 65. The pre-retirement benefit provides for payment
of 50% of the officer's annual compensation at the time of death up to $75,000
annually for a period of 15 years, or until the officer would have reached age
65, whichever is longer. The retirement benefit provides the officer $75,000
annually for a period of 15 years. Presently, Kelvyn H. Cullimore, Jr. and Larry
K. Beardall are covered under this plan.
Funding for obligations arising in connection with the salary
continuation agreement is provided by life insurance policies on the
participating officers, of which Dynatronics is the owner and beneficiary. The
face amounts of the policies have been determined so that sufficient cash values
and death benefits under the policies will meet the obligations as they occur.
In fiscal year 2006, Dynatronics expensed $18,090 relating to salary
continuation obligations under the salary continuation agreement.
401(k) Plan
Dynatronics has adopted a 401(k) Plan. Employees who are at least age
20 and have completed at least six months of service with the Company are
eligible to participate in the 401(k) Plan.
Eligible employees may make contributions to the 401(k) Plan in the
form of salary deferrals of up to 20% of total compensation, not to exceed
$15,000, the maximum allowable amount of salary deferrals for calendar year
2006. Dynatronics matches annual employee contributions at 25% of employee
contributions, up to a maximum of $500 per employee per year.
Participants under the 401(k) Plan are fully vested in their salary
deferral contributions and vest 20% per year after two years of participation in
matching contributions by the Company. Amounts deferred by Named Executive
Officers under the 401(k) Plan are included under "Salary" in the Summary
Compensation Table. Matching contributions for each Named Executive Officer are
included in the "Other Compensation" column in the table above.
Stock Option Grants in Fiscal Year 2006
During fiscal year 2006, the Company granted options to purchase
236,374 shares of common stock under the 1992 Stock Option Plan and 2005 Equity
Incentive Plan to employees, officers and outside directors. Of this amount,
55,000 options were granted to the Named Executive Officers listed in the table
below. When vested, the options give the participants the right to purchase
common stock. The weighted average per share exercise price of all options
granted during fiscal year 2006 was $1.49.
Option Grants in Last Fiscal Year
Individual Grants
Potential Realizable
Value at Assumed Annual
Rates of
Stock Price
Percent of Total Appreciation for Option
Number of Securities Options Granted Term
Underlying Options to Employees in Exercise Price Expiration --------------------------
Name Granted (#)(1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)(1)
-------------------- -------------------- ---------------- -------------- ---------- --------------------------
Kelvyn H. Cullimore,
Jr. 30,000 13% $1.42 11/22/15 $26,791 $67,893
Larry K. Beardall 25,000 11% $1.42 11/22/15 $22,326 $56,578
-------------
(1) Amount reflects the potential realizable value at assumed annual rates
of appreciation for the option term, less the exercise price. Options
became fully vested on the date of grant.
10
Stock Options Exercised and Outstanding
The following table contains certain information, including the fiscal
year-end value of unexercised stock options, held by the Named Executive
Officers as of June 30, 2006.
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year-End Option Values
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares At 6/30/2006 /SARs At 6/30/2006
Acquired on Value Realized (#) Exercisable/ ($) Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable (1)
----------------------- ------------- -------------- -------------------- --------------------
Kelvyn H. Cullimore, Jr. - $ - 170,000 / 0 $41,000 / 0
Larry K. Beardall - $ - 165,000 / 0 $41,000 / 0
Ronald J. Hatch - $ - 48,000 / 0 0 / 0
----------------
(1) Value is based on the fair market value of the common stock on June 30,
2006. Values indicated reflect the difference between the exercise
price of the unexercised options and the market value of shares of
common stock on June 30, 2006. The closing price of the common stock on
June 30, 2006, the last trading date in the Company's fiscal year, as
reported by NASDAQ, was $1.19 per share. The exercise prices for the
options listed above range between $.78 and $1.72 per share.
Compensation Plans
The Company maintains the Amended and Restated 1992 Stock Option Plan
(the "1992 Plan") approved by shareholders under which options and other awards
were granted to employees, officers, directors and consultants of the Company.
The Compensation Committee of the Board of Directors administers the 1992 Plan.
As of June 30, 2006, options for the purchase of 1,096,340 shares remained
outstanding under the 1992 Plan, and no further awards are available to be
granted under the 1992 Plan.
In 2005, the Company adopted and the shareholders approved the
Dynatronics Corporation 2005 Equity Incentive Plan ("2005 Plan"), under which
nonstatutory and statutory awards have been granted to employees, officers and
directors. With the adoption of the 2005 Plan, the Board of Directors determined
that no further awards would be granted under the 1992 Plan. The total number of
shares of common stock that may be issued upon exercise of awards granted under
the 2005 Plan is 402,413 shares. As of June 30, 2006, a total of 363,695 shares
were available for issuance under options or awards yet to be granted under the
2005 Plan, and 33,518 shares were issuable under outstanding options granted
under the 2005 Plan. In addition, each of the four independent directors
received 1,300 shares of restricted common stock under the 2005 Plan.
