UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DCD.C. 20549

___________________

FORM 10-K

(Mark One)

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, ~~2024~~ 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~____________~~ ______________ to ~~____________~~______________

Commission File Number: 000-14942

___________________

PRO-DEX, INC.

(Exact name of registrant as specified in its charter)

Colorado	84-1261240
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
2361 McGaw Avenue, Irvine, CA	92614
(Address of Principal Executive Offices)	(Zip Code)

Colorado

(State or Other Jurisdiction

of Incorporation or Organization)

2361 McGaw Avenue, Irvine, CA

(Address of Principal Executive Offices)

84-1261240

(I.R.S. Employer

Identification No.)

92614

(Zip Code)

~~(949) 769-3200~~___________________

(Registrant’s telephone number, including area code: (949) 769-3200

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	PDEX	NASDAQ Capital Market

___________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. inSee the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of December 2931, ~~2023,~~ 2024, the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing ~~sales~~ sales price on the Nasdaq Capital Market was approximately $3579.59 million. For the purpose of this calculation shares owned by officers, directors, and 10% shareholders known to the registrant have been deemed to be owned by affiliates. This calculation does not reflect a determination that persons are affiliates for any other purposes.

As of September 43, ~~2024~~ 2025, 3,~~358~~261,~~057~~979 shares of the registrant’s no par value common stock were issued and outstanding.

Documents incorporated by reference:

Part III of this ~~report~~ report incorporates by reference certain information from the registrant’s definitive proxy statement (the “Proxy Statement”) for its ~~2024~~2025 Annual Meeting of Shareholders. The Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

PRO-DEX, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED JUNE 30, ~~2024~~2025

TABLE OF CONTENTS

		PAGE
PART I
ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	6
ITEM 1B.	UNRESOLVED STAFF COMMENTS	13
ITEM 1C.	CYBERSECURITY	13
ITEM 2.	PROPERTIES	1413
ITEM 3.	LEGAL PROCEEDINGS	1413
ITEM 4.	MINE SAFETY DISCLOSURES	1413
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	1514
ITEM 6.	RESERVED	1614
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1715
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2522
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	2623
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	5350
ITEM 9A.	CONTROLS AND PROCEDURES	5350
ITEM 9B.	OTHER INFORMATION	5451
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	5451
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	5552
ITEM 11.	EXECUTIVE COMPENSATION	5552
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	5552
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	5552
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	5552
PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	5653
ITEM 16.	FORM 10–K SUMMARY	5955
SIGNATURES		6056

PART I

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements are not based on historical facts but instead reflect the Company’s expectations, estimates or projections concerning future results or events. These statements generally can be identified by the use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “intend,” “intent,” “belief,” “estimate,” “project,” “forecast,” “plan,” “likely,” “will,” “should” or similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties, and assumptions that are difficult to predict and could cause actual results, performance, or achievements to differ materially from those expressed or indicated by those statements. The Company cannot assure you that any of its expectations, estimates or projections will be achieved.

Forward-looking statements included in this report are only made as of the date of this report and the Company disclaims any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances.

Numerous factors could cause the Company’s actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: loss of a significant customer, entry of new and stronger competitors, capital availability, unexpected costs, compliance with contractual obligations, failure to capitalize upon access to new customers, the ramifications of industry consolidation of medical products manufacturers, dealers and distributors, ~~managed health care,~~ failure to mitigate supply chain issues, market acceptance and support of new products, cancellation of existing contracts, customer “in house” production of products previously designed by and/or acquired from the Company, invalidity or unenforceability of the Company’s patents and other intellectual property, maintaining favorable supplier relationships, the Company’s ability to engage qualified human resources as needed, regulatory compliance, general economic conditions, and other factors described under Item 1A (Risk Factors) of this report. This list of factors is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

ITEM 1.

BUSINESS

Company Overview

Pro-Dex, Inc. (“Company,” “Pro-Dex,” “we,” “our,” “us”) specializes in the design, development, and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic, thoracic, and craniomaxillofacial (“CMF”) markets. We have patented adaptive torque-limiting technology and proprietary sealing solutions which appeal to our customers, primarily medical device distributors. We also manufacture and sell rotary air motors to a wide range of industries; however, these motors comprise a de minimis portion of our business.

Our patented adaptive torque-limiting software has been very well received in the CMF and thoracic markets and we have continued investment in this area with research and development focused on applying this technology to other surgical applications.

In November 2020, we purchased an approximate 25,000 square foot industrial building in Tustin, California (the “Franklin Property”). This building is located approximately four miles from our Irvine, California headquarters and was acquired to provide us additional capacity for our expected continued future growth. We substantially completed the build-out of the property during fiscal 2022 and concluded various verification and validation activities during fiscal 2023. We moved our entire assembly and repairs operations to the new facility in the fourth quarter of fiscal 2023 and we are now fully operational in the new facility. We believe the new facility will create additional capacity for our expected continued growth over the next several years.

Our principal headquarters are located at 2361 McGaw Avenue, Irvine, California 92614 and our phone number is 949-769-3200. Our Internet address is www.pro-dex.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, and certain other Securities and Exchange Commission (“SEC”) filings, are available free of charge through our website as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. In addition, our Code of Ethics and other corporate governance documents may be found on our website at the Internet address set forth above. Our filings with the SEC may also be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov and company specific information at www.sec.gov/edgar/searchedgar/companysearch.html.

All years relating to financial data herein shall refer to fiscal years ended June 30, unless indicated otherwise.

Description of Business

The majority of our revenue is derived from designing, developing and manufacturing surgical devices for the medical device industry. The proportion of total sales by type is as follows (in thousands, except percentages):

	Years Ended June 30,
	2024						2023
	2025						2024
	(In thousands)
				% of Revenue						% of Revenue
Medical devices	$	3647,~~979~~747			6972	%	$	3036,~~740~~979			6669	%
Industrial and scientific		~~765~~861			1	%		~~865~~765			21	%
NRE & Prototypes		~~786~~698			1	%		~~2,695~~786			61	%
Dental and component		~~201~~194			—			~~257~~201			1—	%
Repairs		1618,~~505~~586			3128	%		1216,~~617~~505			2731	%
Discounts & Other		(1,~~392~~493	)		(2	%)		(1,~~087~~392	)		(2	%)
Total Sales	$	5366,~~844~~593			100	%	$	4653,~~087~~844			100	%

Our medical device products ~~utilize~~ utilize proprietary designs developed by us primarily under exclusive development and supply agreements and are currently machined in our Irvine, California facility, and assembled in our Tustin, California facility, as are our rotary air motors. Our medical device products are sold primarily to original equipment manufacturers and our air motors are sold ~~primarily~~ to a wide range of distributors and end users.

In fiscal ~~2024~~2025, our top ~~three~~ three customers accounted for 8894% of our sales compared to 9288% in fiscal ~~2023~~2024. In fiscal ~~2024~~2025, we had one customer, included in both medical device and repairs revenue above, that accounted for 7175% of sales with our next largest customer accounting for 12% of sales. This compares to fiscal ~~2023~~2024, when these same two customers accounted for 6771% and 1612%, respectively, of our total sales. In many cases, including our largest customers, disclosure of customer names is prohibited by confidentiality agreements with such entities. We have no plans to discontinue the sales relationships with our existing significant customers, nor does management have any knowledge that any existing significant customer intends to terminate its relationship with us.

Our business today is almost ~~entirely~~ entirely driven by sales of our medical devices. Many of our significant customers place purchase orders for specific products that were ~~developed~~ developed under various development and/or supply agreements. Our customers may request that we design and manufacture a custom surgical ~~device~~ device or they may hire us as a contract manufacturer to manufacture a product of their own design. In either case, we have extensive ~~experience~~ experience with autoclavable, battery-powered and electric, multi-function surgical drivers and shavers. We continue to focus a significant ~~percentage~~ percentage of our time and resources on providing outstanding products and service to our valued principal customers. During the first quarter of fiscal 2021, our largest customer executed an amendment to our existing supply agreement such that we will continue to supply their surgical handpieces to them through calendar 2025 and, during the fourth quarter of fiscal 2021, they executed a product development ~~agreement~~ agreement and related statement of work for our assistance with the next generation of this handpiece. During fiscal 2025, they launched their next generation handpiece. During the fourth quarter of fiscal 2025, the customer released the hold that it had placed on shipments of the next generation handpiece in the third quarter of fiscal 2025, and we resumed production and shipments of the next generation handpiece late in the fourth quarter of fiscal 2025. Additionally, we continue to invest in property and equipment as well as personnel to expand our capacity to achieve higher sales volumes.

To that end, we purchased the Franklin Property in November 2020. This building is located approximately four miles from our Irvine, California headquarters and was acquired to provide us additional capacity for our expected continued future growth. We began operations in the new facility during the fourth quarter of fiscal 2023. While we believe that the efforts we completed to bring the facility operational will allow us ample capacity to increase revenues significantly in future years, there can be no assurance that we will increase revenue.

Simultaneously, we are working to build top-line sales through active proposals of new medical device products with new and existing customers. Our patented adaptive torque-limiting software has been very well received in the CMF and thoracic markets.

The majority of the raw materials and components used to manufacture our products are purchased and are available from several sources, including through our own in-house machining capabilities. Portescap, Fischer Connectors, and Tadiran Batteries are examples of key suppliers. We have no exclusive arrangements with any of our suppliers, but in several instances only one supplier is used for certain high-value components. In most of such instances, secondary suppliers have been identified, although it is likely that any transition to a new or different supplier would result in a delay in the supply chain. We consider our relationships with our suppliers and manufacturers to be good, however, since fiscal 2022 and continuing through fiscal ~~2024~~2025, many of our suppliers have increased lead times, experienced delays in shipments and raised prices or temporarily added surcharges. Additionally, beginning in fiscal 2025, some of our suppliers have begun passing along tariff charges. While we intend to pass on these charges to our customers, we do not know if we will be successful in these endeavors. We do not intend to terminate any such relationship at this time, nor does management have knowledge that any supplier or manufacturer intends to terminate its relationship with us.

Our commitment to product design, manufacturing, and quality systems are supported by our compliance with several regulatory agency requirements and standards. We hold a U.S. Food and Drug Administration (“FDA”) Establishment Registration and a State of California Device Manufacturing License (Department of Public Health Food and Drug Branch) with respect to our Irvine and Tustin, California facilities. In addition, both facilities produce products that are certified to ISO 13485:2016, Medical Device Directive 93/42/EEC – Annex II.

