DYNATRONICS CORP
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
of the
Securities Exchange Act of
1934
Filed
by the Registrant
☑
Filed
by a Party other than the Registrant
☐
Check
the appropriate box:
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☐
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Preliminary
Proxy Statement
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☐
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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☑
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Definitive
Proxy Statement
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☐
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Definitive
Additional Materials
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☐
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Soliciting
Material Pursuant to
§
240.14a-12
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DYNATRONICS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement if
Other Than the
Registrant)
Payment
of Filing Fee (Check the appropriate box)
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☑
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No fee
required.
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☐
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1.
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Title
of each class of securities to which transaction
applies:
________________________________________
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2.
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Aggregate
number of securities to which transaction applies:
_______________________________________
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3.
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was
determined):
__________________
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4.
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Proposed
maximum aggregate value of transaction:
_______________________________________________
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5.
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Total
fee paid:
____________________________________________________________________________
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☐
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Fee
paid previously with preliminary materials.
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☐
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Check
box if any part of the fee is offset as provided by Exchange Act
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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1.
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Amount
Previously Paid:
____________________________________________________________________
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2.
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Form,
Schedule or Registration Statement No:
___________________________________________________
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3.
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Filing
Party:
______________________________________________________________________________
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4.
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Date
Filed:
_______________________________________________________________________________
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DYNATRONICS CORPORATION
1200 Trapp Road
Eagan, MN 55121
October
5, 2021
Dear
Dynatronics Shareholders:
On
behalf of Dynatronics Corporation, a Utah corporation, I cordially
invite you to attend the Annual Meeting of Shareholders on
Thursday, November 18, 2021 at 8:00 a.m. Central Time at our
principal executive offices located at 1200 Trapp Road, Eagan,
Minnesota 55121. All attendees may be required to wear a face mask,
be subject to temperature testing and a COVID-19 self-assessment.
Social distancing will be observed. In addition, prior to the
Meeting, we encourage you to vote online by following the
instructions provided on the Notice of Internet Availability of
Proxy Materials described below.
In
response to the COVID-19 pandemic and as part of our efforts to
conserve environmental resources and prevent unnecessary corporate
expense, we are using the “Notice and Access” method of
providing proxy materials to you via the Internet pursuant to the
regulations promulgated by the U.S. Securities and Exchange
Commission. We believe that this process will provide you with a
safe, convenient and efficient way to access your proxy materials
and vote your shares, while also allowing us to conserve natural
resources and reduce the costs of printing and distributing the
proxy materials for the Annual Meeting by postal mail. On or about
October 5, 2021 we are mailing to our shareholders a one-page
Notice of Internet Availability of Proxy Materials (the
“
Notice
”)
containing instructions on how to access our Proxy Statement and
vote electronically via the Internet or by telephone. The Notice
will also contain instructions on how to receive a paper copy of
your proxy materials.
We will
be conducting the business outlined and described in detail in the
Notice and the accompanying Proxy Statement. We have also made a
copy of our Annual Report on Form 10-K for the year ended June 30,
2021 (“
Annual
Report
”) available with the Proxy Statement. We
encourage you to read our Annual Report. It includes our audited
financial statements and provides information about our
business.
Your vote is very important to us. Whether or
not you plan to attend the Annual Meeting, please carefully review
the accompanying Proxy Statement and then cast your vote by
Internet, telephone or postal mail as promptly as possible so that
your shares will be represented and voted at the Meeting. Please
refer to the Notice for instructions on submitting your
vote
. Our Board of Directors has unanimously approved the
proposals set forth in the accompanying Proxy Statement and we
recommend that you vote in favor of each such
proposal.
Thank
you for your support of Dynatronics. We look forward to your
participation at the Annual Meeting.
Sincerely,
/s/ John A.
Krier
John A. Krier
President and Chief Executive Officer
i
DYNATRONICS CORPORATION
Annual
Meeting of Shareholders
November
18, 2021
8:00
a.m. Central Time
1200
Trapp Road
Eagan,
Minnesota 55121
To the Shareholders
of Dynatronics Corporation:
Notice of
Meeting
– We are pleased to invite
you to attend the 2021 Annual Meeting of Shareholders (the
“
Annual
Meeting
” or “
Meeting
”) of Dynatronics
Corporation, a Utah corporation (the “
Company
,” “
us
,” “
we
” or “
our
”) on November 18, 2021, at
8:00 a.m. Central Time. The Annual Meeting will be held at our
principal executive offices located at 1200 Trapp Road, Eagan,
Minnesota 55121.
Items of
Business –
At the Annual Meeting,
we will conduct the following business:
1.
Elect the four
director nominees named in the accompanying Proxy Statement to the
board of directors, each to serve until our next annual meeting of
shareholders and until her or his successor is duly elected and
qualified, or until the director’s earlier resignation,
removal or death;
2.
Ratify the
appointment of Tanner LLC as our independent registered public
accounting firm for the fiscal year ending June 30, 2022;
and
3.
Consider and
transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The
foregoing proposals are more fully described in the attached Proxy
Statement.
The
board of directors recommends that you vote your shares
“
FOR
” each of
the director nominees included in Proposal 1 and
“
FOR
” Proposal
2.
Notice and Access –
We have
elected to provide access to our proxy materials primarily
electronically via the Internet, pursuant to the “Notice and
Access” method regulations promulgated by the U.S. Securities
and Exchange Commission (the “
SEC
”). We believe this method
expedites our shareholders’ safe receipt of proxy materials
while the COVID-19 pandemic remains a concern, conserves natural
resources and significantly reduces the costs of the Annual
Meeting. On or about October 5, 2021, we began mailing a one-page
Notice of Internet Availability of Proxy Materials (the
“Notice”
) to
each of our shareholders entitled to notice of and to vote at the
Annual Meeting, which Notice contains instructions for accessing
the attached Proxy Statement, our Annual Report on Form 10-K for
our fiscal year ended June 30, 2021 (the “
Annual Report
”) via the Internet,
as well as voting instructions. The Notice also includes
instructions on how you can receive a paper copy of your proxy
materials.
The Proxy Statement and
the Annual Report are both available on the Internet at:
www.proxyvote.com.
Record
Date and
Notice –
You are entitled to
receive notice of and to vote at the Meeting if you were a
shareholder of record holding shares of any of our voting
securities (our common stock, Series A 8% Convertible Preferred
Stock, or Series B Convertible Preferred Stock) as of the close of
business on September 20, 2021 (the date fixed as the Record Date
for determining those shareholders eligible to receive notice of
and entitled to vote at the Annual Meeting or any adjournment or
postponement thereof). For 10 days prior to the Annual Meeting, a
complete list of shareholders entitled to vote at the Annual
Meeting will be available for examination by any shareholder, for
any purpose relating to the Annual Meeting, during ordinary
business hours at our principal executive offices located at 1200
Trapp Road, Eagan, Minnesota 55121. This list will also be
available for examination by shareholders of record during the
Meeting.
You are
entitled to attend the Annual Meeting only if you were a
shareholder as of the close of business on the Record Date or hold
a valid proxy for the Annual Meeting. If you are a shareholder of
record, your ownership as of the Record Date will be verified prior
to admittance into the Annual Meeting. If you are not a shareholder
of record but hold shares through a broker, trustee or nominee, you
must provide proof of beneficial ownership as of the Record Date,
such as an account statement or similar evidence of ownership, to
attend the Annual Meeting. Further information about how to attend
the Annual Meeting and vote your shares is included in the
accompanying Proxy Statement. For instructions on how to vote your
shares, please refer to the instructions on the Notice of Internet
Availability of Proxy Materials you received by postal mail, the
section titled “Voting” beginning on page 2 of the Proxy Statement or,
if you requested to receive printed proxy materials, your enclosed
proxy card.
Voting –
Your vote is very
important to us. Whether or not you expect to attend the Annual
Meeting, we urge you to vote your shares in advance of the Meeting,
as promptly as possible, online via the Internet, by telephone or
by postal mail so that your shares may be represented and voted at
the Meeting. If your shares are held in the name of a bank, broker,
brokerage firm or other fiduciary, please follow the instructions
on the voting instruction card furnished by the record holder.
Telephone and Internet voting are available. You may also vote by
mail by requesting a paper copy of our proxy materials. For
specific instructions on voting, please refer to the instructions
in the Notice of Internet Availability of Proxy Materials. If you
hold your shares through an account with a brokerage firm, bank or
other nominee, please follow the instructions you receive from them
to vote your shares.
Adjournments and
Postponements –
Any action on the
items of business described above may be considered at the Annual
Meeting at the time and on the date specified above or at any time
and date to which the Annual Meeting may be properly adjourned or
postponed.
ii
Important Notice – Health and Safety
Considerations; Contingent Virtual Meeting.
The health
and safety of our employees and our shareholders is of highest
priority to us. All attendees at the Annual Meeting may be required
to wear face coverings covering the nose and mouth, be subject to
temperature testing and a COVID-19 self-assessment and observe safe
physical/social distancing as directed. Anyone who refuses or fails
to cooperate will not be permitted to participate. We are closely
monitoring the developments regarding the coronavirus (COVID-19)
and its variants. Although we currently intend to hold our Annual
Meeting in person and observe applicable and recommended health
guidelines, we are sensitive to the public health and travel
concerns shareholders may have as well as the protocols that
federal, state, and local governments have imposed and may continue
to impose. In the event we determine in our discretion that we need
to conduct our Annual Meeting solely by means of remote
communication, we will announce the change and provide instructions
on how shareholders can participate in the Annual Meeting. These
communications will be made via press release and by filing
additional solicitation materials with the Securities and Exchange
Commission. The press release will also be available on the
Investors section of our website at www.dynatronics.com. If you
currently plan to attend the Annual Meeting in person, please check
our website prior to the Annual Meeting and prior to travel, for
any updates regarding any change to a virtual meeting.
By Order of the
Board of Directors,
/s/ Skyler
Black
Skyler
Black
Corporate
Controller and Corporate Secretary
iii
CONTENTS
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NOTICE
OF 2020 ANNUAL MEETING OF SHAREHOLDERS AND PROXY
STATEMENT
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ii
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IMPORTANT
NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS
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1
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Record
Date and Shares Outstanding
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1
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Quorum
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1
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Important
Notice - Contingent Virtual Meeting
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1
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Shareholder
List
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2
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Attendance
at Annual Meeting
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2
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Voting
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2
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Proposals
and Required Vote for Approval
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3
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Abstentions
and Broker Non-Votes
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3
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Proxies and Revocation of Proxie
s
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3
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Solicitation
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4
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Voting
Results
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4
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Questions
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4
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PROPOSAL
NO. 1 ELECTION OF DIRECTORS
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4
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General
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4
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Vote
required
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4
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Nominees
for Director
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4
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Business
Experience and Qualifications of Nominees
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5
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Recommendation
of the Board
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5
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INFORMATION
REGARDING THE BOARD OF DIRECTORS
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6
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General
Information
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6
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Preferred
Directors
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6
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Family
Relationships
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7
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Director
Attendance at the Annual Meeting
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7
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Director
Compensation
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7
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Director
Compensation Table - Fiscal 2021
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7
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iv
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CORPORATE
GOVERNANCE
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8
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Independence
of the Board of Directors
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8
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Board
Leadership Structure
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8
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Role
of the Board in Risk Oversight
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9
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Communications
with the Board of Directors
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9
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Meetings
of the Board of Directors
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9
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Executive
Sessions
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9
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Information
Regarding Committees of the Board of Directors
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9
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Audit
Committee
|
9
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Compensation
Committee
|
10
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Nominating
and Governance Committee
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10
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Code
of Ethics
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11
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Prohibition
against Pledging Dynatronics Securities and Hedging
Transactions
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11
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Corporate
Governance Guidelines
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11
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Audit
Committee Report for Fiscal 2021
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11
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REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
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11
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PROPOSAL
NO. 2 – RATIFICATION OF SELECTION OF TANNER LLC AS THE
COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
FISCAL 2021
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13
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General
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13
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Vote
Required
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13
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Independence
|
13
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Principal
Accountant Fees and Services
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13
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Pre-approval
Policies and Procedures
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13
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Recommendation
of the Board
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14
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EXECUTIVE
COMPENSATION
|
14
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Executive
Officers
|
14
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Summary
Compensation Table
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14
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Our
Compensation Objectives
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14
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2021
Summary Compensation Table
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15
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Outstanding
Equity Awards at June 30, 2021
|
15
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Employment
Agreements
|
16
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Payments
upon Termination
|
16
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Retirement
Benefits
|
16
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDERS MATTERS
|
17
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Security
Ownership of Certain Beneficial Owners and
Management
|
17
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Beneficial
Ownership Table
|
18
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Securities
Authorized for Issuance Under Equity Compensation
Plans
|
19
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Certain
Relationships and Related Transactions
|
20
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SHAREHOLDER
PROPOSALS FOR 2022 ANNUAL MEETING OF
SHAREHOLDERS
|
21
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Delinquent
Section 16(a) Reports
|
21
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HOUSEHOLDING
OF PROXY MATERIALS
|
21
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OTHER
MATTERS
|
21
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v
DYNATRONICS CORPORATION
1200 Trapp Road
Eagan, Minnesota 55121
Telephone (801) 568-7000
PROXY STATEMENT
FOR THE 2021 ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 18, 2021
The enclosed proxy is solicited on behalf of the
Board of Directors (the “
Board
”) of
Dynatronics Corporation, a Utah corporation
(sometimes referred to as the “
Company
,” “
we
,” “
us
,” or “
our
”) for use at our 2021 Annual Meeting of
Shareholders (the “
Annual
Meeting
” or the
“
Meeting
”) at 8:00 a.m. Central Time on
November 18, 2021. The Annual Meeting will be held
at the Company’s corporate headquarters,
located at 1200 Trapp Road, Eagan, Minnesota
55121.