The following table sets forth information as of June 30, 2006, with
respect to shares of common stock to be issued upon the exercise, and the
weighted-average exercise price, of all outstanding options and rights granted
under our equity compensation plans, as well as the number of shares available
for future issuance under those plans.
11
Equity Compensation Plans in Effect
Number of Securities to be Weighted-Average Number of Securities
Issued upon Exercise of Exercise Price of Remaining Available for
Outstanding Options, Outstanding Options, Future Issuance Under
Plan Category (1) Warrants and Rights Warrants and Rights Equity Compensation Plans
--------------------------- --------------------------- -------------------- -------------------------
2005 Equity Incentive Plan 33,518 $1.53 363,695
1992 Stock Option Plan 1,096,340 $1.42 0
--------------------------- -------------------------
Total 1,129,858 $1.42 363,695
-------------------------------------------------------------------------------------------------------------
REPORT OF THE DYNATRONICS
BOARD OF DIRECTORS
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of the Company
determines the Company's executive compensation policies. The Committee is
comprised of four independent non-employee Directors. After evaluating the
performance of the Company and its executive officers, the Committee recommends
compensation programs and salary levels to the entire Board of Directors for
approval. Set forth below is the report submitted by the Committee addressing
the Company's compensation policies for the fiscal year ended June 30, 2006 as
they affected the executive officers of the Company. Employment contracts for
the Company's Chief Executive Officer and President and for the Executive Vice
President of the Company were approved by the Compensation Committee.
Compensation Philosophy
The goal of the Company is to be a significant provider of quality
products in the markets it serves. To support this and other strategic
objectives as approved by the Board of Directors and to provide adequate returns
to shareholders, the Company must compete for, attract, develop, motivate and
retain top quality executive management.
In designing and administering the executive compensation program, the
Committee strives to balance short and long term incentive objectives and use
prudent judgment in establishing performance criteria, evaluating performance
and determining actual incentive awards. The Committee believes that stock
ownership by executive officers is beneficial in aligning the common interests
of management and shareholders to enhance shareholder value.
Compensation of Chief Executive Officer
In addition to the factors mentioned above, the Committee's general
approach in setting Mr. Cullimore's annual compensation is to seek to be
competitive with other companies in the Company's industry and to reward Mr.
Cullimore's strategic management abilities in directing the Company's expansion
efforts and its development and exploitation of new markets and new business
opportunities.
Compensation Committee
Val J. Christensen, Chairman
Dr. E. Keith Hansen
Howard L. Edwards
Joseph H. Barton
12
REPORT OF THE DYNATRONICS
BOARD OF DIRECTORS AUDIT COMMITTEE
The Audit Committee has prepared this report of its activities for the
year ended June 30, 2006. This report shall not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement into any
other filing under the Securities Act of 1933 or under the Securities Exchange
Act of 1934, except to the extent Dynatronics specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
statutes.
The Audit Committee is composed entirely of independent directors, and
operates under a written charter adopted by the Board of Directors. The Audit
Committee assists the Board of Directors in fulfilling its responsibility to
shareholders, potential shareholders and the investment community relating to
accounting and financial reporting practices.
The Audit Committee meets with management periodically to consider the
adequacy of the Company's internal controls and the objectivity of its financial
reporting. The Audit Committee discusses these matters with the independent
auditors and with appropriate financial personnel.
As needed, the Audit Committee meets privately with both the
independent auditors and the appropriate financial personnel, each of whom has
unrestricted access to the members of the Audit Committee. The Audit Committee
also selects and appoints the independent auditors and reviews periodically the
auditors' performance and independence from management as well as the
compensation paid to the auditors for services provided to the Company.
All members of the Audit Committee are "independent" for purposes of
Rule 4200(a)(15) of The National Association of Securities Dealers' listing
standards and applicable Marketplace Rules. That is, the Board of Directors has
determined that none of the members of the Audit Committee has a relationship to
Dynatronics that may interfere with his independence from Dynatronics and its
management.
Management has primary responsibility for the Company's financial
statements and the overall reporting process, including the Company's system of
internal controls. The independent registered public accounting firm audits the
annual financial statements prepared by management, expresses an opinion as to
whether those financial statements fairly present the financial position,
results of operations and cash flows of Dynatronics in conformity with
accounting principles generally accepted in the United States of America and
discusses with us any issues they believe should be raised with the Committee.