At June 30, ~~2024~~2025, we had a backlog of $1950.84 million compared with a backlog of $4119.68 million at June 30, ~~2023~~2024. Our backlog represents firm purchase orders received and acknowledged from our customers and does not include all revenue expected to be generated from existing customer contracts. Substantially all of our backlog at June 30, ~~2024~~2025, as well as certain purchase orders received subsequent to June 30, ~~2024~~2025, are expected to be delivered during fiscal ~~2025~~2026. We have experienced, and may continue to experience, variability in our new order bookings due to, among other reasons, the launch of new products, the timing of customer orders based on end-user demand, and customer inventory levels. We do not expect a reduction in fiscal 2025 revenue as compared to fiscal 2024 revenue and believe that the decline in backlog at June 30, 2024 compared to June 30, 2023 is related to timing of customer orders, although there can be no assurance that there will not be a decline in future revenue. Additionally, $10.2 million of our backlog at June 30, 2023 related to orders expected to be delivered in fiscal 2025. We do not typically experience seasonal fluctuations in our shipments and revenues.

Segments

We have only one operating segment as our business is currently operated. We have reached this conclusion because ~~the~~ our Chief Executive Officer (“CEO”) allocates resources, assesses performance, and manages our business as one segment. Additionally, 99% of our business ~~relates~~in fiscal 2025 relates to designing, manufacturing, and repairing medical devices. We primarily design, sell, and repair handheld medical devices and accessories. We provide medical devices, NRE and proto-type services, as well as repairs to all our customers and we utilize one machine shop and purchasing ~~team~~ team to procure and manufacture all the products that we sell. The CEO utilizes consolidated operating income to analyze our business operations.

Competition

The markets for products in the industries served by our customers are intensely competitive, and we face significant competition from a number of different sources. Several of our competitors have significantly greater name recognition, as well as substantially greater financial, technical, product development, and marketing resources, than us.

We compete in all of our markets with other major medical device companies. As a provider of outsourced services, we also compete with our customers’ own internal development and manufacturing groups. Competitive pressures and other factors, such as new product or new technology introductions by us, our customers’ internal development and manufacturing departments, or our competitors, may result in price or market share erosion that could have a material adverse effect on our business, results of operations, and financial condition. Also, there can be no assurance that our products and services will achieve broad market acceptance or will successfully compete with other products targeting the same customers.

Research and Development

We conduct research and development activities to both maintain and improve our market position. Our research and development efforts involve the design and manufacture of products that perform specific applications for our existing and prospective customers. Our research and development activities are focused on:

·● expanding our knowledge base in the medical device industry to solidify our products with current customers and expand our customer base;

·● advancing applicable technologies;

·● introducing new products; and

·● enhancing our existing product lines.

In certain instances, we may ~~share~~ share research and development costs with our customers by billing for non-recurring engineering (“NRE”) services often provided for under development portions of certain contracts. Revenue recognized for NRE services represented 1% of our revenue in ~~fiscal~~both ~~2024~~fiscal 2025 and ~~6% of our revenue in fiscal 2023~~2024.

During the fiscal years ~~ended~~ ended June 30, ~~2024~~2025 and ~~2023~~2024, we incurred research and development expenses amounting to $3.26 million and $23.82 million, respectively, ~~which~~ which costs exclude labor and related expenses of approximately $~~224~~73,000 and $~~724~~224,000 in fiscal ~~2024~~2025 and ~~2023~~2024, respectively, that were ~~reimbursed~~ reimbursed by our customers through billings for NRE services.

Human Capital Management

Our employees are among our most critical assets. The success and growth of our business depends on our ability to attract, reward, retain and develop talent in all levels of our organization, including, but not limited to, machine operators, assembly technicians, engineers, and management.

In order to attract and retain highly qualified employees, we offer the following:

Competitive, reasonable, and equitable compensation programs;

Comprehensive and highly competitive health and welfare benefits to promote our employees’ physical health, as well as a 401(k) plan to support our employees’ financial health;

An Employee Stock Purchase Plan and equity compensation to provide financial value, align employee’s interests with those of our shareholders, and incentivize retention;

Flexible paid vacation and sick time, as well as paid volunteer time; and

Education/tuition reimbursement and referral programs.

Our employee turnover for the fiscal years ended June 30, ~~2024~~2025 and ~~2023~~2024 was 2116% and 1621%, respectively. We consider the turnover rate a valuable metric to measure the effectiveness of our programs and to assist in developing new programs.

Employees

At June 30, 2025 and 2024, we had 181 and 148 employees, respectively, two of whom were part time, and all ~~of our employees~~ were working at one or both of our facilities in Irvine, ~~California~~ ~~and Tustin,~~ California. ~~At June 30, 2023, we had 146 employees, one of whom was part-time,~~ and ~~all were working at either our Irvine, California facility or our~~ Tustin, California ~~facility, except for one employee who worked remotely out of state~~. None of our employees are a party to any collective bargaining agreements with us. We consider our relationships with our employees to be good.

Government Regulations

The manufacture and distribution of medical devices are subject to state and federal requirements set forth by various agencies, including the FDA, and state medical boards. The statutes, regulations, administrative orders, and advisories that affect our businesses are complex and subject to diverse, often conflicting, interpretations. While we make every effort to maintain full compliance with all applicable laws and regulations, we are unable to eliminate the ongoing risk that one or more of our activities or devices may at some point be determined to be non-compliant. The penalties for non-compliance could range from an administrative warning to termination of a portion of our business. Furthermore, even if we are subsequently determined to have fully complied with applicable laws or regulations, the costs to achieve such a determination and the intervening loss of business could adversely affect or result in the cessation of a portion of our business. A change in such laws or regulations at any time may have an adverse effect on our operations.

The FDA designates all medical devices into one of three classes (Class I, II, or III) based on the level of control necessary to assure the safety and effectiveness of the device (with Class I requiring the lowest level of control and Class III requiring the greatest level of control). The surgical instrumentation we manufacture is generally classified into Class I. The FDA has broad enforcement powers to recall and prohibit the sale of products that do not comply with federal regulations and to order the cessation of non-compliant processes. No claim has been made to date by the FDA regarding any of our products or processes. Nevertheless, as is common in the industry, certain of our products and processes have been the subject of routine governmental reviews and investigations.

The total cost of providing health care services has been and will continue to be subject to review by governmental agencies and legislative bodies in the major world markets, including the United States, which are faced with significant pressure to lower health care costs. Downward pressure on health care costs could result in reduced pricing or demand for our products.

We believe that our business is conducted in a manner consistent with the Environmental Protection Agency (“EPA”) and other agency regulations governing disposition of industrial waste materials.

While we believe that our products and processes fully comply with applicable laws and regulations, we are unable to predict the outcome of any investigation or review which may be undertaken in the future with respect to our products or processes.

Management believes that each of our facilities has manufacturing systems and processes that are based on established Quality Management System standards. In addition, we believe that both our Irvine, California and Tustin, California facilities are compliant with applicable Good Manufacturing Practices promulgated by the FDA and are compliant with applicable ISO standards set forth by the International Organization for Standardization.

Patents, Trademarks, and Licensing Agreements

We hold US and foreign patents relating to our handheld medical devices and torque-limiting screwdrivers. Our patents have varying expiration dates. The near-term expiration of the patents, if any, is not expected to cause any change in our revenue-generating operations as changing the legal manufacturer of medical devices is a significant undertaking and we believe the expiration of a patent would offer minimal inducement to make such a change.

We have no reason to believe that our activities infringe upon the intellectual property of any third party. With respect to our own patents, we have no reason to believe that our patents are invalid, and we believe that at least some of our patents cover certain aspects of our products. Although we are currently unaware of any reason that would cause us to assert or defend a claim of patent infringement, any such assertion or defense could materially and adversely affect our business and results of operations due to the costs involved.

We have certain federally registered trademarks relating to our products, including Pro-Dex^®, along with a number of other common law trademarks.

We have not entered into any franchising agreements. We have not granted, nor do we hold any, third-party licenses having terms under which we earn revenue or incur expense in material amounts.

ITEM 1A.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information contained in this report, before deciding whether to invest in shares of our common stock. If any of the following risks actually occur, our business, financial condition, operating results, and prospects would suffer. In that case, the trading price of our common stock would likely decline and you might lose all or part of your investment in our common stock. The risks described below are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our operations and business results.

Risks Related to Our Business and the Industry in Which We Operate

A substantial portion of our revenue is derived from a few customers. If we were to lose a key customer, it would have a material adverse effect on our business, financial condition, and results of operations.

In fiscal ~~2024~~2025, our top three customers accounted for 8894% of our sales, with our current largest customer accounting for 7175% of our sales. This customer has made purchase commitments to us through a supply agreement to purchase surgical handpieces through calendar 2025, and has placed purchase orders for deliveries in 2026, but there can be no assurance that this customer will extend purchase commitments to us beyond that date. The loss of, or a material reduction in purchases from, this customer or any of our other significant customers would severely impact us, including having a material adverse effect on our business, financial condition, cash flows, revenue, and results of operations.

A substantial portion of our business is derived from our core business area that, if not serviced properly, may result in a material adverse impact upon our business, financial condition, and results of operations.

In fiscal ~~2024~~2025, we derived 99% of our revenue from sales of our medical device products and related services. We believe that a primary factor in the market acceptance of our products and services is the value they create for our customers. Our future financial performance will depend in large part on our ability to continue to meet the increasingly sophisticated needs of our customers through the timely development, and successful introduction and implementation, of new and enhanced products and services, while at the same time continuing to provide the value our customers have come to expect from us. We have historically expended a significant percentage of our revenue on product development and believe that significant continued product development efforts will be required to sustain our growth. Continued investment in our sales and marketing efforts will also be required to support future growth.

There can be no assurance that we will be successful in our product development efforts, that the market will continue to accept our existing products, or that new products or product enhancements will be developed and implemented in a timely manner, meet the requirements of our customers, or achieve market acceptance. If the market does not continue to accept our existing products, or our new products or product enhancements do not achieve market acceptance, our business, financial condition, and results of operations could be materially adversely affected.

Our customers may cancel or reduce their orders, change production quantities, or delay production, any of which would reduce our sales and adversely affect our results of operations.