IMPORTANT
NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS
We have elected to provide access to the proxy
materials for the Annual Meeting primarily over the Internet in
accordance with the U.S. Securities and Exchange Commission’s
(“
SEC
”) “Notice and Access” rules. On
or about October 5, 2021, we began mailing a one-page Notice of
Internet Availability of Proxy Materials (the
“
Notice
”) to each of our shareholders entitled to
notice of and to vote at the Annual Meeting. The Notice contains
instructions for accessing this Proxy Statement, our Annual Report
on Form 10-K for our fiscal year ended June 30, 2021
(“
Annual
Report
”) and Annual
Meeting voting instructions. The Notice also includes instructions
on how you can receive a paper copy of your proxy materials by
postal mail.
This Proxy Statement and the
Annual Report are available on the Internet at:
www.proxyvote.com.
References in this
Proxy Statement to fiscal years refer to our
fiscal year ended June 30 of the referenced year.
For example, “fiscal 2020”
refers to the fiscal year ended June 30, 2020, “fiscal
2021” refers to the fiscal year ended June 30, 2021, and
“fiscal 2022” refers to the fiscal year ending June 30,
2022.
Record Date and Shares
Outstanding
. The specific
proposals to be considered and acted upon at the Annual Meeting are
each described in this Proxy Statement. Only holders of our voting
securities (common stock, Series A 8% Convertible Preferred Stock
(“
Series A
Preferred
”), or Series B
Convertible Preferred Stock (“
Series B
Preferred
”)) as of the
close of business on September 20, 2021 (the
“
Record Date
”) are entitled to notice of and to vote at
the Annual Meeting. On the Record Date, there were 20,467,891
shares of common stock outstanding and entitled to vote at the
Annual Meeting (including shares of Series A Preferred and Series B
Preferred on an as-converted basis), held by 393 holders of record.
The Series A Preferred and Series B Preferred are sometimes
referred to in this Proxy Statement collectively as the
“
Voting Convertible Preferred
Stock
.”
Quorum.
In order for any business to be conducted at the
Annual Meeting, the holders of more than 50% of the shares entitled
to vote must be represented at the Meeting, either in person or by
properly executed proxy. This is a “quorum.” If a
quorum is not present at the scheduled time of the Annual Meeting,
the shareholders who are present may adjourn the Meeting until a
quorum is present. The time and place of the adjourned Annual
Meeting will be announced at the time the adjournment is taken, and
no other notice will be given. An adjournment will have no effect
on the business that may be conducted at the Annual
Meeting.
Important Notice - Contingent Virtual Meeting.
We are closely
monitoring the developments regarding the coronavirus (COVID-19)
and its variants. Although we currently intend to hold our Annual
Meeting in person, we are sensitive to the public health and travel
concerns shareholders may have and the protocols that federal,
state, and local governments have imposed
and may continue to
impose
.
In the event we determine that we need to conduct our Annual
Meeting solely by means of remote communication, we will announce
the change and provide instructions on how shareholders can
participate in the Annual Meeting via press release and by filing
additional solicitation materials with the SEC. Any such press
release will also be available on the
Investors section of
our website at www.dynatronics.com. If you currently plan to attend
the Annual Meeting in person, please check our website
prior
to the Annual Meeting and prior to travel, for any updates
regarding any change to a virtual meeting.
1
Shareholder
List.
A list of registered
shareholders as of the close of business on the Record Date will be
open for examination by any shareholder for a period of ten days
prior to the Annual Meeting for a purpose pertaining to the Meeting
at our corporate headquarters at 1200 Trapp Road, Eagan, Minnesota
55121.
Attendance
at Annual Meeting.
The Annual Meeting will
be held at our corporate headquarters at 1200 Trapp Road, Eagan,
Minnesota 55121, at 8:00 a.m., Central Time on November 18,
2021.
Voting.
Shareholders may vote
using one of the following four methods:
●
over the Internet – if you are a shareholder as of the Record
Date, you may vote over the Internet by following the instructions
provided in the Notice. which you are encouraged to do if you have
access to the Internet;
●
by telephone – if you are a shareholder as of the Record
Date, you may vote by telephone by following the instructions in
the Notice;
●
by mail – if you requested printed copies of proxy materials
and are a shareholder as of the Record Date, you may vote by
mailing your proxy as described in the proxy materials;
or
●
during the Annual Meeting – by attending the Annual Meeting
and voting in person.
If you hold shares in street name, the organization holding your
account is considered the shareholder of record for purposes of
voting at the Annual Meeting. The shareholder of record will
provide you with instructions on how to ensure your shares are
voted according to your directions. Internet and telephone voting
will be offered to shareholders owning shares through most
brokerage firms and banks. Additionally, if you would like to vote
in person at the Annual Meeting, contact the brokerage firm, bank
or other nominee who holds your shares to obtain a proxy from them
and bring it with you to the Annual Meeting. You will not be able
to vote at the Annual Meeting unless you have a proxy from your
brokerage firm, bank or other nominee.
You may vote at the Annual Meeting if you owned shares of any of
our common stock or Voting Convertible Preferred Stock as of the
close of business on the Record Date. These shares vote as
follows:
Common Stock
. Holders of record of
shares of common stock are entitled to one vote for each share of
common stock owned by them as of the Record
Date.
Voting Convertible Preferred Stock
. Holders of record of
shares of Voting Convertible Preferred Stock vote those shares on
an as-converted to common stock basis, one vote for each share of
common stock issuable upon an assumed conversion of the Voting
Convertible Preferred Stock;
provided
,
however
,
that the voting rights of some holders of the Voting Convertible
Preferred Stock are subject to limitations pursuant to a rule of
The Nasdaq Stock Market (“
NASDAQ
”)
referred to as a “
Voting
Cutback
.”
The Voting Cutback limits the number of
“as-if-converted common shares” that may be voted by
such shareholder to the number of shares of common stock issuable
upon conversion of the Voting Convertible Preferred Stock held by
such holder that equals the quotient of (x) the aggregate purchase
price paid by such holder of the Voting Convertible Preferred Stock
for the shares of Voting Convertible Preferred Stock, divided by
(y) the greater of (i) $2.50 and (ii) the market price of the
common stock on the trading day immediately prior to the date of
issuance of the holder’s Voting Convertible Preferred
Stock.
As of the Record Date, the total number of shares of common stock
issued and outstanding (including as-converted Voting Convertible
Preferred Stock) entitled to vote at the Annual Meeting is
20,467,891 shares (after taking into consideration the applicable
Voting Cutback). This number includes 17,604,296 shares of common
stock, 1,992,000 shares of Series A Preferred (1,628,133 shares
“as-converted” voting power after the applicable Voting
Cutback), and 1,359,000 shares of Series B Preferred (1,235,462
shares “as-converted” voting power after the applicable
Voting Cutback).
Cumulative voting is not permitted, and shareholders are not
entitled to appraisal or dissenters’ rights with respect to
any matter to be voted on at the Annual Meeting.
2
●
Proposal No. 1: Election of Directors. The
election of four nominees to serve as directors
on our Board
for a one-year term of office, or until his
successor is duly elected and qualified; and
●
Proposal
No. 2: Ratification of Appointment Independent Registered Public
Accounting Firm.
The
required vote for each of these proposals is as
follows:
Proposal No. 1: Election of
Directors.
The four director
nominees who receive the greatest number of votes cast at the
Annual Meeting by the shares present, either in person or by proxy,
and entitled to vote will be elected to serve on our Board until
our 2022 Annual Meeting of Shareholders, or until his successor is
duly elected and qualified. The election of directors requires the
affirmative vote of a plurality of the voting shares present or
represented by proxy and entitled to vote at the Annual Meeting.
Unless otherwise instructed or unless authority to vote is
withheld, shares represented by executed proxies will be voted
“FOR” the election of the nominees.
Proposal No. 2: Ratification
of Appointment of our Independent Registered Public Accounting
Firm.
The affirmative
“FOR” vote of a majority of the shares present in
person or by proxy at the Annual Meeting and entitled to vote is
required for the ratification of the selection of Tanner LLC
(“
Tanner
”) as our independent registered public
accounting firm for our current fiscal year.
As of the date of this
Proxy Statement, the Board knows of no other
matters to be brought before the Annual
Meeting.
Abstentions and Broker Non-Votes.
Shares
of common stock for which we have received proxies from a
street-name record holder, but with respect to which the beneficial
holders of those shares have chosen to abstain from voting, will be
counted as present at the Annual Meeting for purposes of
determining the presence or absence of a quorum for the transaction
of business at the Annual Meeting, but such shares will not count
as votes cast in respect of the election of directors, or any other
non-routine proposal with respect to which the shareholder has
chosen to abstain. As a result, those shares will not be included
in the vote totals for such proposals and, therefore, will have no
effect on such proposals.
Brokers
are prohibited in connection with non-routine proposals from
exercising discretionary authority for beneficial owners who have
not returned proxies to the brokers (so-called “broker
non-votes”). In these circumstances, those shares will be
counted for the purpose of determining if a quorum is present, but
such shares will not be included in the vote totals and, therefore,
will have no effect on any such non-routine proposals. Under the
rules that govern brokers, brokers do not have discretionary
authority to vote on the election of directors or on executive
compensation matters; however, brokers do have discretionary
authority to vote on the ratification of our independent registered
public accounting firm and may choose to do so.
All
votes will be tabulated by the inspector of election appointed for
the Annual Meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes. An abstention is
the voluntary act of not voting by a shareholder who is present at
a meeting and entitled to vote.
As
noted above, the four director nominees identified under Proposal
No. 1 who receive the most votes at the Annual Meeting will be
elected to serve on our Board until our 2022 Annual Meeting of
Stockholders, or until his successor is duly elected and qualified,
thus abstentions and broker non-votes will have no effect on the
outcome of Proposal No. 1.
Under
Utah law and our Amended and Restated Bylaws, each other matter
will be determined by the vote of the holders of a majority of the
voting power present or represented by proxy at the Annual Meeting.
For these matters, abstentions and any broker non-votes with
respect to matters as to which brokers do not have discretionary
authority, will not be counted as votes in favor of such proposals,
and will also not be counted as shares voting on such
matters.
Proxies and Revocation of
Proxies.
If you return a
signed and dated proxy card or otherwise vote without marking
voting selections, your shares will be voted by us
“FOR” each of the nominees for director and
“FOR” ratification of the appointment of Tanner as our
independent registered public accounting firm, according to the
recommendation of the Board as indicated in the Proxy Statement. If
any other matter is properly presented at the meeting, your
proxyholder (one of the individuals named on your proxy card) will
vote your shares using their best judgment.
What if my shares are registered in more than one person’s
name?
If you
own shares that are registered in the name of more than one person,
each person registered as a shareholder must sign the proxy. If an
attorney, executor, administrator, trustee, guardian or any other
person signs the proxy in a representative capacity, the full title
of the person signing the proxy should be given and a certificate
should be furnished showing evidence of appointment.
You may
revoke a proxy given by you at any time before the final vote at
the Annual Meeting. If you are the record holder of your shares,
you may revoke your proxy in any one of the following
ways:
●
You may submit
another properly completed proxy card with a later
date.
●
You may grant a
subsequent proxy by telephone or through the Internet.
●
You may send a
timely written notice that you are revoking your proxy to our
Corporate Secretary at 1200 Trapp Road, Eagan, Minnesota
55121.
●
You may attend the
Annual Meeting and vote during the Meeting. Simply attending the
Annual Meeting will not, by itself, revoke your proxy.
3
Your
most current proxy card or Internet proxy is the one that is
counted. If your shares are held by your broker or bank as a
nominee or agent, you should follow the instructions provided by
your broker or bank.
If you
receive more than one Notice, that is an indication that you have
multiple accounts with brokers or with our transfer agent. Please
vote all of these shares. We recommend that you contact your broker
or our transfer agent, as applicable, to consolidate as many
accounts as possible under the same name and address. You may
contact our transfer agent, Direct Transfer, LLC, by telephone at
(919) 744-2722.
Solicitation.