For the fiscal year ended June 30, 2006, the Audit Committee reviewed
the audited financial statements and met with both management and Tanner LC, the
independent registered public accounting firm for fiscal year 2006, to discuss
those financial statements. Management has represented to us that the financial
statements were prepared in conformity with accounting principles generally
accepted in the United States of America.
In discharging the Committee's oversight responsibility for the audit
process, we have discussed with Tanner LC the matters required to be discussed
by SAS 61 (Communications with Audit Committees). SAS 61 requires the Company's
independent registered public accounting firm to provide the Committee with
additional information regarding the scope and results of their audit of the
Company's financial statements, including with respect to (i) their
responsibilities under generally accepted auditing standards, (ii) significant
accounting policies, (iii) management judgments and estimates, (iv) any
significant accounting adjustments, (v) any disagreements with management and
(vi) any difficulties encountered in performing the audit.
The Committee has obtained from Tanner LC a letter providing the
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees) with respect to any relationship
between Tanner LC and the Company which in its professional judgment may
reasonably be thought to bear on independence. Tanner LC discussed its
independence with the Committee, and has confirmed in its letter to the
Committee that, in its professional judgment, it is independent of the Company
within the meaning of the United States securities laws.
Based on these reviews and discussions, we recommended to the Board of
Directors that Dynatronics' audited consolidated financial statements be
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2006.
13
During the Company's fiscal years ended June 30, 2006 and 2005, there
were no disagreements between the Company and its independent registered public
accounting firm on any accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which, if not resolved to the
satisfaction of the independent accountants, would have caused them to make
reference to the subject matter of the disagreement in connection with its
report. None of the "reportable events" described in Item 304(a)(1)(v) of
Regulation S-K have occurred during the fiscal years ended June 30, 2006 and
June 30, 2005.
We did not consult with any independent accountants not formally
engaged by the Company during fiscal years ended June 30, 2006 or 2005, on any
matter which was the subject of any disagreement or any reportable event or on
the application of accounting principles to a specified transaction, either
completed or proposed.
Presented by the members of the
Audit Committee:
Howard L. Edwards, Chairman
Val J. Christensen
Joseph H. Barton
PROPOSAL 2 - RATIFICATION OF SELECTION OF AUDITORS
The Audit Committee of the Board has selected the firm Tanner LC to
serve as the Company's independent registered public accountants for the fiscal
year ending June 30, 2007. The shareholders have been asked to ratify this
appointment. If the shareholders fail to ratify the selection, the Audit
Committee will reconsider its decision. Even if the selection is ratified, the
Audit Committee, in its discretion, may direct the appointment of a different
independent accounting firm at any time during the year if the Audit Committee
feels that such a change would be in the Company's and its shareholders' best
interests.
Representatives of Tanner LC will be present at the Annual Meeting,
will have the opportunity to make a statement if they desire to do so, and will
be available to respond to appropriate questions.
Financial Information Systems Design and Implementation Fees
The Company did not engage Tanner LC to provide any professional
services in connection with (i) operating or supervising the operation of its
information system or managing its local area network or (ii) designing or
implementing a hardware or software system that aggregates source data
underlying the financial statements or generates information that is significant
to the Company's financial statements taken as a whole.
Auditor Fees
Audit Fees
The aggregate fees billed by the Company's Independent Auditors for
professional services rendered in fiscal 2006 and fiscal 2005 in connection with
(i) the audit of the Company's annual financial statements set forth in its
Annual Report on Form 10-KSB for the fiscal years ended June 30, 2006 and June
30, 2005 and (ii) the review of the Company's quarterly financial statements set
forth in its Quarterly Reports on Form 10-QSB for each of its fiscal quarters,
totaled approximately $79,743 and $51,295, respectively.
All Other Fees
The Company engaged Tanner LC to audit its 401(k) plan for fiscal year
2005 at a cost of $8,000. The Company also engaged Tanner LC to provide filing
services for the SEC electronic filing system (Edgar system) at a cost of $1,140
in fiscal year 2006 and $2,420 in fiscal year 2005.
The Audit Committee has advised the Company that it has determined that
the non-audit services rendered by its Independent Auditors during its most
recent fiscal year are compatible with maintaining their independence.