Since most of our customers purchase our products from us on a purchase order basis, they may cancel, change, or delay product purchase commitments with little notice to us. As a result, we are not always able to forecast with certainty the sales that we will make in a given period and sometimes we may increase our inventory, working capital, and overhead in expectation of orders that may never be placed, or, if placed, may be delayed, reduced, or canceled.

The following factors, among others, affect our ability to forecast accurately our sales and production capacity:

	•		Changes in the specific products or quantities our customers order; and

	•		Long lead times and advance financial commitments for components required to complete actual/anticipated customer orders.

In addition to reducing our sales, delayed, reduced, or canceled purchase orders also may result in our inability to recover costs that we incur in anticipation of those orders, such as costs associated with purchased raw materials and write-offs of obsolete inventory.

In recent years, we have launched several new medical device products and our estimates of warranty claims are based largely on our previous history from similar legacy products. If actual warranty claims exceed our estimates, it could have an adverse effect on our results of operations and financial condition.

In recent years, we have completed significant medical device development projects in the CMF and thoracic surgical segments for which we have made estimates of product warranty claims based upon similar, legacy products. If the actual repair volumes or repair costs exceed the estimates that we have been using, we may incur additional costs which could be materially adverse to our results of operations and financial condition.

We face significant competition from a number of different sources, which could negatively impact our results of operations.

We compete in all of our ~~markets~~ markets with other major surgical device and related companies. As a provider of outsourced products and services, we also compete with our customers’ own internal development groups. Competitive pressures and other factors, such as new product or new technology introductions by us, our customers’ internal development and manufacturing departments, or our competitors, may result in price or market share erosion that could have a material adverse effect on our business, results of operations and financial condition. Also, there can be no assurance that our products and services will achieve or maintain broad market acceptance or will successfully compete with other products.

The industry in which we operate is subject to significant technological change and any failure or delay in addressing such change could adversely affect our competitive position or could make our current products obsolete.

The medical device market is generally characterized by rapid technological change, changing customer needs, frequent new product introductions and evolving industry standards. The introduction of products incorporating new technologies and the emergence of new industry standards could render our existing products obsolete and unmarketable. There can be no assurance that we will be successful in developing and marketing new products that respond to technological changes or evolving industry standards.

New product development requires significant research and development expenditures that we have historically funded through operations; however, we may be unable to do so in the future. Any significant decrease in revenues or research funding could impair our ability to respond to technological advances in the marketplace and to remain competitive. If we are unable, for technological or other reasons, to develop and introduce new products in a timely manner in response to changing market conditions or customer requirements, our business, results of operations, and financial condition may be materially adversely affected. Although we continue to target new markets for access, develop new products, and update existing products, there can be no assurance that we will do so successfully or that, even if we are successful, such efforts will be completed concurrently with or prior to the introduction of competing products. Any such failure or delay could adversely affect our competitive position or could make our current products obsolete.

We rely heavily on our proprietary technology, which, if not properly protected or if deemed invalid, could have a material adverse effect on our business, financial condition, and results of operations.

We are dependent on the maintenance and protection of our proprietary technology and rely on patent filings, exclusive development and supply agreements, confidentiality procedures and employee nondisclosure agreements to protect it. There can be no assurance that the legal protections and precautions taken by us will be adequate to prevent misappropriation of our technology or that competitors will not independently develop technologies equivalent or superior to ours. Further, the laws of some foreign countries do not protect our proprietary rights to as great an extent as do the laws of the United States and are often not enforced as vigorously as those in the United States.

We do not believe that our operations or products infringe on the intellectual property rights of others. However, there can be no assurance that others will not assert infringement or trade secret claims against us with respect to our current or future products. Assertions or claims by others, whether or not valid, could cause us to incur significant legal costs defending our intellectual property rights and potentially require us to enter into a license agreement or royalty arrangement with the party asserting the claim or to cease our use of the infringing technology, any of which could have a material adverse effect on our business, financial condition and results of operations.

If our technology infrastructure is compromised, damaged or interrupted by a cybersecurity incident, data security breach or other security problems, our results of operations and financial condition could be adversely affected.

We use technology in substantially all aspects of our business operations, and our ability to serve customers most effectively depends on the reliability of our technology systems. We use software and other technology systems, among other things, to generate sales orders, job orders, and purchase orders and to monitor and manage our business on a day-to-day basis. Cybersecurity incidents can include computer viruses, computer denial-of-service attacks, worms, and other malicious software programs or other attacks, covert introduction of malware to computers and networks, impersonation of authorized users, and efforts to discover and exploit any design flaws, bugs, security vulnerabilities or security weaknesses, as well as intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism by third parties and sabotage.

In addition, our technology infrastructure and systems are vulnerable to damage or interruption from natural disasters, power loss and telecommunications failures. Any such disruption to our systems, or the technology systems of third parties on which we rely, the failure of these systems to otherwise perform as anticipated, or the theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, could result in business disruption, negative publicity, loss of customers, potential liability, including litigation or other legal actions against us or the imposition of penalties, fines, fees or liabilities, which may not be covered by our insurance policies, and competitive disadvantage, any or all of which would potentially adversely affect our customer service, decrease the volume of our business and result in increased costs and lower profits. Moreover, a cybersecurity breach could require us to devote significant management resources to address the problems associated with the breach and to expend significant additional resources to upgrade further the security measures we employ to protect information against cyber-attacks and other wrongful attempts to access such information, which could result in a disruption of our operations.

While we have invested, and continue to invest, in technology security initiatives and other measures to prevent security breaches and cyber incidents, as well as disaster recovery plans, these initiatives and measures may not be entirely effective to insulate us from technology disruption that could result in adverse effects on our results of operations and financial condition.

To service our debt obligations, we will require a significant amount of cash. However, our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on, and to refinance, our debt obligations and to fund capital expenditures, will depend on our ability to generate cash in the future, which, in turn, is subject to general economic, financial, competitive, regulatory and other factors, many of which are beyond our control.

Our business may not generate sufficient cash flow from operations, and we may not have available to us future borrowings in an amount sufficient to enable us to pay our debt obligations or to fund our other liquidity needs. In these circumstances, we may need to refinance all or a portion of our debt obligations on or before maturity. We may not be able to refinance any of our debt obligations, on commercially reasonable terms, or at all. Without this financing, we could be forced to sell assets or secure additional financing to make up for any shortfall in our payment obligations under unfavorable circumstances. However, we may not be able to secure additional financing on terms favorable to us or at all and, in addition, the agreements governing our debt obligations limit our ability to sell assets. In addition, we may not be able to sell assets quickly enough or for sufficient amounts to enable us to meet our obligations.

Our cash and cash equivalents may be exposed to banking institution risk.

We hold our cash balances ~~with~~ with a single financial institution which institution is subject to risks, which may include failure or other circumstances that limit ~~our~~ our access to deposits or other banking services. For example, in March 2023, Silicon Valley Bank (“SVB”) was unable to continue their operations and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver for SVB. ~~However,~~If if similar ~~failures~~ failures in financial institutions occur where we hold deposits, we could experience additional risk. Any such loss or limitation on our cash and cash equivalents would adversely affect our business.

In addition, inif ~~such~~similar ~~circumstances~~failures affect institutions relied on by our customers, we might not be able to receive timely payment from customers. We and they may maintain cash balances that are not insured or are in excess of the FDIC’s insurance limit. Any delay in ours or our customers’ ability to access funds could have a material adverse effect on our operations. If any parties with which we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to continue to fund their business and perform their obligations to us could be adversely affected, which, in turn, could have a material adverse effect on our business, financial condition and results of operations.

We periodically invest surplus cash in marketable securities and other investments in order to realize a positive return, although there can be no assurance that a positive return will be realized, and we could lose some or all of our investments, which could adversely affect our financial condition and results of operation.

We invest a significant portion of our excess capital in marketable securities, including equity securities of publicly traded companies. At June 30, ~~2024~~2025, the fair value of our investments was approximately $56.89 million. Of that amount $3.2 million relates to an investment in Monogram Technologies, Inc., formerly Monogram Orthopaedics Inc. (“Monogram”), described more fully in Note 4 to the consolidated financial statements contained elsewhere in this report. While we intend to hold our investments, ~~including our investment in Monogram,~~ until such time as we believe it is appropriate to sell them in accordance with our overall investment policy, we may have unexpected cash requirements that could necessitate the sale of some or all of these investments for a loss. Additionally, these investments are subject to changes in their valuation, and are recorded at their estimated fair value at each measurement date, with unrealized gains and losses presented in other income (expense) in our consolidated income statements, which can result in material upward or downward non-cash adjustments to our income from quarter-to-quarter.

Our operations are dependent upon our key personnel. If such personnel were to leave unexpectedly, we may not be able to execute our business plan.

Our future performance depends in significant part upon the continued service of our key technical and senior management personnel. Because we have a relatively small number of employees when compared to other companies in the same industry, our dependence on maintaining our relationship with key employees is particularly significant. We are also dependent on our ability to attract and retain high quality personnel, particularly in the areas of product development, operations management, marketing and finance.

A high level of employee mobility and the aggressive recruiting of skilled personnel characterize the medical device industry. There can be no assurance that our current employees will continue to work for us. Loss of services of key employees could have a material adverse effect on our business, results of operations, and financial condition. Furthermore, we may need to provide enhanced forms of incentive compensation to attract and retain such key personnel, which could potentially dilute the holdings of other shareholders.

We may not be able to successfully integrate our business acquisitions, which could adversely affect our business, financial condition, and results of operations.

We have acquired, and may acquire in the future, businesses, products, and technologies that complement or expand our current operations. Acquisitions could require significant capital investments and require us to integrate with companies that have different cultures, management teams, and business infrastructure. Depending on the size and complexity of an acquisition, our successful integration of the acquisition could depend on several factors, including:

• Difficulties in assimilating and integrating the operations, products, and workforce of an acquired business; • The retention of key employees; • Management of facilities and employees in separate geographic areas; • The integration or coordination of different research and development and product manufacturing facilities; • Successfully converting information and accounting systems; and • Diversion of resources and management attention from our other operations.


	•		The integration or coordination of different research and development and product manufacturing facilities;
	•		Successfully converting information and accounting systems; and
	•		Diversion of resources and management attention from our other operations.

If market conditions or other factors require us to change our strategic direction, we may fail to realize the expected value from one or more of our acquisitions. Our failure to successfully integrate any future acquisitions or realize the expected value from past or future acquisitions could harm our business, financial condition, and results of operations.