We will pay for the entire
cost of soliciting proxies,
including
any costs associated with printing and mailing proxy
materials
for those
shareholders who request to receive printed versions of
them
.
In addition, directors,
officers and employees of
Dynatronics and its subsidiaries may solicit
proxies by mail, personal interview, telephone, email or facsimile
transmission without additional compensation. We may also solicit
proxies through press releases and postings on our website
at
www.dynatronics.com
.
Arrangements will be made with brokerage houses, voting trustees,
banks, associations and other custodians, nominees and fiduciaries,
who are record holders of our voting stock not beneficially owned
by them,
for forwarding these
proxy materials to, and obtaining proxies from, the beneficial
owners of such stock entitled to vote at the Annual Meeting. We
will reimburse these persons
for their reasonable expenses incurred in
performing these services
.
Except as described above, we do not presently
intend to solicit proxies other than by the Internet, telephone,
email and postal mail.
Voting
Results.
All votes
will be tabulated by the inspector of elections for the Annual
Meeting, who will separately tabulate affirmative and negative
votes, abstentions and broker non-votes. Preliminary voting results
will be announced at the Annual Meeting. In addition, final voting
results will be published in a Current Report on Form 8-K that we
expect to file within four business days after the Annual Meeting.
If final voting results are not available to us in time to file a
Form 8-K within four business days after the meeting, we intend to
file a Form 8-K to publish preliminary results and, within four
business days after the final results are known to us, file an
additional Form 8-K to publish the final results.
Questions
. You can contact our Corporate
Secretary, Skyler Black, by telephone, at (801) 676-7201 or by
writing to Dynatronics Corporation, 1200 Trapp Road, Eagan,
Minnesota 55121, Attn: Corporate Secretary, with any questions
about the proposals described in this Proxy Statement or how to
execute your vote.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Under
our Bylaws, as amended and restated, our Board may consist of up to
seven directors. Up to four of the directors (the
“
Common
Directors
”) may be elected annually by the holders of
our common stock voting as a group, including holders of the Voting
Convertible Preferred Stock voting on an as-converted basis. The
remaining three directors are referred to as the
“
Preferred
Directors
” and are elected and hold office at the
pleasure of the holders of the Series A Preferred.
In
2020, the Board increased the number of Board members from six
members to seven members when John Krier became Chief Executive
Officer of the Company and was appointed to the Board. Currently,
the Board consists of four Common Directors – Brian Baker,
Scott Klosterman, John Krier and Dr. Scott Ward, and three
Preferred Directors – Erin S. Enright, who is also the
Chairman of the Board, David B. Holtz, and Brian M.
Larkin.
As a
consequence of the increase in the size of the Board, at this
year’s Annual Meeting our shareholders will elect four Common
Directors. The nominees identified below have been selected and
recommended by the Nominating and Governance Committee of the Board
to serve as Common Directors for one-year terms until the 2022
Annual Meeting of shareholders and until their respective
successors are elected or appointed, or until such director’s
earlier resignation, termination or death.
Directors are
elected by a plurality of the votes cast in person or by proxy,
assuming a quorum is present. This means that the four director
nominees receiving the highest number of
“
FOR”
votes at the Annual Meeting
(even if they receive less than a majority) will be elected to the
Board. Since the nominees are running unopposed for the same number
of seats as there are nominees, a nominee only needs one vote to be
elected if there is a quorum present at the Annual
Meeting.
Shares
represented by executed proxies will be voted, if authority to do
so is not withheld, “
FOR
” the election of the nominees
named below. If a nominee becomes unavailable for election as a
result of an unexpected occurrence, shares that would have been
voted for that nominee instead will be voted for the election of a
substitute nominee that we may propose. If you hold your shares
through a broker and you do not instruct the broker on how to vote
on this proposal, your broker will not have authority to vote your
shares. Abstentions and broker non-votes will be counted as present
for purposes of determining the presence of a quorum, but will not
have any effect on the outcome of the election of
directors.
Four
incumbent directors are standing for re-election. Each nominee
named below has agreed to serve if elected. We have no reason to
believe that any nominee will be unable to serve. Our policy is to
encourage directors and nominees for director to attend the Annual
Meeting.
The
Board has determined that two of the nominees to be considered for
election at the Annual Meeting, Mr. Klosterman and Dr. Ward,
qualify as “independent” as defined by the rules and
regulations of NASDAQ. The other nominees include our former Chief
Executive Officer, Brian D. Baker, and our current Chief Executive
Officer, John Krier. Because of applicable NASDAQ Stock Market
Rules, Mr. Baker and Mr. Krier are not considered
independent.
4
Business Experience and Qualifications of Nominees
|
John A. Krier
Director, Chief Executive Officer
Age 44
Director Since July 2020
|
Mr.
Krier has been the Chief Executive Officer since July 2020. He
joined Dynatronics in March of 2020 and served as Chief Financial
Officer until he was named the Chief Executive Officer. Prior to
joining the Company, Mr. Krier was Vice President of Marketing and
Commercial Operations at Breg, Inc., a significant Dynatronics
customer, where his work included executive leadership for
Breg’s bracing product and technology marketing teams,
including integrated applications with healthcare systems, service
solutions with third-party payer reimbursement, and customer
experience. Mr. Krier received his bachelor’s degree from the
University of South Dakota. He is a Certified Public Accountant
(inactive), and a member of the American Institute of Certified
Public Accountants and Minnesota Society of Certified Public
Accountants. We selected Mr. Krier to serve as a member of the
Board because of his many years of experience in our industry at
executive levels and the Nominating and Governance Committee
believes it is important to have our Chief Executive Officer also
serve as a member of the Board.
|
|
|
|
|
Brian D. Baker
Director, Consultant
Age 55
Director Since August 2019
|
Mr.
Baker served as our Chief Executive Officer from August 2019 to
July 2020 and as our Chief Operating Officer from May 2019 until
August 2019. Following his resignation as Chief Executive Officer,
Mr. Baker continued as an employee of the Company until October 8,
2020 and then became a consultant to the Company. From February
2018 to May 2019, Mr. Baker served as the President of our Therapy
Products Division. Prior to joining Dynatronics, he was Vice
President of Global Operations of SeaSpine Holdings Corporation
from July 2015 to January 2018, and Vice President of Operations of
the SeaSpine business within Integra LifeSciences Corporation from
March 2015 to July 2015. From November 2013 until March 2015, he
was an industry consultant providing mergers and acquisitions and
business process optimization services. He holds a B.A. degree in
business from the University of Phoenix. We selected Mr. Baker as a
member of the Board because of his extensive industry experience
and the insights gained from his work with restructuring our
operations during his service as an executive officer of the
Company.
|
|
|
|
|
Scott A. Klosterman
Director
Age 63
Director since 2016
Independent Director
|
Mr. Klosterman is Chief of Staff at
HNI Healthcare, a technology-enabled physician
management
company, since April
2020 where he previously served as Chief Financial Officer
(2018-2020) and
Executive Vice
President of Financial Operations (2016-2017). From 2010 to 2015,
he was Vice President and General Manager,
Post-Operative Products and
Services at Hanger, Inc., a leading provider of
prosthetic, orthotic, and therapeutic solutions. From 2009 to 2010,
he was an executive consultant, providing consulting services to
healthcare businesses, advising on product development and new
product launches. He was
Division President of Chattanooga Group from 2003
to 2008, where he previously served as Chief Operating Officer
(1997-2003) and Chief Financial Officer, Secretary, and Treasurer
(1994-1997). He was a licensed certified public accountant in
Pennsylvania from 1982 until 1994 and has an M.B.A. degree from
Baylor University and a B.S. degree in
Accounting (with highest honors) from the
University of Delaware. We selected
Mr. Klosterman to serve on our Board based on his extensive
experience in the medical industry and as a finance
executive.
|
|
R. Scott Ward, Ph.D.
Director
Age 65
Director since 2013
Independent Director
|
Dr.
Ward serves as the chairman of the Department of Physical Therapy
at the University of Utah. He is the past president of the American
Physical Therapy Association, a position he held from 2006 to 2012.
In addition, Dr. Ward served as chair of the rehabilitation
committee of the American Burn Association. He has published
extensive research studies related to wound care and burn
rehabilitation. Dr. Ward received a B.A. degree in Physical Therapy
and a Ph.D. degree in Physiology from the University of Utah. We
selected Dr. Ward to serve as a member of our Board based on his
prominence in his field, and his extensive experience and expertise
in physical therapy.
|
|
|
|
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“
FOR”
EACH OF THE
FOUR NOMINEES NAMED ABOVE.
5
INFORMATION REGARDING THE BOARD OF DIRECTORS
Directors elected
at the Annual Meeting of shareholders serve until our next annual
meeting of shareholders and until their successors are elected and
qualified, or their earlier resignation or removal. Three members
of the Board are Preferred Directors appointed under the provisions
of the Certificate of Designations, Preferences and Rights of the
Series A Preferred (the
“
Series A
Certificate of Designations
”
) as discussed in the following
section of this Proxy Statement.
Under
our Bylaws as amended and restated, the Board can include up to
seven members. The Series A Certificate of Designations grants to
the holders of the Series A Preferred certain rights, referred to
as “
Director
Rights
,” to appoint up to three members of the Board
– the Preferred Directors – for as long as the original
Series A Preferred investors own or would directly or indirectly
beneficially own at least 28.6% of our common stock (the
“
Threshold Ownership
Percentage
”
). This
period of ownership is known as the “
Director Rights Period
”. Excluded
from the calculation of the Threshold Ownership Percentage are any
shares of common stock issuable upon the exercise of the warrants
held by these investors. In compliance with NASDAQ Rule 5640, the
number of Preferred Directors will be reduced pro rata with any
reduction in ownership by the preferred investors below the
Threshold Ownership Percentage, so that the number of Preferred
Directors is approximately proportionate to the preferred
investors
’
direct or
indirect ownership of our common stock. By agreement among the
Series A Preferred shareholders and Dynatronics, the Director
Rights may be exercised at the discretion of certain affiliates of
Prettybrook Partners, LLC, a private investment firm (with its
affiliates, collectively referred to as “
Prettybrook
”) for as long as
Prettybrook owns at least 50% of the outstanding Series A
Preferred.
Common
stock has no voting, nomination, election or other rights with
respect to the Preferred Directors. Each Preferred Director serves
as a member of the Board during the Director Rights Period or until
his or her successor is appointed by the holders of the Series A
Preferred (or Prettybrook, exercising such rights, as discussed
above) during the Director Rights Period.
The
current Preferred Directors are Erin S. Enright, who is also the
Chairman of the Board, David B. Holtz, and Brian M. Larkin. Their
business experience and other qualifications are as
follows:
Erin S.
Enright
. Ms. Enright, 60, currently serves as a Managing
Member of Prettybrook Partners LLC, a family office dedicated to
investing in healthcare companies. Prettybrook has approximately 20
active investments in a variety of companies, typically as a
co-investor with institutional private equity. In addition to her
service as Chairman, Ms. Enright is Chair of the Nominating and
Governance Committee and a member of the Audit Committee and
Compensation Committee of the Board. She is a member of the Board
of Directors, Chair of the Investment Committee and member of the
Audit Committee of Medical Facilities Corporation (TSX: DR) and a
member of the Board and Chair of the Audit Committee of Keystone
Dental, Inc., a private company controlled by the private equity
firm Accelmed. Previously, she served on the Board of Directors and
the Audit Committee of Biolase, Inc. (NASDAQ: BIOL) during 2013,
was a member of the Board of Directors of Tigerlabs, a
Princeton-based business accelerator, from 2012 to 2018, and from
2010 to 2015 served on the Board of Directors of Ceelite
Technologies, LLC. She was the President of Lee Medical, a medical
device manufacturer based in Plainsboro, New Jersey, from 2004-13.
She was Chief Financial Officer of InfuSystem, Inc. (NASDAQ:INFU)
from 2005 to 2007. From 1993 to 2003, Ms. Enright was with
Citigroup, where she was a Managing Director in its Equity Capital
Markets group. While at Citigroup, Ms. Enright was Chairperson of
the firm’s Institutional Investors Committee, responsible for
screening and approving the firm’s participation in equity
underwritings and a member of the Citigroup Global Equity
Commitment Committee, responsible for reviewing and approving the
firm’s underwritings. From 1989 until 1993, Ms. Enright was
an attorney with Wachtell, Lipton, Rosen & Katz in the
firm’s New York office. Ms. Enright received her A.B. degree
from the School of Public and International Affairs at Princeton
University and J.D. degree from the University of Chicago Law
School. We believe that Ms. Enright’s extensive experience in
various capacities within our industry and her legal background
qualify her to serve as a member of our Board.
David B.
