Item 1.01 Entry into a Material Definitive Agreement

Effective July 8, 2020, Dynatronics Corporation (the "Company") entered into a Master Service Agreement ("Agreement") with Millstone Medical Outsourcing, LLC ("Millstone") to provide fulfillment and distribution services. Pursuant to the Agreement, Millstone will store and distribute products as directed by the Company and the Company will pay Millstone fees at prices and on terms provided in the Agreement.

The initial term of the Agreement is for three years from the effective date. The Agreement will automatically renew for one-year terms thereafter unless terminated by either party in accordance with its terms. Either party may terminate the Agreement with or without cause upon 180 days' written notice. Either party may terminate in the event of material breach by the other party, following 60-days' written notice and opportunity to cure, or immediately upon written notice in the event of a material breach incapable of cure that is resulting in continuing damage or loss. Either party may also terminate immediately with written notice in the event of the failure to obtain or renew any necessary governmental permit, license or approval, or in the event of the bankruptcy or insolvency of the other party.

Management believes the outsourcing of these distribution capabilities to Millstone is consistent with the Company's objectives of streamlining its operations, continuing to align operating expenses with current revenue levels and, where advantageous, producing additional benefits from a reduction in workforce and related costs.

The foregoing summary of the terms and conditions of the Agreement is qualified in its entirety by reference to the Agreement, to be filed as an exhibit to the Company's Form 10-K for the fiscal year ended June 30, 2020.

Caution Concerning Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that describe future outcomes or expectations that are usually identified by words such as "will," "should," "could," "plan," "intend," "expect," "continue," "forecast," "believe," and "anticipate" and include, for example, any statement made regarding the Company's future results. Actual results may differ materially as a result of various risks and uncertainties, including circumstances or developments that may make the Company unable to implement or realize the anticipated benefits, or that may increase the costs, of its current business initiatives, including the outsourcing of manufacturing and assembly functions and any related reduction in workforce; and those other risks and uncertainties expressed in the cautionary statements and risk factors in the Company's annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. The Company may not be able to predict and may have little or no control over many factors or events that may influence its future results and, except as required by law, shall have no obligation to update any forward-looking statements.

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