We have experienced losses in the past, and we cannot be certain that we will sustain our current profitability; we may need additional capital in the future to fund our businesses, which we may not be able to obtain on acceptable terms.

We have experienced operating losses in the past. Our ability to achieve or sustain profitability is based on a number of factors, many of which are out of our control, including the material costs for our products and the demand for our products.

We currently anticipate that our available capital resources, including our existing cash and cash equivalents and accounts receivable balances, will be sufficient to meet our expected working capital and capital expenditure requirements as our business is currently conducted for at least the next 12 months. However, if our available capital resources become insufficient, we may attempt to raise additional funds through public or private debt or equity financings, if such financings become available on acceptable terms. We cannot be certain that any additional financing we may need will be available on terms acceptable to us, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of opportunities, develop new products, or otherwise respond to competitive pressures, and our operating results and financial condition could be adversely affected.

Risks Related to Ownership of Our Common Stock

Two of our directors hold voting power with respect to a substantial portion of our outstanding common stock that enables them to have significant influence over the outcome of all matters submitted to our shareholders for approval, which influence may conflict with our interests and the interests of other shareholders.

As of August 20, ~~2024~~2025, two of our directors, Nicholas J. Swenson and Raymond E. Cabillot, directly or indirectly, controlled voting power over approximately 4239% (31% and 118%, respectively) of the outstanding shares of our common stock. As a result of such voting control, these directors will have significant influence over all matters submitted to our shareholders for approval, including the election of our directors and other corporate actions, and may have interests that conflict with our interests and the interests of other shareholders.

Our quarterly results can fluctuate significantly from quarter to quarter, which may negatively impact the price of our shares and/or cause significant variances in the prices at which our shares trade.

Our sales have fluctuated in the past, and may fluctuate in the future from quarter to quarter and period to period, as a result of a number of factors, including, without limitation: the size and timing of orders from customers; the length of new product development cycles; market acceptance of new technologies; changes in pricing policies or price reductions by us or our competitors; the timing of new product announcements and product introductions by us or our competitors; the financial stability of major customers; our success in expanding our sales and marketing programs; acceleration, deferral, or cancellation of customer orders and deliveries; changes in our strategy; revenue recognition policies in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”); personnel changes; and general market and economic factors.

Because a significant percentage of our expenses are fixed, a variation in the timing of sales can cause significant fluctuations in operating results from quarter to quarter. As a result, we believe that interim period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. Further, our historical operating results are not necessarily indicative of future performance for any particular period.

In addition, it is possible that our operating results in future quarters may be below the expectations of public market analysts and investors. In such an event, the price of our common stock could be materially adversely affected.

Regulatory & Compliance Risks

Our operations are subject to a number of complex government regulations, the violation of which could have a material adverse effect on our business.

The manufacture and distribution of medical devices are subject to state and federal requirements set forth by various government agencies including the FDA and EPA. The statutes, regulations, administrative orders, and advisories that affect our businesses are complex and subject to diverse, often conflicting, interpretations. While we make every effort to maintain full compliance with all applicable laws and regulations, we are unable to eliminate the ongoing risk that one or more of our activities may at some point be determined to be non-compliant. The penalties for non-compliance could range from an administrative warning to termination of a portion of our business. Furthermore, even if we are subsequently determined to have fully complied with applicable laws or regulations, the costs to achieve such a determination and the intervening loss of business could adversely affect or result in the cessation of a portion of our business. A change in such laws or regulations at any time may have an adverse effect on our operations.

The FDA designates all medical devices into one of three classes (Class I, II, or III) based on the level of control necessary to assure the safety and effectiveness of the device (with Class I requiring the lowest level of control and Class III requiring the greatest level of control). The surgical instrumentation we manufacture is generally classified into Class I. The FDA has broad enforcement powers to recall and prohibit the sale of products that do not comply with federal regulations and to order the cessation of non-compliant processes. No claim has been made to date by the FDA regarding any of our products or processes. Nevertheless, as is common in the industry, certain of our products and processes are from time to time subject to routine governmental reviews and investigations. We are also subject to EPA regulations concerning the disposal of industrial waste.

While management believes that our products and processes fully comply with applicable laws and regulations, we are unable to predict the outcome of any such future review or investigation.

We face risks and uncertainties associated with potential litigation by or against us, which could have a material adverse effect on our business, financial condition, and results of operations.

We continually face the possibility of litigation as either a plaintiff or a defendant. It is not reasonably possible to estimate the awards or damages, or the range of awards or damages, if any, that we might incur in connection with such litigation.

Many of our products are complex and technologically advanced. Such products may, from time to time, be the subject of claims concerning product performance and construction, including warranty and patent infringement claims. While we are committed to investigating such concerns and correcting them, there is no assurance that solutions will be found on a timely basis, if at all, to satisfy customer demands or to avoid potential claims or litigation. Also, due to the location of our facilities, as well as the nature of our business activities, there is a risk that we could be subject to litigation related to environmental remediation claims. We maintain insurance to protect against claims associated with the manufacture and use of our products as well as environmental pollution, but there can be no assurance that our insurance coverage will adequately cover any claim asserted against us.

The uncertainty associated with potential litigation may have an adverse impact on our business. In particular, litigation could impair our relationships with existing customers and our ability to obtain new customers. Defending or prosecuting litigation could result in significant legal costs and a diversion of management’s time and attention away from business operations, either of which could have a material adverse effect on our business, financial condition, and results of operations. There can be no assurance that litigation would not result in liability in excess of our insurance coverage, that our insurance will cover such claims, or that appropriate insurance will continue to be available to us in the future at commercially reasonable rates.

1110

The agreements governing our various debt obligations impose restrictions on our business and could adversely affect our ability to undertake certain corporate actions.

The agreements governing our debt obligations include covenants imposing significant restrictions on our business. These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise. These covenants place restrictions on our ability to, among other things:

• incur additional debt;

• declare or pay dividends to shareholders;

• create liens or use assets as security in other transactions;

• be acquired by a third party;

• pursue strategic acquisitions;

• engage in transactions with affiliates; and

• sell or transfer assets.

The agreements governing our debt obligations also require us to comply with a number of financial ratios, borrowing base requirements and additional covenants.

Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial, and industry conditions. These covenants could adversely affect our business by limiting our ability to take advantage of financing, merger and acquisition, or other corporate opportunities. The breach of any of these covenants or restrictions could result in a default under our debt obligations. If we were unable to repay our debt or are otherwise in default under any provision governing our secured debt obligations, our lender could proceed against us and against the collateral (consisting of substantially all of our assets) securing that debt.

We are subject to changes in and interpretations of financial accounting matters that govern the measurement of our performance, compliance with which could be costly and time-consuming.

We are subject to changes in and interpretations of financial accounting standards that govern the measurement of our performance. Based on our reading and interpretations of relevant pronouncements, guidance, or concepts issued by, among other authorities, the Financial Accounting Standards Board, the SEC, and the American Institute of Certified Public Accountants, management believes our performance, including current sales contract terms and business arrangements, has been properly reported. However, there continue to be issued pronouncements, interpretations, and guidance for applying the relevant standards to a wide range of contract terms and business arrangements that are prevalent in the industries in which we operate. Future interpretations or changes by the regulators of existing accounting standards or changes in our business practices may result in future changes in our accounting policies and practices that could have a material adverse effect on our business, financial condition, cash flows, revenue, and results of operations.

We have previously identified material weaknesses in in our internal control over financial reporting. Failure to achieve and maintain effective internal control over financial reporting ~~could~~ could materially and adversely affect our business, results of operations, financial condition, and stock price.

We identified material weaknesses in our internal control over financial reporting as of June 30, 2024, and June 30, 2023. The material weaknesses as of June 30, 2024, related to our inventory accounting and the valuation of one of our Level 2 investments. The material weakness as of June 30, 2023, related to the valuation of our Level 3 ~~investment~~investments. As a result of these material weaknesses, as of June 30, 2024, and June 30, 2023, our management concluded that our internal control over financial reporting was not effective based on the framework in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In fiscal 2025 and 2024, we ~~implemented~~ aimplemented remediation ~~plan~~plans designed to address our June 30, ~~2023~~2024 ~~material weakness, which was both time consuming~~ and ~~costly. We are actively engaged in implementing a remediation plan designed to address the June 30~~2023, ~~2024~~ material weaknesses~~. However~~, aswhich ~~with~~were ~~the June 30, 2023 material weakness, our remediation efforts could be~~ both time consuming and costly. In addition, if ~~our remedial measures are insufficient to address the material weaknesses, or if~~ additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our ~~financial~~ financial results.

~~Even~~If ~~if the June 30, 2024 material weaknesses are quickly remedied, or if~~ we or our auditors discover one or more additional material weaknesses in our internal controls in the future, the market’s confidence in our financial statements could decline and our stock price may be harmed. In addition, our failure to maintain effective controls over financial reporting could subject us to sanctions or investigations by The Nasdaq Stock Market, the SEC, or other regulatory authorities.

Our evaluation of internal controls and remediation of potential problems is costly and time-consuming and could expose weaknesses in financial reporting.

Section 404 of the Sarbanes-Oxley Act of 2002, as amended, requires management’s assessment of the effectiveness of our internal control over financial reporting. This process is expensive and time consuming and requires significant attention of management. Management can give no assurance that material weaknesses in internal controls will not be discovered (see above, “We have previously identified material weaknesses in our internal control over financial reporting. Failure to achieve and maintain effective internal control over financial reporting could materially and adversely affect our business, results of operations, financial condition, and stock price.”). We cannot be certain that a future material weakness will not occur and that it will not be time consuming and costly to remediate and ~~could~~ further divert the attention of management. The disclosure of a material weakness, even if quickly remedied, could reduce the market’s confidence in our financial ~~statements~~ statements and harm our stock price, especially if a restatement of financial statements for past periods is required.

General Risks

The global economic environment may impact our business, financial condition, and results of operations.

Changes in the global economic environment have caused, and may cause in the future, a general tightening in the credit markets, lower levels of liquidity, increases in rates of default and bankruptcy, high rates of inflation, higher interest rates, and extreme volatility in credit, equity and fixed income markets. These macroeconomic developments could negatively affect our business, operating results or financial condition should they cause, for example, current or potential customers to become unable to fund purchases of our products, in turn resulting in delays, decreases or cancellations of purchases of our products and services, or causing the customer to not pay us or to delay paying us for previously purchased products and services. In addition, financial institution failures may cause us to incur increased expenses or make it more difficult either to obtain financing for our operations, investing activities (including the financing of any future acquisitions), or financing activities. Additional economic risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition, and results of operations.