Holtz
. Mr. Holtz, 55, has been a principal of Provco Group
Ltd. (
“
Provco
”
) since 2012. Provco became a
preferred shareholder of Dynatronics in 2015. He serves as part of
Provco
’
s executive
management group responsible for managing investment portfolios and
the accounting function. From 2011 to 2012, Mr. Holtz was executive
manager of Grey Street Holdings, a property investment holding
company. From 2008 to 2010, he served as Chief Financial Officer
and then Interim President of Nucryst Pharmaceuticals Corp. From
1993 to 2006, Mr. Holtz worked at Integra LifeSciences in various
capacities including Vice President, Finance and Treasurer, and
Senior Vice President, Finance and Treasurer. Before joining
Integra, Mr. Holtz was an associate with Coopers & Lybrand,
L.L.P. in Philadelphia and Cono Leasing Corporation, a private
leasing company. He received a B.S. degree in Business
Administration from Susquehanna University and was a certified
public accountant in Pennsylvania until 1998. We believe Mr.
Holtz’s extensive financial experience and background qualify
him to serve as a member of our Board.
Brian M.
Larkin
.
Mr. Larkin, 52,
is President and CEO of SP Industries, Inc., a privately held
manufacturer of biopharmaceutical production lines, laboratory
equipment and specialty glassware headquartered in Pennsylvania,
where he has held the position since he joined in February of 2018.
From May 2017 to February 2018, he served as the Vice President and
General Manager of the Diabetes Care business at Becton
Dickinson. From May 2015 to May 2017, he served as Senior Vice
President and General Manager for LifeCell, Inc., a
Division of Acelity L.P., Inc. Prior to joining Acelity, Mr.
Larkin was Corporate Vice President of Integra Lifesciences
Holdings Corporation, which he joined in January of 2000 and where
he served most recently as President of the Global Spine and
Orthobiologics business and Head of Strategic
Development. Mr. Larkin received a B.S. degree
in Chemistry from the University of Richmond and
completed the Advanced Management Program at Harvard Business
School. We believe that Mr. Larkin’s extensive and varied
business background and executive experience qualify him to serve
as a member of our Board.
6
In
addition to the Director Rights, the holders of the Series A
Preferred have the right to appoint one observer (who is not a
Preferred Director) who may attend any meetings of the Board of
Directors and participate in discussions among the Board members,
but who does not have any voting rights on any matters. So long as
Prettybrook owns at least 50% of the outstanding Series A
Preferred, Prettybrook has the right to choose this observer.
Prettybrook has appointed Stuart M. Essig as the observer to the
Board. Mr. Essig is a significant shareholder of Dynatronics and is
the husband of Ms. Enright, Chairman of our Board of Directors. Mr.
Essig and Ms. Enright are managers of Prettybrook.
There
are no family relationships among the members of the Board of
Directors and our executive officers.
We
believe the Annual Meeting provides a good opportunity for our
directors to hear any feedback that our shareholders may desire to
share with the Board and with us. As a result, directors are
encouraged to attend the Annual Meeting if their schedules permit.
All our directors attended the 2020 Annual Meeting of Shareholders,
either in person or via video conference. We reimburse our
directors for the reasonable expenses they may incur in attending
the Annual Meeting.
Director Compensation
Our
directors play a critical role in guiding our strategic direction
and overseeing our management. Ongoing developments in corporate
governance and financial reporting have resulted in an increased
demand for such highly qualified and productive public company
directors. The many responsibilities and risks and the substantial
time commitment of being a director of a public company require
that we provide adequate incentives for our directors’
continued performance by paying compensation commensurate with our
directors’ workload. Our non-employee directors are
compensated based upon their respective levels of board
participation and responsibilities, including service on Board
committees. Our employee directors receive no separate or
additional compensation for their service as
directors.
Our
director compensation is reviewed by the Compensation Committee,
which makes recommendations to the Board on the appropriate
structure for our non-employee director compensation program and
the appropriate amount of compensation. Our Board is responsible
for final approval of our non-employee director compensation
program and the compensation paid to our non-employee directors.
Our non-employee directors are entitled to reimbursement for their
reasonable travel and lodging expenses for attending Board and
committee meetings.
In
fiscal year 2021, we authorized payment to our non-employee
directors of an annual equity retainer of
10,000
shares of common stock under our
2018 Equity Incentive Plan (the “
2018 Plan
”) (5,000 to be awarded
on January 1 and 5,000 on July 1 of each fiscal year based on
service), plus additional common shares with an equivalent value of
$7,500 under the 2018 Plan, priced on the date of issue and awarded
on July 1
st
, plus $7,500 cash
on January 1st. Committee chairs were authorized to receive an
additional retainer of shares of common stock with the equivalent
value of $
5,000
on July
1
st
,and
$5,000 cash on January 1
st
. All retainer
payments were pro-rated for the portion of the year served if a
director’s service began after the start of the fiscal year.
The following table summarizes the total compensation paid to the
non-employee and independent directors during the fiscal year ended
June 30, 2021.
|
Name
(a)
|
Fees Earned or
Paid in Cash
($)
(b)
(1
)
|
Stock Awards
($)
(c)
(1)
|
All other Compensation
($)
(g)
(2)
|
Total
($)
(h)
|
|
Brian
Baker
|
$
7,500
|
$
4,350
|
$
34,280
|
$
46,130
|
|
Erin S.
Enright
|
$
12,500
|
$
21,250
|
$
-
|
$
33,750
|
|
David B.
Holtz
|
$
12,500
|
$
21,250
|
$
-
|
$
33,750
|
|
Scott A.
Klosterman
|
$
12,500
|
$
21,250
|
$
-
|
$
33,750
|
|
Brian M.
Larkin
|
$
7,500
|
$
16,250
|
$
-
|
$
23,750
|
|
R.
Scott Ward, Ph.D.
|
$
7,500
|
$
16,250
|
$
-
|
$
23,750
|
_________________
(1)
Columns (d) through
(f) are omitted from this table as no items of compensation
referenced in those columns were paid to the directors during the
period covered by the table.
(2)
Other compensation
paid to Brian Baker were for consulting services.
7
The
table below provides information regarding the equity awards we
granted to our non-employee directors during our fiscal year ended
June 30, 2021.
|
|
July 1, 2020
|
January 1, 2021
|
Total
|
|
Mr.
Baker
|
$
-
|
$
4,350
|
$
4,350
|
|
Ms.
Enright
|
$
16,900
|
$
4,350
|
$
21,250
|
|
Mr.
Holtz
|
$
16,900
|
$
4,350
|
$
21,250
|
|
Mr.
Larkin
|
$
11,900
|
$
4,350
|
$
16,250
|
|
Mr.
Klosterman
|
$
16,900
|
$
4,350
|
$
21,250
|
|
Dr.
Ward
|
$
11,900
|
$
4,350
|
$
16,250
|
|
Grant
Date stock price
|
$
0.88
|
$
0.87
|
|
|
Aggregate
share value
|
$
74,502
|
$
26,100
|
$
100,600
|
CORPORATE GOVERNANCE
The
Board has determined that a majority of the members of the Board of
Directors should consist of
“
independent directors,
”
determined in accordance with the
applicable NASDAQ Stock Market Rules as in effect from time to
time. Directors who are also our employees are not considered to be
independent for this purpose. Our Board determines the independence
of our directors by applying the rules, regulations and listing
standards of NASDAQ and the rules and regulations of the SEC. The
Nasdaq Stock Market Rules provide that a director is independent
only if the Board affirmatively determines that the director does
not have a relationship with us that would interfere with the
exercise of his or her independent judgment in carrying out the
responsibilities of a director. They also specify certain
relationships that preclude a determination of director
independence, including certain business, professional and personal
relationships. Subject to some exceptions, these standards
generally provide that a director will not be independent if (a)
the director is, or in the past three years has been, an employee
of ours; (b) a member of the director’s immediate family is,
or in the past three fiscal years has been, an executive officer of
ours; (c) the director or a member of the director’s
immediate family has received more than $200,000 per year in direct
compensation from us other than for service as a director (or for a
family member, as a non-executive employee); (d) the director or a
member of the director’s immediate family is, or in the past
three years has been, employed in a professional capacity by our
independent public accountants, or has worked for such firm in any
capacity on our audit; (e) the director or a member of the
director’s immediate family is, or in the past three years
has been, employed as an executive officer of a company where one
of our executive officers serves on the compensation committee; or
(f) the director or a member of the director’s immediate
family is an executive officer of a company that makes payments to,
or receives payments from, us in an amount which, in any
twelve-month period during the past three years, exceeds the
greater of $1,000,000 or two percent of that other company’s
consolidated gross revenues.
Our
Board annually reviews the independence of our directors according
to these standards, taking into account all relevant facts and
circumstances. In its most recent review of information collected
from our directors, the Board determined that the non-employee
members of our Board are
“
independent directors
”
under the NASDAQ standards and the
SEC
’
s rules. The Board
has determined that Ms. Enright, Mr.
Klosterman, Mr. Holtz, Mr. Larkin and
Dr. Ward are independent and that these independent directors have
no relationship with Dynatronics that would interfere with the
exercise of their independent judgment in carrying out the
responsibilities of a director.
None of
our directors is a party to any agreement or arrangement that would
require disclosure pursuant to NASDAQ Rule 5250(b)(3).
The
Board has also determined that all members of the Compensation
Committee are independent and meet the additional independence
criteria required under NASDAQ Rule 5605(a)(2), and that each
member of the Audit Committee: (i) is independent, (ii) meets the
financial literacy requirements of the NASDAQ Stock Market Rules,
and (iii) meets the enhanced independence standards under Section
10A(m)(3) of the Securities Exchange Act of 1934, as amended
(
“
Exchange Act
”
). In connection with its
determination regarding the independence of our directors, the
Board found that none of the nominees for director had a material
or other disqualifying relationship with us.
In
February 2018, our Board determined to separate
the role of Chairman of the Board
from the role of Chief Executive Officer, and appointed Erin
Enright as Chairman. The Board believes that separating these roles
allows us to efficiently develop and implement corporate strategy
that is consistent with the Board
’
s oversight role, while facilitating
strong day-to-day leadership.
In
making the decision to separate the roles of Chief Executive
Officer and Chairman of the Board, the Board cited the demands of
and differences between each role. The Chief Executive Officer is
responsible for setting our strategic direction, with guidance from
the Board. The Chairman of the Board is responsible for leadership
and for the over-all performance of Dynatronics pursuant to the
policies of the Board, while providing guidance to the Chief
Executive Officer, and setting the agenda for Board meetings, and
presiding over meetings of the Board.
Ms.
Enright brings considerable skills and experience to the role of
Chairman. In this capacity, she has significant responsibilities,
including those described above, as well as calling and presiding
over Board meetings, including meetings of the independent
directors, setting meeting agendas and determining materials to be
distributed to the Board. As Chairman, she has substantial ability
to shape the work of the Board. We believe that having an
independent Chairman creates an environment that is more conducive
to objective evaluation and oversight of management
’
s performance, increases management
accountability and improves the ability of the Board to monitor
whether management
’
s
actions are in our best interests and those of our shareholders. As
a result, we believe that having an independent chairman and a
separate chief executive can enhance the effectiveness of the Board
as a whole. The active involvement of our independent directors,
combined with the qualifications and significant responsibilities
of our Chairman, provide balance on the Board and promote strong,
independent oversight of our management and affairs.
8
The
Board has an active role, both as a whole and at the committee
level, in overseeing management of our risks. The Board regularly
reviews information regarding our credit, liquidity and operations,
as well as the risks associated with each. The Audit
Committee
’
s charter
mandates that the committee review and discuss with management and
our independent registered public accounting firm, as appropriate,
our major financial risk exposures and the steps taken by
management to monitor and control these exposures. The Compensation
Committee is responsible for overseeing the management of risks
relating to our executive compensation plans and arrangements. The
Nominating and Governance Committee manages risks associated with
the independence of the Board and potential conflicts of interest.
While each committee is responsible for evaluating certain risks
and overseeing the management of such risks, the entire Board is
informed regularly through committee reports about such
risks.
The
Board desires that the Board of Directors and its committees and
individual directors hear the views of shareholders and that
appropriate responses are provided to shareholders on a timely
basis. Shareholders wishing to formally communicate with the Board,
the independent directors as a group or any individual director may
send communications directly to Dynatronics Corporation, Board of
Directors, Attn: Legal Department, 1200 Trapp Road, Eagan,
Minnesota 55121. All clearly marked written communications, other
than unsolicited advertising or promotional materials, are logged
and copied, and forwarded to the director to whom the communication
was addressed.
Please
note that the foregoing communication procedure does not apply to:
(1) shareholder proposals pursuant to Exchange Act Rule 14a-8 and
communications made in connection with such proposals; (2) service
of process or any other notice in a legal proceeding; (3)
advertisements, promotions of a product or service, patently
offensive material or matters deemed inappropriate for the Board;
(4) items solely related to complaints with respect to ordinary
course of business, customer service and satisfaction issues; or
(5) material clearly unrelated to our business, industry,
management, Board, or related committee matters.
