Dynatronics Corporation Announces Third Quarter Results

SALT LAKE CITY, May 4 /PRNewswire-FirstCall/ -- Dynatronics Corporation today announced results for its third fiscal quarter ended March 31, 2006. Sales for the quarter were $4,979,697, compared to $5,048,108 in the same period last year. Net income for the quarter ended March 31, 2006, was $17,019 ($.00 per share), compared to net income of $164,762 ($.02 per share) in the third quarter of the previous year.

Sales for the nine months ended March 31, 2006 totaled $14,568,959, compared to $15,289,610 in the same period last year. Net income for the nine months ended March 31, 2006, was $154,931 ($.02 per share), compared to net income of $559,217 ($.06 per share) in the prior year period.

"We are continuing to aggressively pursue the development and introduction of our next generation X-series devices -- the Dynatron X3 and the Dynatron DX2," stated Kelvyn H. Cullimore Jr., company chairman and president. "This pursuit is manifest in the fact that R&D expenses increased 21% in this quarter over the same quarter last year and 44% for the nine month period. Unfortunately, delays in meeting projected timelines for these new products have resulted in both hampered sales in the third quarter and increased R&D expenses."

During the third fiscal quarter, the company began shipping the new Dynatron 702, a stand-alone light therapy device. The new Dynatron 702 simplifies infrared light therapy treatments and is capable of powering not only the company's light probes, but also our new light pad for treating larger body segments.

In addition, the company began shipping the new DX9 combination traction and light therapy system. The new Dynatron DX9 Decompression System combines the benefits of infrared light therapy using the Dynatron 702 with decompression therapy. This novel approach is proving very effective in treating back pain.

"The positive impact of the introduction of the Dynatron 702 and the Dynatron DX9 package was somewhat blunted by a decline in sales of high-margin Synergie aesthetic equipment and legacy 50 Series combination therapy devices," explained Larry Beardall, Executive V.P. for Sales and Marketing. "This also had the effect of lowering margins for the quarter."

The new X-Series products currently under development include the Dynatron X3 multiple modality infrared light therapy device, the DX2 proprietary traction device that incorporates patent-pending technology, and the T4 treatment table specially designed for performing traction and decompression therapies. These products will expand the range of decompression and light therapy treatment options for treating back pain.

"We anticipate that the market reception of the Dynatron X3 and DX2 products, which are now slated for release in the quarter beginning July 1, 2006, will justify the extensive R&D investment over the past year," said Cullimore.

Dynatronics has scheduled a conference call for investors today, Thursday, May 4, 2006, at 3 p.m. ET (1 p.m. MT). Those wishing to participate should call 800-861-4084 and use passcode 9921511#.

A summary of the financial results for the three and nine months ended March 31, 2006, follows:

Summary Selected Financial Data Income Statement Highlights Three Months Ended Nine Months Ended March 31, March 31, 2006 2005 2006 2005 Net sales $4,979,697 $5,048,108 $14,568,959 $15,289,610 Cost of sales 3,175,172 3,031,174 9,117,687 9,082,178 Gross profit 1,804,525 2,016,934 5,451,272 6,207,432 SG&A expenses 1,312,920 1,372,927 3,884,398 4,328,640 R&D expenses 430,363 356,313 1,276,329 885,467 Other expense, net 33,294 19,789 38,352 84,029 Income before income taxes 27,948 267,905 252,193 909,296 Income tax expense 10,929 103,143 97,262 350,079 Net income $17,019 $164,762 $154,931 $559,217 Net income per share (diluted) $.00 $.02 $.02 $.06 Balance Sheet Highlights March 31, June 30, 2006 2005 Cash $543,251 $472,899 Accounts Receivable 3,651,464 3,006,315 Inventories 5,116,331 4,712,523 Total current assets 10,249,902 9,075,579 Total assets $15,181,911 $13,459,723 Accounts payable $599,735 $605,788 Accrued expenses 488,048 571,940 Total current liabilities 2,806,841 2,031,725 Total liabilities 5,497,257 3,946,215 Total liabilities and equity $15,181,911 $13,459,723

Dynatronics manufactures, markets and distributes advanced-technology medical devices, orthopedic soft goods and supplies, treatment tables and rehabilitation equipment for the physical therapy, sports medicine, chiropractic, podiatry, plastic surgery, dermatology and other related medical, cosmetic and aesthetic markets. More information regarding Dynatronics is available at www.dynatronics.com.

This press release contains forward-looking statements. Those statements include references to the company's expectations and similar statements. Actual results may vary from the views expressed in the forward-looking statements contained in this release. The development and sale of the company's products are subject to a number of risks and uncertainties, including, but not limited to, changes in the regulatory environment, FDA clearance of new products, growth in the physical medicine industry, competitive factors, availability of third-party component parts and products, inventory risks due to shifts in market demand, changes in product mix, market demand for the company's products and the risk factors listed from time to time in the company's SEC reports including, but not limited to, the report on Form 10-KSB for the year ended June 30, 2005, and its subsequent quarterly reports on Form 10-QSB.

Dynatronics Corporation

CONTACT: Bob Cardon of Dynatronics Corp., +1-800-874-6251, or+1-801-568-7000

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