Tariffs could have a negative effect on our business, results of operations, financial condition, and liquidity.

Starting in the first calendar quarter of 2025, the United States government announced its intention and/or actively took action to increase tariffs at various rates, including on certain products imported from many countries and individualized higher tariffs on certain other countries. Other countries have announced reciprocal tariffs or other similar actions. In some cases, these tariffs have since been followed by announcements of limited exemptions and temporary pauses. We are subject to risks relating to increased tariffs on U.S. imports, and other changes affecting imports, as we purchase raw materials and components from a complex supply chain which includes both direct and indirect purchases from foreign countries. The recent enactment of these tariffs, along with the unpredictability of the rates, poses a risk to our business operations and may materially increase our costs and reduce our margins. There continues to be significant uncertainty about the future relationship between the U.S. and other countries regarding such trade policies, treaties and tariffs. As such, we can make no assurances about the eventual impact on our operating results and business. However, some of our suppliers have begun passing along tariff charges. Our inability to minimize the impact of tariffs on our raw material and components costs, pass through price increases to customers, or find alternative sources for our raw materials and components, may have a material adverse impact on our business, financial condition, and results of operations.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 1C.

CYBERSECURITY

Risk management and strategy

We have implemented and maintain various information security processes in accordance with our business designed to identify, assess, manage and protect against material risks from cybersecurity threats to our critical computer networks, communication systems, hardware and software, and our critical data, including intellectual property and confidential information.

Depending on the environment, we implement and maintain various technical, physical and organizational measures, processes, and policies designed to manage and mitigate material risks from cybersecurity threats to our information systems and data, including, for example, incident detection and response plans; disaster recovery and business continuity plans; maintaining network security and access controls; asset management; monitoring certain of our systems and network; cybersecurity insurance; and training our employees about certain cybersecurity risks and threats.

We currently engage third ~~party~~ party information technology partners to design and manage our information security processes and system. Working with our outsourced ~~security~~ security team, our Chief Financial Officer manages the risk assessment and mitigation process. We ~~have~~hired ~~budgeted~~a tobusiness ~~add~~systems ~~information~~and information technology ~~staff to~~manager ~~our~~in ~~organization~~fiscal 2025 to increase our in-house expertise in this area. As we grow, we plan to develop a more robust and detailed ~~strategy~~ strategy for cybersecurity.

Governance

Cybersecurity risks are overseen by the full Board of Directors and the Audit Committee as part of their regular oversight. Members of the Board and Audit Committee are encouraged to engage in ad hoc conversations with management on cybersecurity related updates to our risk management and strategy. Cybersecurity incidents are reported to the Chief Financial Officer to determine incident severity and response. In an effort to deter and detect cyber threats, we also provide all employees with access to digital assets with an ongoing cybersecurity awareness training program, which further educates employees and covers timely and relevant topics, including phishing, password protection, asset use and mobile security.

Risks from cybersecurity threats

To date, we have not identified any cybersecurity incidents or threats that have materially affected us, or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. However, like many companies in our industry, we face numerous and evolving cybersecurity threats that could adversely affect our business. For more information about the risks from cybersecurity threats that may materially affect us and how they may do so, see our risk factors under Part 1 Item 1A Risk Factors contained elsewhere in this report.

ITEM 2.

PROPERTIES

Our executive offices and manufacturing facility are located at 2361 McGaw Avenue, Irvine, California 92614. We lease the 28,000 square foot facility from an unrelated third party at a current base monthly lease rate of approximately $4445,000 with 3% annual escalations through the expiration of the lease in September 2027. The building is a one-story, stand-alone structure of concrete “tilt-up” construction, approximately 45 years old and in good condition.

Our Franklin Property, located at 14401 Franklin Avenue, Tustin, California 92780, is used primarily for our assembly and repairs operations. We purchased this 25,000 square foot facility in November 2020 from an unrelated third party, with the majority of the purchase price financed by a property loan (See Notes 45 and 78 of to the consolidated financial statements contained elsewhere in this report). The building is a one-story, stand-alone structure of concrete “tilt-up” construction, approximately 45 years old and in good condition.

We believe that our facilities are adequate for our current and expected future needs and are in full compliance with applicable state, EPA and other agency environmental standards.

ITEM 3.

LEGAL PROCEEDINGS

See Note 910 to the consolidated financial statements contained elsewhere in this report.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

1413

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted under the symbol “PDEX” on the Nasdaq Capital Market (“NASDAQ”). The following table sets forth for the quarters indicated the high and low sales prices of our common stock as reported by NASDAQ. The quotations reflect inter-dealer prices, without retail markup, markdown, or commissions, and may not necessarily represent actual transactions. On September 3, 2024, the last sale price of our common stock as reported by NASDAQ was $22.33 per share.

	High		Low
Year ended June 30, 2024:
First Quarter	$	18.94	$	15.52
Second Quarter		18.63		14.63
Third Quarter		22.50		16.50
Fourth Quarter		19.95		17.55
Year ended June 30, 2023:
First Quarter	$	20.25	$	14.94
Second Quarter		19.93		15.80
Third Quarter		17.71		15.29
Fourth Quarter		19.24		15.50

Holders

As of September 32, ~~2024~~2025, there were ~~122~~131 holders of record of our common stock. This number does not include beneficial owners including holders whose shares are held in nominee, or “street,” name.

Dividends

We have never paid a cash dividend with respect to our common stock. The current policy of our Board of Directors is to retain any future earnings to provide funds for the operation and expansion of our business or for repurchases of our common stock pursuant to our repurchase plans. Any determinations to pay dividends in the future will be at the discretion of our Board of Directors. In addition, our current credit facilities contain covenants that prohibit us from paying dividends.

Repurchases

During the fourth quarter of fiscal ~~2024~~2025 and ~~2023~~2024, we repurchased 0 and 88,011 ~~and 0~~ shares of our common stock, respectively, at an aggregate cost of $0 and $1.7 million ~~and $0~~, respectively, through Board approved prearranged share repurchase plans intended to qualify for the safe harbor under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Period		Total Number of Shares Purchased(1)		Average Price Paid per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
	April 1, 2024 to April 30, 2024		32,334	$	18.47		32,334		499,707
	May 1, 2024 to May 31, 2024		38,162	$	19.17		38,162		461,545
	June 1, 2024 to June 30, 2024		17,515	$	19.79		17,515		444,030
	Total		88,011	$	19.04		88,011

(1) In December 2019, we announced that our Board of Directors authorized the repurchase of up to one million shares of our outstanding common stock. The extent to which we repurchase our shares, and the timing of such repurchases is at our discretion and will depend upon a variety of factors, including working capital requirements, market conditions, legal requirements, business condition, and other factors. Our repurchase program has no stated expiration and may be discontinued at any time

ITEM 6. RESERVED

1614

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto contained elsewhere in this report, as well as the Risk Factors included in Item 1A of this report. The following discussion contains forward-looking statements. (See “Cautionary Note Regarding Forward-Looking Statements” included in Part I of this report.)

Overview

The following discussion and ~~analysis~~ analysis provides information that management believes is relevant to an assessment and understanding of our results of operations and ~~financial~~ financial condition for the fiscal years ended June 30, ~~2024~~2025 and ~~2023~~2024.

We specialize in the design, development, and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic, thoracic, and CMF markets. Additionally, we provide engineering, quality, and regulatory consulting services to our customers. We also sell rotary air motors to a wide range of industries; however, these motors comprise a de minimis portion of our business. Our products are found in hospitals, medical engineering labs, scientific research facilities, and high-tech manufacturing operations around the world. We are headquartered in Irvine, California.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Revenue Recognition

Under Accounting Standards ~~Update~~ Update (“ASU”) 2014-09, (Topic 606) “Revenue From Contracts with Customers,” we recognize revenue from the sales of products and services by applying the following steps: (1) identify the contract with a customer; (2) identify the performance ~~obligations~~ obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. We primarily sell finished products and recognize revenue at point of sale or delivery. However, we also perform services when we are engaged to design a product for a customer and there is more judgment involved in determining the amount and timing of revenue recognition under those types of contracts. In fiscal ~~2024~~2025, the revenue from NRE and prototype services represents approximately 1% of total revenue.

Returns of our product for credit are not material; accordingly, we do not establish a reserve for product returns at the time of sale.

Estimated Losses on Product Development Services

Cost and revenue estimates related to the product development service portions of development and supply contracts are reviewed and updated quarterly. An expected loss on development service contracts is recognized immediately in cost of sales. Losses recorded in fiscal 2024 and 2023 related to these services totaled $118,000 and $108,000, respectively.

Due to the complexity of many of the contracts we have undertaken, the cost estimation process requires significant judgment. It is based upon the knowledge and experience of our project managers, engineers, and finance professionals. Factors that are considered in estimating the cost of work to be completed and ultimate profitability of the fixed price product development portion of development and supply contracts include the nature and complexity of the work to be performed, availability and productivity of labor, the effect of change orders, the availability of materials, performance of subcontractors, and expected costs for specific regulatory approvals.

Warranties

Most of our products are sold with a warranty that provides for repairs or replacement of any defective parts for a period, generally one to two years, after the sale. At the time of the sale, we accrue an estimate of the cost of providing the warranty based on prior experience with such factors as return rates and repair costs, which factors are reviewed quarterly.

Warranty expenses, including changes of estimates, are included in cost of sales in our statements of operations.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Reductions to estimated net realizable value are recorded, and charged to cost of sales, when indicated based on a formula that compares on-hand quantities to both historical usage and estimated demand from the measurement date.

Accounts Receivable

Trade receivables are stated at their original invoice amounts, less an allowance for credit losses. Management determines the allowance for credit losses based on facts and circumstances related to specific accounts, and on historical experience related to the age of accounts. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously reserved are offset against the allowance when received.

Deferred Costs

Deferred costs reflect costs incurred related to NRE services under the terms of the related development and supply contracts. These costs get recorded to cost of sales in the period that the revenue is recognized.