Our
Board met virtually six
times during fiscal year 2021. Our
Audit Committee met virtually four times. Our Compensation
Committee met virtually two times and acted by unanimous written
consent three times with respect to executive compensation matters
and grants of equity securities. Our Nominating and Governance
Committee requested action by the entire Board with respect to
re-election of members of our Board and other resolutions presented
to our shareholders at our 2020 Annual Meeting of Stockholders and
Board committee assignments. Each director serving during our
fiscal year ended June 30, 2021 attended all of the meetings of the
Board and the committees of the Board upon which such director
served that were held during the fiscal year.
The
Board holds regular executive sessions of the non-employee
directors without the presence of management, as required under
applicable NASDAQ Stock Market Rules. In fiscal 2021, six executive
sessions were convened at which only independent and non-employee
directors were present.
The
Board has
established
an Audit
Committee, a Compensation Committee and a Nominating and Governance
Committee and adopted a written charter for each committee, copies
of which are available to shareholders on the Investors section of
our website at
https://irdirect.net/DYNT/corporate_governance
.
The
following table provides membership information for fiscal year
2021 for each of these committees of the Board:
|
Name
|
|
Audit
|
|
Compensation
|
|
Nominating and Governance
|
|
Erin S.
Enright
|
|
X
|
|
X
|
|
*
|
|
David
B. Holtz
|
|
*
|
|
|
|
X
|
|
Scott
A. Klosterman
|
|
X
|
|
*
|
|
X
|
|
Brian
M. Larkin
|
|
|
|
X
|
|
X
|
|
R.
Scott Ward, Ph.D.
|
|
|
|
X
|
|
|
|
Brian
D. Baker
|
|
|
|
|
|
|
*Committee
Chair
Below
is a description of the Board committees. Each of the committees
has authority to engage legal counsel or other experts or
consultants as it deems appropriate to carry out its
responsibilities.
The
Audit Committee was established in accordance with requirements of
Section 3(a)(58)(A) of the Exchange Act, and is comprised of the
following independent directors: David B. Holtz (Chairman), Erin S.
Enright, and Scott A. Klosterman. The NASDAQ Stock Market Rules
regarding corporate governance require that at least one member of
the Audit Committee have past employment experience in finance or
accounting, requisite professional certification in accounting, or
comparable experience or background which results in the
individual
’
s
“
financial
sophistication.
”
This
financial sophistication may derive from the person being or having
been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities. Our Board
believes that all three members of its Audit Committee meet the
NASDAQ requirements for financial sophistication. Our Board further
believes that each of the committee members is an independent
director as defined in the NASDAQ Stock Market Rules. The Board has
also determined that the members of the Audit Committee qualify as
“audit committee financial experts”
(“
Audit Committee Financial
Experts
”) as defined by applicable SEC
’
s rules. The SEC rules define an
Audit Committee Financial Expert as a person who has all of the
following attributes:
9
●
Understanding of
accounting principles generally accepted in the United States of
America, or GAAP, and financial statements.
●
Ability to assess
the general application of GAAP in connection with accounting for
estimates, accruals and reserves.
●
Experience in
preparing, auditing, analyzing or evaluating financial statements
that present a breadth and level of complexity of accounting issues
that are generally comparable to the breadth and complexity of
issues that can reasonably be expected to be raised by our
financial statements, or experience actively supervising one or
more persons engaged in such activities.
●
Understanding of
internal control over financial reporting.
●
Understanding of
audit committee functions.
The
Audit Committee is concerned primarily with the integrity of our
financial statements, the selection, independence, qualifications
and performance of our independent registered public accounting
firm, and our compliance with legal requirements. The Audit
Committee charter approved by the Board reflects the standards and
requirements adopted by the SEC and NASDAQ.
The
Compensation Committee is responsible for reviewing and approving
the compensation, as well as evaluating the performance, of our
principal executive officer and other executive officers, and
advising and assisting management in developing our overall
compensation strategy to assure that it promotes shareholder
interests, supports our strategic and tactical objectives, and
provides for appropriate rewards and incentives for our management
and employees. Each member of the Compensation Committee is an
“
independent
director
”
as defined by
the federal securities laws and in Rule
5605(a)(2) of the NASDAQ Stock Market
Rules.
The
Compensation Committee is empowered to advise management and make
recommendations to the Board with respect to the compensation and
other employment benefits of our executive officers and key
employees. In exercising its responsibilities, the Compensation
Committee establishes and monitors policies governing the
compensation of executive officers, reviews the performance of and
determines salaries and incentive compensation for executive
officers, and approves option or other equity-based awards to those
individuals. Additionally, the Compensation Committee administers
our stock plans.
The
Compensation Committee meets as often as it deems necessary,
without the presence of any executive officer whose compensation it
is then approving. Neither the Compensation Committee nor the
Company engaged or received advice from any compensation consultant
during fiscal year 2021. As of the date of this Proxy Statement,
the following independent directors are members of the Compensation
Committee: Scott A. Klosterman (Chairman), Erin S. Enright, Brian
M. Larkin and R. Scott Ward.
The
charter of the Compensation Committee grants the committee full
access to all our books, records, facilities and personnel. In
addition, under the charter, the Compensation Committee has the
authority to obtain, at our expense, advice and assistance from
compensation consultants and internal and external legal,
accounting or other advisors and other external resources that the
Compensation Committee considers necessary or appropriate in the
performance of its duties. The Compensation Committee has direct
responsibility for the oversight of the work of any consultants or
advisers engaged for the purpose of advising the committee. In
particular, the Compensation Committee has the sole authority to
retain, in its sole discretion, compensation consultants to assist
in its evaluation of
executive and
director compensation, including the authority to approve the
consultant
’
s reasonable
fees and other retention terms.
The
Nominating and Governance Committee is responsible for overseeing,
reviewing and making periodic recommendations concerning our
corporate governance policies, and for recommending to the full
Board candidates and nominees for election to the Board. The
committee is comprised of the following directors: Erin S. Enright
(Chairman), David B. Holtz, Brian M. Larkin and Scott A.
Klosterman. Each member of this committee is an independent
director under applicable NASDAQ Stock Market Rules.
Nominees to the
Board should be committed to enhancing long-term shareholder value
and must possess a high level of personal and professional ethics,
sound business judgment and integrity. The Nominating and
Governance Committee encourages selection of directors who will
contribute to our corporate governance, including: responsibility
to its shareholders, technology leadership, effective execution,
high customer satisfaction and superior employee working
environment.
The
Nominating and Governance Committee from time to time reviews the
appropriate skills and characteristics required of Board members,
including factors that it seeks in Board members such as diversity
of business experience, viewpoints and personal background, and
diversity of skills in technology, finance, marketing,
international business, financial reporting and other areas that
are expected to contribute to an effective board of directors. In
evaluating potential director candidates, the Nominating and
Governance Committee considers these factors in light of the
specific needs of the Board at that time. The brief biographical
information for each nominee set forth in the section under the
heading
“
Business
Experience and Qualifications of Nominees
” on page
1
above,
includes the primary individual experience, qualifications,
attributes and skills of each of our directors nominated for
election at this Annual Meeting that led the Nominating and
Governance Committee to conclude that each nominee should serve as
a member of the Board.
Shareholders may
recommend a director nominee to the Nominating and Governance
Committee. In recommending candidates for election to the Board,
the committee considers nominees recommended by directors,
officers, employees, shareholders and others, using the same
criteria to evaluate all candidates. The Nominating and Governance
Committee reviews each candidate
’
s qualifications, including whether
a candidate possesses any of the specific qualities and skills
desirable in certain members of the Board. Evaluations of
candidates generally involve a review of background materials,
internal discussions and interviews with selected candidates as
appropriate. The Nominating and Governance Committee may, but is
not required to, engage consultants or third-party search firms to
assist in identifying and evaluating potential
nominees.
10
To
recommend a prospective nominee for the Nominating and Governance
Committee
’
s
consideration, submit the candidate
’
s name and qualifications to us in
writing to the following address: Dynatronics Corporation, Attn:
Legal Department, 1200 Trapp Road, Eagan, Minnesota 55121. When
submitting candidates for nomination to be elected as directors,
shareholders must also follow the notice procedures and provide the
information required by our bylaws. In particular, for the
Nominating and Governance Committee to consider a candidate
recommended by a shareholder for nomination at the 2022 Annual
Meeting of Shareholders, the recommendation must be delivered or
mailed to and received by us as indicated above between July 2,
2022 and August 1, 2022 (or, if the 2022 Annual Meeting is not held
within 30 calendar days of the anniversary of the date of the 2021
Annual Meeting, within 10 calendar days after our public
announcement of the date of the 2022 Annual Meeting). The
recommendation must include the same information as is specified in
our bylaws for shareholder nominees to be considered at an annual
meeting, including the following:
●
The
shareholder
’
s name and
address and the beneficial owner, if any, on whose behalf the
nomination is proposed;
●
The
shareholder
’
s reason for
making the nomination at the annual meeting, and the signed consent
of the nominee to serve if elected;
●
The number of
shares owned by, and any material interest of, the record owner and
the beneficial owner, if any, on whose behalf the record owner is
proposing the nominee;
●
A description of
any arrangements or understandings between the shareholder, the
nominee and any other person regarding the nomination;
and
●
Information
regarding the nominee that would be required to be included in our
proxy statement by the SEC
’
s rules, including the
nominee
’
s age, business
experience for the past five years and any directorships held by
the nominee, including directorships held during the past five
years.
We have
adopted a Code of Business Ethics that applies to all officers,
directors and employees. The Code of Business Ethics is available
on the Investors section of our website at
https://irdirect.net/DYNT/corporate_governance
. If
we make any substantive amendments to the Code of Business Ethics
or grant any waiver from a provision of our Code to any executive
officer or director, we will promptly disclose the nature of the
amendment or waiver on our website.
Prohibition against Pledging Dynatronics Securities and Hedging
Transactions
Consistent with our
Insider Trading Policy, we prohibit our executive officers and
members of the Board from pledging our common stock or other
securities and engaging in hedging or monetization transactions or
similar arrangements with respect to our securities that could be
used to hedge or offset any decrease in the value of our
securities. Our policies also specifically prohibit our executive
officers and non-employee directors from engaging in short sales of
our stock, or holding our securities in any margin account for
investment purposes or otherwise using our securities as collateral
for a loan.
The
Board has not adopted formal written corporate governance
guidelines. Given the experience and qualifications our directors
contribute to the Board’s activities, we have implemented a
number of practices designed to encourage effective corporate
governance. These practices include:
●
the requirement
that at least a majority of the directors meet standards of
independence determined by NASDAQ and our Board;
●
holding regular
executive sessions of the independent members of the
Board;
●
holding committee
meetings which include individual sessions with representatives of
our independent registered public accounting firm, as well as with
our Chief Financial Officer and our Chief Executive Officer;
and
●
completion of
“
360
”
performance evaluations of each
director by the other members of the Board.
Our
Board is actively involved in the oversight and management of the
material risks that could affect us. The Board carries out its risk
oversight and management responsibilities by monitoring risk
directly as a full board and, where appropriate, through its
committees. Effective risk oversight is a priority of the Board.
These duties are accomplished through the effective use of Board
committees that function under written charters adopted by the
Board.
Audit Committee Report for Fiscal 2021
The
following is the report of the
Audit Committee with respect to the audited consolidated
financial statements for the fiscal year ended June 30, 2021
included in the Company’s Annual Report on Form
10-K.
Our
management is responsible for preparing our financial statements
and implementing our financial reporting process, including our
system of internal controls over financial reporting pursuant to
Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and has
the primary responsibility for assuring their accuracy,
effectiveness and completeness. Our independent registered public
accounting firm, Tanner LLC, is responsible for performing an
independent audit of our consolidated financial statements and
issuing opinions on the conformity of those audited financial
statements with United States generally accepted accounting
principles (“
GAAP
”) and the effectiveness of
our internal control over financial reporting. The role and
responsibility of the Committee is to monitor and oversee these
financial processes on behalf of the Board of
Directors.
11
The
Audit Committee meets periodically with the independent registered
public accountants, with and without management present, to discuss
the results of the independent registered public accountants’
examinations and evaluations of our internal controls and the
overall quality of our financial reporting, and, as appropriate,
initiates inquiries into various aspects of our financial affairs.
The members of the Audit Committee are not employees of Dynatronics
and are not, nor do they represent themselves to be, accountants or
auditors by profession, and they do not undertake to conduct
auditing or accounting reviews or procedures. Therefore, in
performing the Audit Committee’s oversight role, the Audit
Committee necessarily must rely on management’s
representations that it has maintained appropriate accounting and
financial reporting principles and policies, and appropriate
internal control over financial reporting and disclosure controls
and procedures designed to ensure compliance with accounting
standards and applicable laws and regulations, and that the
Company’s financial statements have been prepared with
integrity and objectivity and in conformity with GAAP, and on the
representations of our independent registered public accounting
firm included in its reports on the Company’s financial
statements.