14
Audit Committee Policy Regarding Pre-Approval of Audit and Permissible Non-Audit
Services of the Company's Independent Auditors
The Audit Committee has established a policy that all audit and
permissible non-audit services provided by the independent auditors will be
pre-approved by the Audit Committee. These services may include audit services,
audit-related services, tax services and other services. The Audit Committee
considers whether the provision of each non-audit service is compatible with
maintaining the independence of the Company's auditors. Pre-approval is detailed
as to the particular service or category of services and is generally subject to
a specific budget. The independent auditors and management are required to
periodically report to the Audit Committee regarding the extent of services
provided by the independent auditors in accordance with this pre-approval, and
the fees for the services performed to date.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL #2
RATIFYING THE SELECTION OF TANNER LC AS AUDITORS
FOR DYNATRONICS FOR THE FISCAL YEAR ENDING JUNE 30, 2007.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented at the
Annual Meeting. If, however, any further business should properly come before
the Annual Meeting, the persons named as proxies in the accompanying form will
vote on such business in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Regulations adopted by the Securities and Exchange Commission require
that shareholder proposals must be furnished to Dynatronics a reasonable time in
advance of the meeting at which the action is proposed to be taken. Shareholder
proposals intended to be presented at next year's 2007 Annual Meeting of the
Shareholders must be received by Dynatronics at its corporate headquarters on or
before June 25, 2007, in order to be included in the Proxy Statement and Form of
Proxy relating to that meeting. Receipt of a shareholder proposal does not
necessarily guarantee that the proposal will be included in the proxy. If a
shareholder intends to propose any matter for a vote at the Annual Meeting of
Shareholders to be held in 2007, but fails to notify Dynatronics of such
intention prior to the date indicated above, then a proxy solicited by the Board
of Directors may be voted on such matter in the discretion of the proxy holder,
without discussion of the matter in the proxy statement soliciting such proxy
and without such matter appearing as a separate item on the proxy card.
ADDITIONAL INFORMATION
Dynatronics will provide, without charge, to each shareholder to whom
this Proxy Statement is delivered, upon written or oral request, a copy of the
Company's annual report on Form 10-KSB for the year ended June 30, 2006,
including the financial statements, as filed with the Securities and Exchange
Commission. The requested document will be sent by first class mail or other
equally prompt means. Written or oral requests for such information should be
directed to Mr. Bob Cardon, Secretary/Treasurer, Dynatronics Corporation, 7030
Park Centre Drive, Salt Lake City, UT 84121.
DYNATRONICS CORPORATION
By order of the Board of Directors
/s/ Bob Cardon
______________________________________
Bob Cardon, Secretary/Treasurer
15
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DYNATRONICS CORPORATION
The undersigned hereby appoints Kelvyn H. Cullimore, Jr., and Larry K.
Beardall as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote as designated below all shares of
common stock of Dynatronics Corporation held of record by the undersigned on
October 9, 2006, at the Annual Meeting of Shareholders of Dynatronics
Corporation to be held at the offices of the Company, 7030 Park Centre Dr., Salt
Lake City, UT 84121, on November 28, 2006 at 4:00 p.m., local time, or any
adjournment thereof. The undersigned revokes any prior proxy for such meeting
and ratifies all said proxies, or any of them, may lawfully do by virtue hereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH
NOMINEE FOR DIRECTOR IDENTIFIED BELOW AND FOR PROPOSAL 2:
1. ELECTION OF SEVEN (7) DIRECTORS TO SERVE FOR A ONE-YEAR PERIOD UNTIL
THEIR SUCCESSORS HAVE BEEN ELECTED AND QUALIFIED:
Kelvyn H. Cullimore, Jr. Kelvyn H. Cullimore
E. Keith Hansen, M.D. Joseph H. Barton
Larry K. Beardall Val J. Christensen
Howard L. Edwards
WITHHOLD AUTHORITY FOR ALL
_____ FOR ALL ______ TO VOTE FOR ALL _______ EXCEPT
(instructions: to withhold authority to vote for any individual
nominee, mark "FOR ALL EXCEPT" and write that nominee's name in this
space
_____________________________________________________________________).
2. RATIFICATION OF THE APPOINTMENT OF TANNER LC AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR FISCAL YEAR ENDING JUNE
30, 2007:
________ FOR ________ AGAINST ________ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF EACH NOMINEE FOR DIRECTOR AND "FOR" PROPOSAL 2.
All Shareholders are urged to attend the meeting in person or by proxy.
Shareholders who do not expect to attend the meeting are requested to sign and
date this Proxy and return it in the enclosed envelope. Receipt of the Notice of
Annual Meeting of Shareholders and Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on the stock certificate. When
shares are held by joint tenants, both should sign. When signing as an attorney,
executor, administrator, trustee or guardian, please sign in the full corporate
name by President or other authorized officer. If a partnership, please sign in
the partnership name by authorized person. If these materials were not addressed
properly, please indicate your return address.
_______________________ ____________________________________________
(Number of Shares Owned) (Please print or type name exactly as it
appears on stock certificate)
_____________________ ____________________________________________
(Date) (Signature)
____________________________________________
(Signature of joint owner)
AFTER SIGNING, PLEASE RETURN PROMPTLY TO THE COMPANY IN THE ADDRESSED ENVELOPE
ENCLOSED.