Investments

Investments consist of marketable equity securities of publicly held companies ~~and, as of June 30, 2023, a warrant (the “Monogram Warrant”) to purchase common stock of a publicly held company (which we exercised in the second quarter of fiscal 2024)~~. The investments were made to realize a reasonable return, although there is no assurance that positive returns will be realized. Investments are marked to market at each measurement date, with unrealized gains and losses presented in other income (expense) in our consolidated income statements. Some of our investments include the common stock of public companies that are thinly traded. Certain of these investments are classified as long-term in nature, as we may not be able to liquidate the investments in a timely manner even if we wish to sell them. All of our investments were subject to a valuation analysis as of June 30, ~~2024~~2025 and ~~2023~~2024.

Long-lived Assets

We review the recoverability of long-lived assets, consisting of building, equipment, and improvements, when events or changes in circumstances occur that indicate carrying values may not be recoverable.

Building, equipment, and improvements are recorded at historical cost and depreciation is provided using the straight-line method over the following periods:


Building	Thirty years
Equipment	Three to ten years
Improvements	Shorter of the remaining life of the underlying building, lease term, or the asset’s estimated useful life

Intangibles

Other intangibles consist of legal fees incurred in connection with patent applications. The legal fees will be amortized over the estimated life of the product(s) that will be utilizing the technology or expensed immediately in the event the patent office denies the issuance of the patent. The expense associated with the amortization of the patent costs is recognized in research and development costs.

Income Taxes

We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities, along with net operating loss and tax credit carryovers. Deferred tax assets and liabilities at June 30, ~~2024~~2025 and ~~2023~~2024 consisted primarily of basis differences related to unrealized gain/loss related to investments, stock-based compensation, fixed assets, accrued expenses and inventories. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Significant management judgment is required in determining our provision for income taxes and the recoverability of our deferred tax assets. Such determination is based on our historical taxable income, with consideration given to our estimates of future taxable income and the periods over which deferred tax assets will be recoverable. In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence, including reversals of deferred tax liabilities, projected future taxable income, and results of recent operations. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying business. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income (loss).

~~Results of Operations for the Fiscal Year Ended June 30, 2024 Compared to the Fiscal Year Ended June 30, 2023~~16

~~The~~Results ~~following~~of ~~tables~~Operations ~~set~~for the Fiscal Year Ended ~~forth~~June ~~results~~30, ~~from~~2025 ~~operations~~Compared ~~for~~to the ~~fiscal~~Fiscal ~~years~~Year ~~ended~~Ended June 30, 2024 ~~and 2023:~~

	Years Ended June 30,
	2024						2023
	Dollars in thousands
				% of Net Sales					% of Net Sales
Net sales	$	53,844			100	%	$	46,087		100	%
Cost of sales		39,293			73	%		33,338		72	%
Gross profit		14,551			27	%		12,749		28	%
Selling expenses		117			—			155		—
General and administrative expenses		4,072			8	%		4,028		9	%
Research and development costs		3,189			6	%		2,804		6	%
Total operating expenses		7,378			14	%		6,987		15	%
Operating income		7,173			13	%		5,762		13	%
Other income (expense), net		(4,539	)		(8	%)		3,666		7	%
Income before income taxes		2,634			5	%		9,428		20	%
Income tax expense		507			1	%		2,354		5	%
Net income	$	2,127			4	%	$	7,074		15	%

The following tables set forth results from operations for the fiscal years ended June 30, 2025 and 2024:

	Years Ended June 30,
	2025					2024
	Dollars in thousands
			% of Net Sales						% of Net Sales
Net sales	$	66,593		100	%	$	53,844			100	%
Cost of sales		47,083		71	%		39,293			73	%
Gross profit		19,510		29	%		14,551			27	%
Selling expenses		344		—			117			—
General and administrative expenses		4,841		7	%		4,072			8	%
Research and development costs		3,636		6	%		3,189			6	%
Total operating expenses		8,821		13	%		7,378			14	%
Operating income		10,689		16	%		7,173			13	%
Other income (expense), net		1,369		2	%		(4,539	)		(8	%)
Income before income taxes		12,058		18	%		2,634			5	%
Income tax expense		3,080		5	%		507			1	%
Net income	$	8,978		13	%	$	2,127			4	%

Net Sales

The majority of our revenue is derived from designing, developing, manufacturing and\ repairing powered surgical instruments for medical device original equipment manufacturers. We also manufacture ~~and~~ and sell rotary air motors to a wide range of industries. The proportion of total sales by product/service type is as follows:

	Years Ended June 30,												Increase (Decrease) From ~~2023~~2024 To
	2024						2023						To 2024
	2025						2024						2025
	Dollars in thousands
				% of Net Sales						% of Net Sales
Net sales:
Medical devices	$	3647,~~979~~747			6972	%	$	3036,~~740~~979			6669	%		2029	%
Industrial and scientific		~~765~~861			1	%		~~865~~765			21	%		~~(12~~13	%)
NRE & Prototype services		~~786~~698			1	%		~~2,695~~786			61	%		(7111	%)
Dental and component		~~201~~194			—			~~257~~201			1—	%		(224	%)
Repairs		1618,~~505~~586			3128	%		1216,~~617~~505			2731	%		3113	%
Discounts & Other		(1,~~392~~493	)		(2	%)		(1,~~087~~392	)		(2	%)		287	%
	$	5366,~~844~~593			100	%	$	4653,~~087~~844			100	%		1724	%

~~Net sales in fiscal 2024 increased by $7.8 million, or~~ 17%, as compared to fiscal 2023, due primarily to an increase in repair revenue of $3.9 million and an increase in medical device revenue of $6.2 million offset by a decrease in NRE and prototype services of $1.9 million. Details of our medical device sales by type is as follows:

	Years Ended June 30,										Increase (Decrease) From 2023
	2024					2023					To 2024
	Dollars in thousands
			% of Total					% of Total
Medical device sales:
Orthopedic		23,630		64	%		19,688		64	%		20	%
CMF		10,334		28	%		8,497		28	%		22	%
Thoracic		3,015		8	%		2,555		8	%		18	%
Total		36,979		100	%		30,740		100	%		20	%

Net sales in fiscal 2025 increased by $12.7 million, or 24%, as compared to fiscal 2024, due primarily to an increase in medical device revenue of $10.8 million and an increase in repair revenue of $2.1 million. Details of our medical device sales by type is as follows:

Sales of our medical device products increased $6.2 million, or 20%, during fiscal 2024 as compared to fiscal 2023. During fiscal 2024, thoracic sales increased by $460,000 to $3.0 million, up from $2.6 million in fiscal 2023, due to a product launch for a second distributor in the first quarter of fiscal 2024. Recurring revenue from distributors of CMF drivers increased $1.8 million in fiscal 2024 compared to fiscal 2023. We do not have much visibility into our customers’ distribution networks, but we surmise the increase relates to a replenishment of customer inventory. Our orthopedic sales increased $3.9 million in fiscal 2024 compared to fiscal 2023, due to continued demand from our largest customer.

	Years Ended June 30,										Increase (Decrease) From 2024 To
	2025					2024					2025
	Dollars in thousands
			% of Net Sales					% of Net Sales
Medical device sales:
Orthopedic	$	33,542		70	%	$	23,630		64	%		42	%
CMF		9,943		21	%		10,334		28	%		(4	%)
Thoracic		4,262		9	%		3,015		8	%		41	%
Total	$	47,747		100	%	$	36,979		100	%		29	%

Sales of our ~~industrial~~medical ~~and~~device ~~scientific~~ products increased $10.8 million, ~~which~~or ~~consist~~29%, during fiscal 2025 as compared to fiscal 2024. Our medical device revenue to our largest customer, included in orthopedic sales above, increased $10.1 million, compared to the prior fiscal year due primarily to the launch of ~~our~~that ~~compact~~customer’s ~~pneumatic~~next ~~air~~generation handpiece. As previously disclosed, late in the third quarter of fiscal 2025 the ~~motors~~customer requested we hold off on next generation handpiece shipments in favor of continued shipments and enhanced repair of the legacy handpieces. During the fourth quarter of fiscal 2025, ~~decreased~~the ~~$100~~customer requested that we resume production and shipments of the next generation handpiece. While this pause negatively impacted our fourth quarter results,~~000~~ we do not anticipate any additional delays in shipment of the next generation handpiece. During fiscal 2025, orthoracic ~~12%~~sales increased by $1.3 million to $4.3 million, ~~for~~up from $3.0 million in fiscal 2024. Recurring revenue from distributors of CMF drivers decreased $391,000 in fiscal 2025 compared to fiscal ~~2023~~2024. ~~The~~We ~~revenue~~do ~~decrease~~not ishave ~~expected~~much asvisibility ~~these~~into ~~are~~our ~~legacy~~customers’ ~~products with~~distribution nonetworks, ~~substantive~~but ~~marketing~~these orfluctuations ~~sales~~are ~~efforts~~within expected levels.

Sales of our ~~NRE~~industrial &and ~~prototype~~scientific ~~services~~products, ~~decreased~~which ~~$1.9~~consist ~~million~~primarily orof ~~71%~~our ~~compared~~compact topneumatic ~~fiscal~~air motors, ~~2023~~increased ~~and~~$96,000, ~~relates~~or to13%, afor ~~reduction~~fiscal in2025 ~~the~~compared ~~number~~to ~~of billable~~fiscal ~~engagements~~2024. ~~during~~These ~~fiscal~~are ~~2024~~legacy ~~compared~~products towith ~~fiscal~~no ~~2023~~substantive marketing or sales efforts.

20Sales of our NRE & prototype services decreased $88,000, or 11%, during fiscal 2025 as compared to fiscal 2024 and relates to a reduction in the number of billable engagements for various NRE projects undertaken for our customers.

Sales of our dental products and components in fiscal ~~2024~~2025 decreased $567,000, or 224%, as compared to fiscal ~~2023~~2024. The decrease is as expected and we expect future declines in this area as we are no longer manufacturing dental products, but rather are simply selling remaining component inventory.