The
Audit Committee currently consists of three directors, all of whom
qualify as “independent” and meet the financial
literacy and other requirements under the current NASDAQ listing
standards and SEC rules regarding audit committee membership: David
B Holtz, Erin S. Enright, and Scott A. Klosterman.
In this
context, the Audit Committee hereby reports as
follows:
(1)
The Audit Committee
has reviewed and discussed our consolidated audited financial
statements with our management.
(2)
The Audit Committee
has discussed with Tanner LLC the matters required to be discussed
by Auditing Standard No. 1301, “Communications with Audit
Committees,” as adopted by the Public Company Accounting
Oversight Board (the “
PCAOB
”).
(3)
The Audit Committee
has received the written disclosures and the letter from Tanner LLC
required by the applicable requirements of the PCAOB regarding
Tanner LLC’s communications with the Audit Committee
concerning independence, and the Audit Committee has discussed with
Tanner LLC its independence.
(4)
Based on the review
and discussions referred to above in (1) through (3), the
Audit Committee recommended to the Company’s Board,
and the Board approved, that the consolidated audited financial
statements be included in our Annual Report on Form 10-K for the
year ended June 30, 2021 for filing with the SEC.
Respectfully
Submitted by:
MEMBERS
OF THE AUDIT COMMITTEE
David B. Holtz, Chairman
Erin S. Enright
Scott A. Klosterman
Dated:
September 23, 2021
The information contained in the above report shall not be deemed
to be “soliciting material” or to be
“filed” with the SEC, nor shall such information be
incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act
of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference in such
filing.
12
RATIFICATION OF SELECTION OF TANNER
LLC AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIRM FOR
FISCAL
2022
At the
Annual Meeting you will be asked to ratify the appointment of
Tanner LLC (“
Tanner
”) as our independent
registered public accounting firm for the fiscal year ending June
30, 2022. Representatives of Tanner are expected to be present at
the Annual Meeting, and will have the opportunity to make
statements if they desire to do so and to respond to appropriate
questions. Tanner has served as our independent registered public
accounting firm since
October 24,
2016.
If a quorum is present, the affirmative vote of a
majority of the votes cast at the 2021 Annual Meeting on this
proposal is required
for
ratification of our independent registered public accounting firm.
Abstentions will be counted as present
for purposes of determining the presence of a
quorum, but will not be considered as votes cast
either “FOR” or
“
AGAINST” the
proposal and will therefore have no effect on the outcome of the
vote.
Neither
our bylaws nor other governing documents or law require shareholder
ratification of the selection of Tanner as our independent
registered public accounting firm. However, the Audit Committee is
submitting the selection of Tanner to the shareholders for
ratification as a matter of good corporate practice. If the
shareholders fail to ratify the selection, the Audit Committee will
reconsider whether or not to retain that firm. Even if the
shareholders ratify the selection, the Audit Committee in its
discretion may direct the appointment of different independent
auditors at any time during the year if they determine that such a
change would be in our best interests and in the best interests of
our shareholders.
Tanner
has advised us that it has no direct or indirect financial interest
in us or in any of our subsidiaries and that during fiscal year
2021, it had no connection with us or any of our subsidiaries,
other than as our independent registered public accounting firm or
in connection with certain other services, as described
below.
During
fiscal year 2021, we entered into an engagement agreement with
Tanner, which sets forth the terms by which Tanner agreed to
perform audit services for us. Those services consisted of the
audit of our annual consolidated financial statements and review of
the quarterly financial statements.
During
fiscal year 2020, Tanner performed services consisting of the audit
of our annual consolidated financial statements, review of the
quarterly financial statements, and accounting consultations,
consents, and other services related to our SEC
filings.
Tanner
did not perform any financial information systems design and
implementation services for us or our subsidiaries in fiscal years
2020 or 2021.
The
following table summarizes the fees paid by us to Tanner during
fiscal years 2020 and 2021.
|
Type of Service and
Fee
|
2020
|
2021
|
|
Audit Fees
(1)
|
$
185,406
|
$
244,912
|
|
Audit Related Fees
(2)
|
$
11,700
|
$
11,650
|
|
Tax
Fees
|
|
|
|
All Other
Fees
|
|
|
|
Total
Fees
|
$
197,106
|
$
256,562
|
(1)
Audit fees
represent fees for professional services provided in connection
with the audit of our financial statements and internal control
over financial reporting, the review of our quarterly financial
statements, and audit services provided in connection with other
statutory or regulatory filings.
(2)
Audit-related fees
primarily included fees related to accounting consultation and
attestation services.
The
Audit Committee has established a policy that all audit and
permissible non-audit services provided by the independent
registered public accounting firm 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 independent
registered public accounting firm. Pre-approval is detailed as to
the particular service or category of services and is generally
subject to a specific budget. The independent registered public
accounting firm and our management are required to periodically
report to the Audit Committee regarding the extent of services
provided in accordance with this pre-approval, and the fees for the
services performed to date.
The
Audit Committee has determined that the rendering of services other
than audit services by Tanner is compatible with maintaining the
principal accountant
’
s
independence.
13
Recommendation of the Board
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL
NO. 2 RATIFYING THE SELECTION OF TANNER AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING JUNE 30,
2022
Executive Officers
The
following table sets forth certain information with respect to our
executive officers as of the date of this Proxy
Statement:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
John A.
Krier
(1)
|
|
44
|
|
President,
Chief Executive Officer, and Director
|
|
Skyler
Black
(2)
|
|
38
|
|
Corporate
Controller and Corporate Secretary
|
|
Norman
Roegner III
(3)
|
|
46
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
(1)
Principal Executive Officer
.
(2)
Principal
Accounting Officer.
(3)
Principal
Financial Officer.
John A. Krier.
Mr. Krier is a nominee for director at
the Annual Meeting. His personal information is detailed above on
page
5
of this Proxy Statement.
Skyler Black
joined us
as Corporate Controller in January 2018. He was previously with
PricewaterhouseCoopers, LLP where he spent 12 years in their
assurance practice. He is a certified public accountant and holds a
B.S. degree in Accounting from Brigham Young University
–
Idaho. Mr. Black was
appointed Principal Accounting Officer in July 2020.
Norman Roegner III.
Mr. Roegner became
our Chief Financial Officer in November 2020. Prior to joining us,
Mr. Roegner served from 2016 to 2019 as Vice President of Finance
of Phillips-Medisize, LLC, a subsidiary of Molex, LLC. Molex, LLC
is a subsidiary of Koch Industries and a globally recognized
provider of electronic solutions in a wide range of industries,
including medical device manufacturing. Prior to his role with
Phillips-Medisize, LLC, from 1998 to 2016, Mr. Roegner held various
leadership roles in the finance, supply chain, sales operations and
marketing divisions of the Molex organization. Mr. Roegner holds a
B.S. degree in Accountancy from Northern Illinois University and a
M.B.A. from DePaul University.
Our Compensation Objectives
The
Compensation Committee operates under a written charter that
establishes its responsibilities. The Compensation Committee
reviews the charter annually to ensure that its scope is consistent
with the Compensation Committee’s expected role and meets
regulatory requirements. Under the charter, the Compensation
Committee is charged with general responsibility for the oversight
and administration of our executive compensation program. The
charter gives the Compensation Committee the sole responsibility
for determining the compensation of the Chief Executive Officer
based on the Committee’s evaluation of his performance. The
charter also authorizes the committee to engage consultants and
other professionals without management approval to the extent
deemed necessary to discharge its responsibilities.
Decisions regarding
other executives are made by the Compensation Committee considering
recommendations from the Chief Executive Officer and with input
from other executive officers and management. Decisions by the
Compensation Committee with respect to compensation of the Chief
Executive Officer are ratified by the non-executive members of the
Board.
The
compensation of our executive officers includes base salary and
equity components. The ultimate goal of our compensation philosophy
is to create long-term shareholder value by rewarding performance
that furthers our strategic goals and growth. At the same time, the
Compensation Committee seeks to maintain an executive compensation
program that is competitive with comparably-sized organizations
within our industry.
Dynatronics does
not target a specific pay mix; however, each Named Executive
Officer has a significant percentage of their bonus determined by
performance goals established by the Compensation Committee. Each
executive’s compensation opportunity is designed to provide
pay below targeted pay levels if annual and/or long-term
performance goals are not achieved. The compensation program is
designed to provide pay at or above targeted pay levels if
performance meets or exceeds goals. The Company provides a
competitive base salary and benefits with limited equity awards.
There is not an expectation of future equity awards for our
executives, beyond the Chief Executive Officer.
The
following table summarizes information concerning the compensation
paid to our Named Executive Officers for the last two fiscal years
(columns (d), (g) and (h) have been intentionally
omitted):
14
The
following table shows information regarding the compensation of our
named executive officers (“
NEO
”) for services performed in
the fiscal years ended June 30, 2021 and 2020.
|
Name and principal
position
(a)
|
|
Salary
($)
(c)
|
Stock awards ($) (e)
|
Option awards
($)
(f)
|
All other
compensation
($)
(i)
(1)
|
Total
|
|
Brian
D. Baker
|
2021
|
$
82,500
|
-
|
-
|
$
48,737
|
$
131,237
|
|
President and Chief Executive
Officer
(2)
|
2020
|
$
268,097
|
$
69,500
|
$
18,557
|
$
9,730
|
$
365,884
|
|
John A.
Krier
|
2021
|
$
249,179
|
$
46,370
|
$
6,498
|
$
20,872
|
$
322,919
|
|
President and Chief Executive
Officer
(3)
|
2020
|
$
57,500
|
-
|
$
17,744
|
$
5,645
|
$
80,899
|
|
Norman Roegner
III
|
2021
|
$
141,563
|
$
7,768
|
-
|
$
12,706
|
$
162,037
|
|
Chief Financial Officer
|
2020
|
-
|
-
|
-
|
-
|
-
|
|
Jennifer
Keeler
|
2021
|
$
203,627
|
-
|
-
|
$
20,689
|
$
224,316
|
|
General Counsel and Corporate
Secretary
(4)
|
2020
|
$
130,769
|
-
|
-
|
$
10,803
|
$
141,572
|
|
Skyler
Black
|
2021
|
$
158,250
|
-
|
-
|
$
16,897
|
$
175,147
|
|
Corporate Controller
|
2020
|
$
156,086
|
-
|
-
|
$
15,765
|
$
171,851
|
__________________
(1)
“All other
compensation” includes employer contributions to the 401K,
medical, dental, and life insurance benefits.
(2)
Mr. Baker was our
President and Chief Executive Officer from August 2019 through July
2020. During the year ended June 30, 2021, “All other
compensation” includes $7,500 for director fees paid in cash,
$4,350 for director fees paid in stock awards, and $34,280 for
consulting fees.
(3)
Mr. Krier was our
Chief Financial Officer from March to July 2020, and has been our
President and Chief Executive Officer since July 2020.
(4)
Ms. Keeler was our
General Counsel and Corporate Secretary from December 2019 through
July 2021.
The
following table presents information regarding outstanding equity
awards held by each of the NEOs as of June 30, 2021.
|
|
Option awards
|
Stock awards
|
||||
|
Name
|
Number of securities underlying
unexercised options (#) exercisable
|
Number of securities underlying
unexercised options (#) unexercis-able
|
Option exercise price ($)
|
Option expiration date
|
Number of shares or units of stock that have not vested
(#)
|
Market value of shares or units of stock that have not vested
($)
|
|
(a)
|
(b)
|
(c)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
Brian
D. Baker
|
37,500
|
52,500
|
$
1.39 to $2.70
|
2/27/2026
to 8/25/2027
|
37,500
|
45,000
|
|
John
A. Krier
|
8,750
|
41,250
|
$
0.93 to $1.12
|
3/22/2027
to 7/6/2027
|
50,000
|
60,000
|
|
Norman
Roegner III
|
-
|
-
|
-
|
-
|
10,000
|
12,000
|
|
Jennifer
Keeler
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Skyler
Black
|
-
|
-
|
-
|
-
|
-
|
-
|
15
Employment Agreements
Bria
n D.
Baker
.
On August 26,
2019, we entered into an employment agreement with Brian D. Baker
as our President and Chief Executive Officer (the
“
Baker Employment
Agreement
”). Pursuant to the Baker Employment
Agreement, Mr. Baker was paid a salary of $275,000 per year and was
eligible for an annual bonus targeted at a maximum payout of
$100,000, as determined by the Compensation Committee of the Board,
based on results of operations and Mr. Baker’s performance
against goals established by the Compensation Committee. Mr. Baker
was also entitled to annual equity grants of RSUs valued at a
maximum of $100,000, as determined by the Compensation Committee,
such grants to vest 50% upon the date of grant and 50% on the first
anniversary of the date of grant.
Upon
execution of the Baker Employment Agreement, Mr. Baker received a
grant of 50,000 RSUs, vesting in four equal annual installments
commencing on the first anniversary of the grant date. We also
granted him a stock option under the 2018 Plan to purchase 50,000
shares of common stock at a price of $1.39 per share, which was the
closing price of our common stock on the date of grant. The option
vests in four equal annual installments, commencing on the first
anniversary of the date of grant. In conjunction with Mr.
Baker’s appointment as President and Chief Executive Officer,
the Board determined that it is in the Company’s best
interests that the principal executive officer should operate from
our Eagan, Minnesota location and therefore authorized payment of
certain relocation expenses for Mr. Baker, not to exceed
$25,000.
The
Baker Employment Agreement package included non-solicitation,
non-competition and confidentiality agreements with
post-termination restrictive covenants. We also entered into an
indemnification agreement with Mr. Baker on the same terms that we
have entered into with our other directors and executive
officers.
Mr.
Baker resigned as Chief Executive Officer in June 2020 and his
agreement was terminated. See “Payments upon
Termination,” below.
John A. Krier
. On
July 7, 2020, we entered into an employment agreement with our new
President and Chief Executive Officer, John Krier. Pursuant to the
Agreement, we will pay Mr. Krier an annual base salary of $250,000
per year and he will be eligible for an annual bonus targeted at a
maximum payout of $75,000, and an annual equity award of restricted
stock units, or RSUs, up to a maximum value of $75,000, which
amount will be determined by the Compensation Committee of the
Board, based on results of operations and Mr. Krier’s
performance against goals established by the Compensation
Committee. On the date of his appointment, Mr. Krier received a
grant of 50,000 RSUs under the 2018 Plan, vesting in four equal
annual installments commencing on the first anniversary of the
grant date. Upon vesting, Mr. Krier will receive a number of shares
of common stock equal to the number of RSUs that have vested. Also,
upon his appointment date, the Company granted Mr. Krier a stock
option under the 2018 Plan for the purchase of 15,000 shares of
common stock, vesting over a four-year period with one-fourth of
the shares vesting annually on the anniversary of the grant date.
The exercise price of the stock option is the market price of the
common stock on the date of grant.
The
employment agreement continues until terminated by the Company or
by Mr. Krier in accordance with the terms of the agreement. If the
Company terminates Mr. Krier’s employment during the first 12
months without cause as defined under the agreement, we must pay
Mr. Krier an amount equal to three months base salary. In addition,
in such event, one-half of the initial equity compensation awards
granted to him at the time of his appointment as CEO will
automatically vest, subject to his execution of a release of all
claims against the Company.
Mr.
Krier is also subject to a non-solicitation, non-competition and
confidentiality agreement with post-termination restrictive
covenants. We also entered into an indemnification agreement with
Mr. Krier on the same terms as the agreements entered into with our
other directors and executive officers.
Brian D. Baker.
On
July 7, 2020, Brian Baker, citing the need for a reduced work
schedule to allow more flexibility to address health issues
relating to the COVID-19 virus, stepped down as Chief Executive
Officer. Mr. Baker continues to serve as a member of the Board and
is a nominee for election at the Annual Meeting. Subject to the
conditions and provisions of the Company’s equity incentive
plans, equity awards held by Mr. Baker will continue to vest and be
exercisable according to their respective terms. In connection with
Mr. Baker’s resignation, the Company and Mr. Baker entered
into a Separation and Pay Continuation Agreement
(“
Separation
Agreement
”). The Separation Agreement provides that
through October 7, 2020 (the “
Separation Date
”), Mr. Baker
would receive the same compensation and benefits, including
continued vesting of outstanding equity awards, as under his
employment agreement as in effect on August 19, 2019. The
Separation Agreement includes a general release of claims and
waivers customary in such agreements. Mr. Baker’s departure
was not the result of any disagreement with us on any matter
relating to the Company’s operations, policies or practices.
We also entered into a Consulting Agreement with Mr. Baker
effective October 8, 2020, pursuant to which Mr. Baker provides
consulting services to the Company on a part-time basis following
the Separation Date for up to 20 hours per week.
We do
not provide pension arrangements or post-retirement health coverage
for executive officers or employees. Our executive officers and
other eligible employees may participate in one of our 401(k)
defined contribution plans depending on the location of their
employment. In fiscal year 2021, we maintained two separate 401(k)
plans for our employees: (1) the Dynatronics Corporation Plan (the
“
Dynatronics Plan
”
) covers its Bird & Cronin, LLC
and Dynatronics Corporation employees; and (2) the Hausmann
Enterprises, LLC Plan (the
“
Hausmann Plan
”
) covers employees at our New Jersey
location.
Dynatronics Plan
.
Under the Dynatronics Plan, employees who are 21 years of age or
older are eligible to participate on the first day of the month
following their hire date. Eligible employees may contribute to the
Dynatronics Plan in the form of salary deferrals of up to $19,500,
the maximum allowable for calendar year 2021. Eligible employees
who are over 50 years old may contribute an additional $6,000 in
catchup contributions during calendar year 2021. We match employee
contributions at 50% of the first 6% of employee compensation, up
to a maximum of $3,000 per employee per year. Participants in the
Dynatronics Plan are fully vested in their salary deferral
contributions, and employer matching contributions vest 10% after
year one, 20% each year thereafter (100% vested after six
years).
16
Hausmann Plan
. Under
the Hausmann Plan, employees who are 21 years of age or older are
eligible to participate on the first day of the month following
their hire date. Eligible employees may contribute to the Hausmann
Plan in the form of salary deferrals of up to $19,500, the maximum
allowable for calendar year 2021. Eligible employees who are over
50 years old may contribute an additional $6,000 in catchup
contributions during calendar year 2021. We match employee
contributions at 50% of the first 6% of employee compensation, up
to a maximum of $3,000 per employee per year. Participants in the
Hausmann Plan are fully vested in their salary deferral
contributions, and employer matching contributions vest 10% after
year one and two, 20% each year thereafter (100% vested after six
years).
Security Ownership of Certain Beneficial Owners and
Management
The
following table sets forth certain information regarding the
ownership of our voting securities as of September 20, 2021,
for:
●
each shareholder
known by us to be the beneficial owner of more than 5% of any class
of our voting securities;
●
each of our
directors;
●
each of our NEOs;
and
●
all of our
directors and executive officers as a group.
Applicable
ownership is based on 17,604,296 shares of common stock outstanding
at September 20, 2021. In computing the percentage of shares of
common stock beneficially owned, we deemed to be outstanding all
shares of common stock subject to options, warrants or other equity
awards and all shares of our Series A Preferred, and Series B
Preferred held by that person or entity that are currently
exercisable or exchangeable or that will become exercisable or
convertible within 60 days.
Under
SEC rules,
“
Named Executive Officers
”
or “
NEO
” include (i) all persons who
served as principal executive officer during the last completed
fiscal year, regardless of compensation level; (ii) our two most
highly compensated executive officers other than the principal
executive officer who were serving as executive officers as of the
end of the last completed fiscal year; and (iii) up to two
additional individuals who would have been deemed to be Named
Executive Officers except that they were not serving as officers at
the end of the fiscal year. Pursuant to these rules, we have
identified as our NEOs for purposes of this Proxy Statement the
following: (1) Mr. Krier, who is our Chief Executive Officer at the
end of fiscal 2021; (2) Mr. Baker, who served as our Chief
Executive Officer for a time during fiscal 2021; (3) Jennifer
Keeler, who was our General Counsel and Corporate Secretary and one
of our two most highly compensated executive officer for fiscal
2021; and (4) Skyler Black, who is our Corporate Controller and
Corporate Secretary. Unless otherwise indicated in the notes below
the table, the address of each beneficial owner listed in the table
below is c/o Dynatronics Corporation, 1200 Trapp Road, Eagan,
Minnesota 55121.
17
Beneficial Ownership Table
|
Name/Address
of Beneficial Owner
(1)
|
Title of
Class
|
No. of
Shares of each
Class
Beneficially
Owned
|
Percent of Class
Beneficially
Owned
|
Total No. of Shares Beneficially
Owned
|
Percent of Total Voting
Power
|
|
Greater than 5% Shareholders:
|
|
|
|
|
|
|
Stuart
M. Essig
(2)
|
Common
|
2,149,671
|
11.8%
|
3,289,671
|
12.1%
|
|
|
Series
A
|
880,000
|
44.2%
|
|
|
|
|
Series
B
|
260,000
|
19.1%
|
|
|
|
Stuart
M. Essig 2007 Family Trust
(3)
|
Common
|
643,500
|
3.6%
|
872,300
|
2.6%
|
|
|
Series
A
|
188,800
|
9.5%
|
|
|
|
|
Series
B
|
40,000
|
2.9%
|
|
|
|
Provco
Ventures I, LP
(4)
|
Common
|
1,599,375
|
8.8%
|
2,283,375
|
7.8%
|
|
|
Series
A
|
484,000
|
24.3%
|
|
|
|
|
Series
B
|
200,000
|
14.7%
|
|
|
|
Armistice
Capital, LLC
(5)
|
Common
|
2,760,000
|
14.7%
|
3,260,000
|
10.2%
|
|
|
Series
B
|
500,000
|
36.8%
|
|
|
|
Nancy
K. Cronin
(6)
|
Common
|
978,161
|
5.6%
|
978,161
|
4.8%
|
|
|
|
|
|
|
|
|
Directors and Named Executive Officers:
|
|
|
|
|
|
|
Brian
D. Baker (CEO/Director)
(7)
|
Common
|
171,961
|
1.0%
|
267,961
|
*
|
|
|
Series
A
|
96,000
|
4.8%
|
|
|
|
John A.
Krier (CEO/Director)
(8)
|
Common
|
47,322
|
*
|
47,322
|
*
|
|
|
|
|
|
|
|
|
Erin S. Enright (Director)
(9)
|
Common
|
643,500
|
3.6%
|
872,300
|
2.6%
|
|
|
Series A
|
188,800
|
9.5%
|
|
|
|
|
Series
B
|
40,000
|
2.9%
|
|
|
|
David
B. Holtz (Director)
(10)
|
Common
|
99,829
|
*
|
99,829
|
*
|
|
Scott
A. Klosterman (Director)
(11)
|
Common
|
99,829
|
*
|
99,829
|
*
|
|
Brian M. Larkin (Director)
(12)
|
Common
|
252,771
|
1.4%
|
320,771
|
1.2%
|
|
|
Series A
|
48,000
|
2.4%
|
|
|
|
|
Series
B
|
20,000
|
1.5%
|
|
|
|
R.
Scott Ward (Director)
(13)
|
Common
|
82,078
|
*
|
82,078
|
*
|
|
Norman
Roegner III (CFO)
(14)
|
Common
|
7,680
|
*
|
7,680
|
*
|
|
Jennifer
Keeler (General Counsel and Corporate Secretary)
(15)
|
Common
|
-
|
*
|
-
|
*
|
|
Skyler
Black (Corporate Controller and Corporate Secretary)
(16)
|
Common
|
-
|
*
|
-
|
*
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group (11
persons)
|
Common
|
1,404,970
|
8.0%
|
1,979,770
|
6.2%
|
|
|
Series
A
|
332,800
|
16.7%
|
|
|
|
|
Series
B
|
60,000
|
4.4%
|
|
|
(1)
The
table assumes 17,604,269 shares of common stock issued and
outstanding as of September 20, 2021. The amount in the
“Percent of Total Voting Power” column includes the
impact of any applicable Voting Cutback as to the indicated
beneficial owner. Subject to the Voting Cutback, the Series A
Preferred and the Series B Preferred vote on an as-converted basis
one vote per share with the common stock. For purposes of the
table, we determined the number of shares of each class as
beneficially owned by each person under Rule 13d-3(d)(1) of the
Exchange Act. Under this rule, shares of voting stock not
outstanding that are subject to issuance pursuant to options,
warrants, rights or conversion privileges exercisable by a person
within 60 days of the date indicated are deemed outstanding for the
purpose of calculating the number and percentage beneficially owned
by such person, but are not deemed outstanding for the purpose of
calculating the number or percentage beneficially owned by any
other person listed in the table. Except where otherwise noted, we
believe that each individual or entity named has sole investment
and voting power with respect to the shares beneficially owned by
such person, subject to community property laws, where applicable.
Beneficial ownership representing less than one percent of the
outstanding shares of a class is denoted with an asterisk (*). If
an individual or person disclaims beneficial ownership, that is
noted in the notes below the table.