Our fiscal ~~2024~~2025 repair revenue increased approximately $32.91 million, or 3113%, to $1618.56 million, as compared to fiscal ~~2023~~2024, due to increased repairs of the legacy orthopedic handpiece we ~~sell~~sold to our largest customer. WeThis ~~expected~~increase ~~repair~~relates ~~revenue~~ to ~~increase~~the ~~based~~continuation ~~upon~~of the ~~customer’s~~previously ~~requested~~disclosed ~~refurbishments~~enhanced torepair ~~upgrade previously purchased handpieces to the next generation, which we collectively term “enhanced repairs”~~program. We ~~are~~anticipate ~~rapidly refurbishing these handpieces and we believe~~ that ~~our~~repair ~~largest~~revenue ~~customer~~may ~~will~~decline ~~request enhanced repairs for a similar volume or number of handpieces~~ in ~~fiscal~~future ~~2025;~~periods ~~however,~~as ~~there~~this ~~are~~customer notransitions ~~assurances as~~ to the ~~number of enhanced repairs that will~~ ~~ultimately~~next begeneration ~~requested~~handpiece ~~from~~in ~~this~~lieu ~~client~~of inenhancements ~~fiscal~~of ~~2025~~the orlegacy ~~thereafter~~handpiece.

Cost of Sales and Gross Margin

	Years Ended June 30,												Increase (Decrease) From ~~2023~~2024 To
	2024						2023						To 2024
	2025						2024						2025
	Dollars in thousands
Cost of sales:				% of Net Sales						% of Net Sales
				% of Net Sales						% of Net Sales
Product costs	$	38,121			71	%	$	29,600			64	%		29	%
Costs of sales
NRE and Prototype services costs		802			1	%		1,724			4	%		(54	%)
Product costs	$	43,833			66	%	$	38,121			71	%		15	%
Under (over)-absorption of manufacturing overhead		(74	)		—			1,724			4	%		(104	%)
NRE and Prototype services costs		469			1	%		802			1	%		(42	%)
Inventory and warranty charges		444			1	%		290			—			53	%
Under (over)-absorption of manufacturing overhead		2,517			4	%		(74	)		—			3,501	%
Total cost of sales	$	39,293			73	%	$	33,338			72	%		18	%
Inventory and warranty charges		264			—			444			1	%		(41	%)
Total cost of sales	$	47,083			71	%	$	39,293			73	%		20	%

Cost of sales in fiscal ~~2024 increased~~2025 increased $67.08 million, or 1820%, from fiscal ~~2023~~2024, primarily due to the increase in product costs, consistent with the 1724% increase in net sales. During fiscal ~~2024~~2025, we experienced $~~74,000~~2.5 million of ~~over~~under-absorption of manufacturing costs compared to $~~1.7~~74,000 ~~million~~ of ~~under~~over-absorption in fiscal ~~2023~~ 2024, due primarily to an increase in our ~~standard~~indirect ~~labor~~manufacturing ~~and~~costs ~~overhead rate recorded~~ in ~~the fourth quarter of~~ fiscal ~~2024~~2025. Costs related to inventory and warranty charges ~~increased~~decreased $~~154~~180,000 in fiscal ~~2024~~2025 compared to fiscal ~~2023~~2024, primarily due to ~~increased~~ decreased inventory reserves.

Operating Expenses

	Years Ended June 30,										Increase (Decrease) From ~~2023~~2024 To
	2024					2023					To 2024
	2025					2024					2025
	Dollars in thousands
			% of Net Sales					% of Net Sales
Operating expenses:
Selling expenses	$	~~117~~344		—		$	~~155~~117		—			~~(25~~194	%)
General and administrative expenses		4,~~072~~841		87	%		4,~~028~~072		98	%		119	%
Research and development costs		3,~~189~~636		6	%		23,~~804~~189		6	%		14	%
	$	78,~~378~~821		1413	%	$	67,~~987~~378		1514	%		620	%

Selling expenses consist of of salaries and other personnel-related expenses related to our business development department, as well as trade show attendance, advertising and marketing expenses, and travel and related costs incurred in generating and maintaining customer relationships. Selling expenses ~~decreased~~increased $38227,000, or 25194%, compared to fiscal ~~2023~~2024, primarily due to ~~decreased~~recruiting ~~sales~~fees ~~commissions~~and inpersonnel ~~the~~costs ~~amount~~related ofto ~~$74,000~~our ~~offset~~new byDirector ~~increased~~of ~~recruiting~~Business ~~and~~Development ~~advertising~~who ofwe ~~$20,000~~hired in December 2024 as well as increased advertising and ~~$10,000,~~related ~~respectively~~expenses.

General and administrative expenses (“G&A”) consist of salaries and other personnel-related expenses for corporate, accounting, finance, and human resource personnel, as well as costs for outsourced information technology services, professional fees, directors’ fees, and costs associated with being a public company. The $44769,000 increase in G&A expenses from fiscal ~~2023~~2024 to ~~2024~~2025 is due primarily to ~~increased~~$441,000 ~~audit and consulting fees~~ in ~~the~~increased ~~amount~~bonus ofaccruals, $~~323~~249,000 ~~and~~in increased ~~recruiting~~personnel ~~fees~~costs, ofand $~~100~~270,000 ~~offset~~in byincreased ~~reduced patent related~~ legal ~~fees of $233,000~~ and ~~non-cash~~information ~~compensation~~technology ~~expense~~expenses, offset ~~related~~by ~~to stock compensation in the amount of~~ $~~161~~157,000 ~~due~~in ~~primarily~~decreased toaudit ~~forfeitures caused by employee turnover~~fees.

Research and development ~~costs~~ costs generally consist of salaries, employer-paid benefits, and other personnel- related costs of our engineering and support personnel, as as well as allocated facility and information technology costs, professional and consulting fees, patent-related fees, lab costs, materials, and travel and related costs incurred in the development and support of our products. Fiscal ~~2024~~2025 research and development costs increased $~~385~~447,000 from fiscal ~~2023~~2024 due to increased spending on internal product development projects of $82378,000 as well as reduced billable project expenditures which get reclassified to cost of sales. The majority of our research and development expenditures incurred in fiscal ~~2024~~2025 and ~~2023~~2024 relates to our sustaining activities related to products we currently manufacture and sell. As we introduce new products into the market, we expect to see an increase in sustaining and other engineering expenses. Typical examples of sustaining engineering activities include, but are not limited to, end-of-life component replacement, especially in electronic components found in our printed circuit board assemblies, analysis of customer complaint data to improve process and design, and replacement and enhancement of tooling and fixtures ~~used~~ used in the machine shop, assembly operations, and inspection areas to improve efficiency and through-put.

Other Income (Expense)

Interest and Dividend Income

Our interest and dividend ~~income~~ income earned in fiscal ~~2024~~2025 and ~~2023~~2024 includes income earned from our interest-bearing money market accounts and portfolio of equity investments.

Unrealized gain (loss) on investments

The unrealized gain (loss) on investments relates to our investment portfolio. Additional information related to the nature of our investments is more fully described in Note 4 to the consolidated financial statements contained elsewhere in this report.

Gain on Sale of Investments

During fiscal ~~2024~~2025, ~~our investment sales were immaterial. During fiscal 2023,~~ we liquidated some of the investments in our portfolio of equity investments receiving proceeds of $~~89,000~~1.9 million and recording a gain of $6595,000. During fiscal 2024, our investment sales were immaterial.

Interest Expense

Interest expense incurred in fiscal ~~2024~~ 2025 and ~~2023~~2024 consists primarily of interest expense related to our debt with Minnesota Bank & Trust (“MBT”) ~~described~~ described more fully in Note 78 to the consolidated financial statements contained elsewhere in this report.

Income Taxes

The effective tax rate ~~for~~ for the fiscal years ended June 30, ~~2024~~2025 and ~~2023~~2024 was 1926% and 2519%, respectively, slightly less than our combined expected federal and ~~applicable~~ applicable state corporate income tax rates due primarily to federal and state research credits. Our pre-tax income in fiscal 2025 was $12.0 million compared to $2.6 million in fiscal 2024. The impact of our tax credits is more significant when pre-tax income is lower.

Liquidity and Capital Resources

The following table is a summary of our Statements of Cash Flows and Cash and Working Capital as of and for the fiscal years ended June 30, ~~2024~~2025 and ~~2023~~2024:

	As of and for the Years Ended June 30,
	2024			2023
	2025			2024
	(In thousands)
Cash provided by (used in):
Operating activities	$	6(1,~~199~~682	)	$	56,~~462~~224
Investing activities	$	(~~2,233~~238	)	$	(~~885~~2,233	)
Financing activities	$	(~~4,271~~292	)	$	(24,~~490~~296	)
Cash, cash equivalents and working capital:
Cash and cash equivalents	$	~~2,631~~419		$	2,~~936~~631
Working capital	$	2332,~~719~~666		$	2123,~~303~~719

Cash Flows from Operating Activities

Cash ~~provided~~used by in operating activities during fiscal 2025 totaled $61.27 million ~~during fiscal 2024~~. Our net income was $29.10 million, which includes $4.1.5 million of unrealized ~~losses~~gains on certain equity investments, as$595,000 ~~well~~of asrealized ~~non-cash~~gains ~~stock~~on ~~compensation~~the ~~expense~~sale ~~and~~of ~~depreciation~~certain ~~and~~equity ~~amortization expense~~investments inas ~~the~~well ~~amount~~as $1.2 million of depreciation and amortization and $~~605~~555,000 ~~and~~of ~~$1.2~~non-cash ~~million,~~stock ~~respectively~~compensation. Additionally, ~~our~~at ~~accounts~~June ~~payable~~30, ~~and~~2025 ~~accrued~~compared ~~expenses~~to June 30, 2024, our accounts receivable increased by $2.45 million ~~and~~corresponding with our ~~inventory~~increased ~~decreased~~revenue, byour income tax accounts reflect a $~~898,000~~1.5 ~~Offsetting~~million ~~these~~outlay ~~inflows~~ of cash, ~~our~~mostly ~~accounts~~related to ~~receivable~~higher ~~and~~estimated ~~deferred~~income tax ~~assets~~ ~~grew~~payments, and our inventory increased by $36.9 million ~~and~~in ~~$1.6~~anticipation ~~million,~~of ~~respectively~~increased sales to support our largest customer’s release of their next generation orthopedic handpiece.