(2)
Mr. Essig is an
observer to our Board and the husband of Erin Enright, a Preferred
Director and the Chairman of our Board. The amount of common stock
beneficially owned includes: (a) 1,560,666 shares of common stock
owned of record and (b) 589,005 shares of common stock issuable
upon the exercise of warrants. Mr. Essig has sole voting and
dispositive power over the shares of stock indicated. He has no
voting or dispositive power over securities that are beneficially
owned of record by The Stuart M. Essig 2007 Family Trust
(“Essig Trust,” see, Note (3), below) or by Ms. Enright
(see, Note (9), below). The address for this beneficial owner is
512 West MLK Jr. Blvd #320, Austin, Texas 78701.
18
(3)
Mr. Essig is the
settlor/grantor of the Essig Trust. His wife, Ms. Enright, is
Trustee of the Essig Trust. Shares of common stock beneficially
owned include: (a) 199,699 shares of common stock owned of record
and (b) 343,200 shares of common stock issuable upon exercise of
warrants. Ms. Enright and the Essig Trust have shared voting and
dispositive power over the shares of stock owned of record by the
Essig Trust. Amount indicated also includes 100,601 shares of
common stock owned of record by Ms. Enright personally, over which
Ms. Enright has sole voting and dispositive power. (See, Note (9),
below.) The address for this beneficial owner is 512 West MLK Jr.
Blvd #320, Austin, Texas 78701.
(4)
The address of this
beneficial owner is 795 E. Lancaster Ave. Suite 200, Villanova, PA
19085. The general partner of this shareholder is Provco, LLC. The
sole member of Provco, LLC is Richard E. Caruso, Ph.D. The amount
of common stock beneficially owned includes: (a) 1,023,375 shares
of common stock owned of record, and (b) 576,000 shares of common
stock issuable upon the exercise of warrants.
(5)
The address for
this beneficial owner is c/o Steven Boyd, 510 Madison Ave, 22nd
Floor, New York, New York 10022. With respect to information
relating to Armistice Capital, LLC, we have relied solely on
information supplied by such entity on a Schedule 13G/A filed with
the SEC
on February 16,
2021. Per the Schedule 13G/A, Armistice Capital, LLC held shared
voting power over 1,630,000 shares and shared dispositive power
over 1,630,000 shares. Amount of common stock beneficially owned
includes 1,130,000 shares of common stock issuable upon the
exercise of warrants.
(6)
Ms. Cronin received
these shares upon conversion of shares of our Series D Non-Voting
Convertible Preferred Stock issued in connection with our
acquisition of Bird & Cronin, Inc. (“Bird &
Cronin”), of which she was a majority beneficial owner. The
address for this beneficial owner is 6101 Mt. Normandale Dr.,
Bloomington, Minnesota 55438.
(7)
Amount of common
stock beneficially owned includes (a) 50,000 exercisable options,
(b) 97,961 shares of common stock owned of record, and (c) 24,000
shares of common stock issuable upon exercise of
warrants.
(8)
Amount of common
stock beneficially owned includes 12,500 exercisable
options.
(9)
The amount of
common stock beneficially owned includes: (a) 100,601 shares of
common stock owned of record and (b) 542,899 shares of common stock
beneficially owned by the Essig Trust (see, Note (3), above). Ms.
Enright has no voting and dispositive power over the shares
beneficially owned by her husband; she has shared voting and
dispositive power as Trustee over the shares beneficially owned by
the Essig Trust.
(10)
Mr. Holtz is an
executive officer of Provco, LLC, the general partner of Provco
Ventures I LP. He does not have sole voting or dispositive power of
shares beneficially owned by Provco.
(11)
All amounts
indicated are shares of common stock owned of record by Mr.
Klosterman.
(12)
The amount of
common stock beneficially owned includes: (a) 190,771 shares of
common stock owned of record and (b) 62,000 shares issuable upon
the exercise of warrants.
(13)
All amounts
indicated are shares of common stock owned of record by Dr.
Ward.
(14)
All amounts
indicated are shares of common stock owned of record by Mr.
Roegner.
(15)
Ms. Keeler does not
own any company securities. Ms. Keeler was our General Counsel and
Corporate Secretary from December 2019 through July
2021.
(16)
Mr. Black does not
own any company securities.
Securities Authorized for Issuance Under Equity Compensation
Plans
Equity Grants
As of
June 30, 2021, options to purchase a total of 140,000 registered
shares of our common stock were outstanding at a weighted average
exercise price of $1.56 per share, of which options to purchase
46,250 shares of our common stock were vested and exercisable at a
weighted average exercise price of $1.91 per share and options to
purchase 93,750 shares were unvested and not exercisable at a
weighted average exercise price of $1.38 per share. These options
were issued under our Dynatronics 2018 Equity Incentive Award Plan
(the “
2018
Plan
”) and under our Dynatronics Corporation 2020
Equity Incentive Plan (the “
2020 Plan
”). At June 30, 2021, an
additional 1,000,000 shares remained available for future equity
grants under our 2020 Plan, and 290,656 shares remained available
for future equity grants under our 2018 Plan.
The
following table summarizes awards outstanding under the 2018 Plan
and the 2020 Plan as of June 30, 2021. The following information
does not reflect issuances or exercises under the 2018 Plan or the
2020 Plan subsequent to June 30, 2021.
19
|
Plan category
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)
|
Number of securities
remaining available for
future issuance
under
equity compensation
plans
(excluding securities
reflected in column (a))
(c)
|
|
Equity compensation plans approved by security
holders
|
|
|
|
|
2020 Plan
|
-
|
-
|
1,000,000
|
|
2018 Plan
|
140,000
|
$1.56
|
290,656
|
|
Total
|
140,000
|
|
1,290,656
|
Description of the 2018 Plan
Our
Board unanimously approved the Company’s 2018 Plan on
September 10, 2018, and the 2018 Plan was approved by our
shareholders at our 2018 Annual Meeting of Shareholders on December
3, 2018. The Board also determined to keep the 2018 Plan in effect
upon adoption of the 2020 Plan, and to grant awards under the 2018
Plan until the remaining shares available for awards and issuance
under the 2018 Plan have been exhausted. The 2018 Plan reserved for
issuance pursuant to awards under the 2018 Plan, 600,000 shares of
common stock, plus the number of shares of common stock reserved
and available for issuance under our prior plan (the 2015 Plan) as
of the date of shareholder approval of the 2018 Plan. For purposes
of this limitation, the shares of stock underlying any awards that
are forfeited, are canceled, expire or are terminated (other than
by exercise) under (i) the 2018 Plan or (ii) from and after
shareholder approval of the 2018 Plan, the shares remaining
available under our 2015 Equity Incentive Award Plan (the
“
2015 Plan
”)
were added to the shares of stock available for issuance under the
2018 Plan. Shares tendered or held back upon exercise of an option
or settlement of an award to cover the exercise price or tax
withholding were not be available for future issuance under the
2018 Plan. As of June 30, 2021, 290,656 shares remain authorized
for issuance under the 2018 Plan and awards covering 140,000 of
shares of common stock remain outstanding as of June 30, 2021 and
remain operative under the terms of the respective
grants.
Description of the 2020 Plan
The
maximum number of shares of stock reserved and available for
issuance under the 2020 Plan is 1,000,000 shares of common stock
(without giving effect to any subsequent adjustments resulting from
stock splits or other transactions), plus the number of shares of
common stock underlying any award granted under our 2015 Plan and
the 2018 Plan that are forfeited, are canceled, expire or are
terminated (other than by exercise). Shares tendered or held back
upon exercise of an option or settlement of an award to cover the
exercise price or tax withholding shall not be available for future
issuance under the 2020 Plan.
The
2020 Plan provides for the grant of various types of awards,
including, for example: (i) incentive stock options; (ii)
nonqualified stock options; (iii) stock appreciation rights; (iv)
restricted stock awards; (v) deferred stock awards; and (vi) other
stock-based and cash-based awards to eligible individuals. The
terms of the awards will be set forth in an award agreement,
consistent with the terms of the 2020 Plan.
As of
June 30, 2021, 1,000,000 shares remain authorized for issuance
under the 2020 Plan and no awards remain outstanding as of June 30,
2021.
Certain Relationships and Related Transactions
We have
adopted a policy that any transactions with directors, executive
officers or entities of which they are also officers or directors
or in which they have a financial interest, will only be on terms
consistent with industry standards and approved by a majority of
the disinterested members of our Board. In addition, interested
directors may be counted in determining the presence of a quorum at
a meeting of our Board or a committee thereof that approves such
transactions. If there are no disinterested directors, we shall
obtain a majority vote of the shareholders approving the
transaction.
20
Shareholders may
submit proposals on matters appropriate for shareholder action at
meetings of our shareholders in accordance with Rule 14a-8
promulgated under the Exchange Act. For such proposals to be
included in our proxy materials relating to our 2022 Annual Meeting
of Shareholders, all applicable requirements of Rule 14a-8 must be
satisfied and such proposals must be received by us no later than
June 1, 2022. Such proposals should be delivered to Dynatronics
Corporation, 1200 Trapp Road, Eagan, Minnesota 55121, Attention:
Legal Department, telephone (801) 568-7000.
Our
Board has determined that, except in the case of proposals made in
accordance with Rule 14a-8, for shareholder nominations to the
Board or other proposals to be considered at an annual meeting of
shareholders, the shareholder must have given timely notice thereof
in writing to our Corporate Secretary not less than 60 nor more
than 90 calendar days prior to the anniversary of the date on which
we first mailed our proxy materials for our immediately preceding
annual meeting of shareholders (as specified in the proxy materials
for the immediately preceding annual meeting of shareholders). To
be timely for the 2022 Annual Meeting of Shareholders, a
shareholder
’
s notice must
be delivered or mailed to and received by our Corporate Secretary
at our principal executive offices between July 11, 2022 and August
11, 2022. However, in the event that the 2022 Annual Meeting is
called for a date that is not within 30 calendar days of the
anniversary of the date that the 2022 Annual Meeting was called, to
be timely, notice by the shareholder must be received by us not
later than the close of business on the tenth calendar day
following the date on which public announcement of the date of the
2022 Annual Meeting is first made. In no event will the public
announcement of an adjournment of an Annual Meeting of shareholders
commence a new time period for the giving of a
shareholder
’
s notice as
provided above. A shareholder
’
s notice to our Corporate Secretary
must set forth the information required by the bylaws with respect
to each matter the shareholder proposes to bring before the Annual
Meeting.
In
addition, the proxy solicited by the Board for the 2022 Annual
Meeting of Shareholders will confer discretionary authority to vote
on (i) any proposal presented by a shareholder at that meeting for
which we have not been provided with notice on or prior to August
11, 2022, and (ii) any proposal made in accordance with the bylaw
provisions, if the 2022 Proxy Statement briefly describes the
matter and how management
’
s proxy holders intend to vote on
it, if the shareholder does not comply with the requirements of
Rule 14a-4(c)(2) under the Exchange Act.
Delinquent Section 16(a) Reports
Section
16(a) of the Exchange Act requires our directors and executive
officers, and persons who own more than 10% of a registered class
of our equity securities, to file with the SEC initial reports of
ownership and reports of changes in beneficial ownership of such
equity securities. To our knowledge, based upon the reports filed
and written representations regarding reports required during the
fiscal year ended June 30, 2021, no executive officer or director
of the Company failed to file reports required by Section 16(a) on
a timely basis, except that due to an administrative oversight, Mr.
Krier, Mr. Roegner, and Mr. Black were late reporting their initial
statement of beneficial ownership on Form 3.
The SEC
has adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for Notices of
Internet Availability of Proxy Materials or other Annual Meeting
materials with respect to two or more shareholders sharing the same
address by delivering a single Notice of Internet Availability of
Proxy Materials or other Annual Meeting materials addressed to
those shareholders. This process, which is commonly referred to as
“
householding
,
”
potentially means extra convenience
for shareholders and cost savings for companies.
This
year, a number of brokers with account holders who are Dynatronics
shareholders will be householding our proxy materials. A single
Notice of Internet Availability of Proxy Materials will be
delivered to multiple shareholders sharing an address unless
contrary instructions have been received from the affected
shareholders. Once you have received notice from your broker that
they will be householding communications to your address,
householding will continue until you are notified otherwise or
until you revoke your consent. If, at any time, you no longer wish
to participate in householding and would prefer to receive a
separate Notice of Internet Availability of Proxy Materials, please
notify your broker. Shareholders who currently receive multiple
copies of the Notices of Internet Availability of Proxy Materials
at their addresses and would like to request householding of their
communications should contact their brokers.
The
Board knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are
properly brought before the meeting, it is the intention of the
persons named in the accompanying proxy to vote on such matters in
accordance with their best judgment.
By
Order of the Board of Directors
/s/ Skyler Black
Skyler
Black
Corporate
Controller and Corporate Secretary
October
5, 2021
A copy of
our
Annual
Report on Form 10-K
for the
fiscal year ended June 30, 2021, is available without charge upon
written request to: Attn: Corporate Secretary, Dynatronics
Corporation, 1200 Trapp Road, Eagan, Minnesota
55121.
To the extent the rules and
regulations adopted by the SEC state that certain information
included in this
Proxy
Statement is not deemed “
soliciting material” or
“
filed” with the
SEC or subject to
Regulation
14A promulgated by the SEC or to the liabilities of
Section 18 of the Exchange Act, such
information shall not be deemed incorporated by reference by any
general statement incorporating by reference this
Proxy Statement into any filing under
the
Securities Act of 1933, as
amended, or under the
Exchange
Act.
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