Cash provided by operating activities ~~during fiscal 2023~~ totaled $56.52 million during fiscal 2024. Our fiscal 2024 net income was $72.1 million, which includes $34.91 million of unrealized losses ~~gains~~ on certain equity investments, as well as ~~$857,000~~non-cash ofstock compensation expense and depreciation and amortization ~~and~~expense in the amount of $~~766~~605,000 ofand ~~non-cash~~$1.2 ~~stock~~million, ~~compensation~~respectively. Additionally, our accounts ~~receivable~~payable ~~decreased~~and byaccrued ~~$5.4~~expenses ~~million~~at ~~due~~June to30, ~~the~~2024 ~~variability~~increased by in$2.4 ~~the~~million ~~timing of shipments~~ and our ~~prepaid~~inventory ~~expenses and deferred income taxes~~ decreased by $~~494~~898,000 ~~and~~as ~~$264~~compared to June 30,~~000,~~ ~~respectively~~2023. Offsetting ~~this~~these ~~net~~inflows ~~inflow~~ of cash, ~~inventory~~our ~~increased~~accounts ~~by $3.5 million~~receivable and ~~our~~deferred ~~accounts~~tax ~~payable~~assets ~~and~~at ~~accrued~~June ~~expenses~~30, ~~and~~2024 ~~deferred~~grew ~~revenue decreased~~ by $13.19 million and $1.06 million, respectively, compared to June 30, 2023.

Cash Flows from Investing Activities

Net cash used in investing activities in fiscal ~~2024~~2025 was $2238,000. During the 2025 fiscal year, we made capital expenditures in the amount of $1.2 million and ~~related~~exercised warrants to ~~the~~purchase ~~exercise~~common stock and preferred stock of ~~the~~Monogram Technologies, Inc., formerly Monogram ~~Warrant~~Orthopaedics Inc. (“Monogram”) for cash in the amount of $1899,~~250,~~000 (See Note 4 to the consolidated financial statements contained elsewhere in this report) asoffset ~~well~~by proceeds asof ~~equipment~~$1.9 ~~and~~million ~~improvements~~from ~~purchases in~~ the ~~amount~~sales of ~~$983,000~~marketable equity securities.

Net cash used in investing activities in fiscal ~~2023~~2024 was $~~885,000~~2.2 ~~During~~million and related to the ~~2023~~exercise ~~fiscal~~of ~~year,~~the wewarrant ~~made~~to ~~capital~~purchase ~~expenditures~~Monogram common stock for cash in the amount of $~~974~~1,250,000 ~~primarily for~~(See Note 4 to the ~~Franklin~~consolidated ~~Property~~financial ~~and~~statements wecontained ~~received~~elsewhere ~~proceeds~~in ofthis ~~$89,000~~report) ~~from~~as ~~the~~well ~~sales~~as ofequipment ~~marketable~~and improvements ~~equity~~purchases ~~securities~~in the amount of $983,000.

Cash Flows from Financing Activities

Net cash used in financing activities for fiscal ~~2024~~2025 totaled $4.292,000 and included $3.5 million ~~and~~in ~~related~~net ~~primarily~~borrowings on various notes payable to MBT, more fully described in Note 8 to the consolidated financial statements contained elsewhere in this report, offset by $3.5 million ~~repurchase~~related to the repurchase of ~~184~~130,~~901~~148 shares of our common stock pursuant to our share repurchase program, as well as payment of $~~816~~305,000 of ~~net~~employee ~~principal~~payroll ~~payments~~ taxes related to ~~our~~the ~~various~~award ~~loans~~of ~~from~~40,000 ~~MBT~~shares ~~more~~of ~~fully described~~common instock ~~Note 7~~ to ~~the~~employees ~~consolidated~~under ~~financial~~previously ~~statements~~granted ~~contained~~performance ~~elsewhere in this report~~awards.

Net cash used in financing activities for fiscal ~~2023~~2024 totaled $24.53 million and ~~included~~related ~~$809,000~~primarily ~~in net principal payments of various notes payable~~ to ~~MBT,~~the ~~and~~ $13.5 million ~~related to the~~ repurchase of 86184,~~422~~901 shares of our common stock pursuant to our share repurchase program, as well as ~~payment of~~ $~~223~~841,000 of ~~employee~~net ~~payroll~~principal ~~taxes~~payments related to ~~the~~our ~~award~~various ofloans ~~37,500~~from ~~shares~~MBT ofmore ~~common~~fully described ~~stock~~in Note 8 to ~~employees~~the ~~under~~consolidated ~~previously~~financial ~~granted~~statements ~~performance awards~~contained elsewhere in this report.

Liquidity Requirements for the Next 12 Months

As of June 30, ~~2024~~2025, ~~our~~ our working capital was $2332.7 million. We currently believe that our existing cash and cash equivalent balances, together with our ~~account~~ account receivable balances, and anticipated cash flows from operations will provide us sufficient funds to satisfy our cash requirements as our business is currently conducted for at least the next 12 months. ~~In addition to our cash and cash equivalent balances, we expect to derive a portion of our liquidity from our cash flows from operations.~~ We may also liquidate some or all of our investment portfolio or borrow against our revolving loan with MBT (See ~~Notes~~Note 78 ~~and 14~~ to consolidated financial statements contained elsewhere in this report), ~~under~~ under which we had availability of $47.03 million as of June 30, ~~2024~~2025.

We are focused on preserving our cash balances by monitoring expenses, identifying cost savings, and investing only in those development programs and products that we believe will most likely contribute to our profitability. As we execute our current strategy, however, we may require debt and/or equity capital to fund our working capital needs and requirements for capital equipment to support our manufacturing and inspection processes. In particular, we have experienced negative operating cash flow in the past, especially as we procure long-lead time materials to satisfy our backlog, which can be subject to extensive variability. We believe that if we need additional capital to fund our operations, we can borrow against our revolving loan with MBT.21

We are focused on preserving our cash balances by monitoring expenses, identifying cost savings, and investing only in those development programs and products that we believe will most likely contribute to our profitability. As we execute our current strategy, however, we may require additional debt and/or equity capital to fund our working capital needs and requirements for capital equipment to support our manufacturing and inspection processes. In particular, we have experienced negative operating cash flow in the past, especially as we procure long-lead time materials to satisfy our backlog, which can be subject to extensive variability.

Surplus Capital Investment Policy

During fiscal 2013, our Board approved a Surplus Capital Investment Policy (the “Policy”) that provides, among other items, for the following:

(a)

Determination by our Board of Directors of (i) our surplus capital balance and (ii) the portion of such surplus capital balance to be invested according to the Policy;

(b)

Selection of an Investment Committee responsible for implementing the Policy; and

(c)

Objectives and criteria under which investments may be made.

The Investment Committee is comprised of Messrs. Swenson (Chair), Cabillot, and Van Kirk. Both Mr. Cabillot and Mr. Swenson are active investors with extensive portfolio management expertise. We leverage the experience of these committee members to make investment decisions for the investment of our surplus operating capital or borrowed funds. Additionally, many of our securities holdings include stocks of public companies that either Messrs. Swenson or Cabillot or both may own from time to time either individually or through the investment funds that they manage, or other companies whose boards they sit on. The Investment Committee approved each of the investments comprising the $56.89 million of investments in marketable public equity securities held at June 30, ~~2024~~2025, which amount includes unrealized holding gains in the amount of $3.13 million at June 30, ~~2024~~2025.

In December 2019, our Board approved a new share repurchase program authorizing us to repurchase up to one million shares of our common stock, as the prior repurchase plan, authorized by our Board in 2013, authorizing the repurchase of 750,000 shares of common stock was nearing completion. In accordance with, and as part of, these share repurchase programs, our Board has approved the adoption of several prearranged share repurchase plans intended to qualify for the safe harbor Rule 10b5-1 under the Exchange Act (“10b5-1 Plan” or “Plan”).

During the fiscal year ended June 30, ~~2024~~2025, we repurchased ~~184~~130,~~901~~148 shares at an aggregate cost, inclusive of fees under the Plan, of $3.5 million. During the fiscal year ended June 30, ~~2023~~2024, we repurchased 86184,~~422~~901 shares at an aggregate cost, inclusive of fees under the Plan, of $13.5 million. On a ~~cumulative~~ cumulative basis, since 2013 we have repurchased a total of 1,~~381~~511,~~349~~497 shares under the share repurchase programs at an aggregate cost, ~~inclusive~~ inclusive of fees under the Plan, of $2024.72 million. All repurchases under the 10b5-1 Plans were administered through an independent broker.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide this information.

2522

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

PRO-DEX, INC. AND ~~SUBSIDIARIES~~SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm (Moss Adams LLP, Irvine, California, Auditor ID: 659)	27
Report of Independent Registered Public Accounting Firm (Baker Tilly US, LLP, Irvine California, Auditor ID: 23)	24
Financial Statements:
Consolidated Balance Sheets, June 30, 2024 and 2023	29
Consolidated Balance Sheets, June 30, 2025 and 2024	25
Consolidated Income Statements, Years Ended June 30, 2024 and 2023	30
Consolidated Income Statements, Years Ended June 30, 2025 and 2024	26
Consolidated Statements of Shareholders’ Equity, Years Ended June 30, 2024 and 2023	31
Consolidated Statements of Shareholders’ Equity, Years Ended June 30, 2025 and 2024	27
Consolidated Statements of Cash Flows, Years Ended June 30, 2024 and 2023	32
Consolidated Statements of Cash Flows, Years Ended June 30, 2025 and 2024	28
Notes to Consolidated Financial Statements	3430

2623

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors

Pro-Dex, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Pro-Dex, Inc. (the “Company”) as of June 30, ~~2024~~2025 and ~~2023~~2024, the related consolidated statements of income, shareholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, ~~2024~~2025 and ~~2023~~2024, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits ~~provides~~ provide a reasonable basis for our opinion.

2724

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ ~~Moss~~Baker ~~Adams~~Tilly US, LLP Irvine, California September 54, ~~2024~~2025

We have served as the Company’s auditor since 2003.

2825

PRO-DEX, INC. AND ~~SUBSIDIARIES~~ SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	June 30,
	2024		2023
	2025		2024
ASSETS
Current assets:
Current assets
Cash and cash equivalents	$	~~2,631~~419	$	2,~~936~~631
Investments		46,~~217~~740		14,~~134~~217
Accounts receivable		1316,~~887~~433		913,~~952~~887
Deferred costs		~~262~~24		~~494~~262
Inventory		1522,~~269~~213		1615,~~167~~269
Prepaid expenses		345		296
Income taxes receivable		1,056		—
Total current assets		36,611		30,979
Prepaid expenses		410		345
Land and building, net		6,155		6,249
Total current assets		47,295		36,611
Equipment and improvements, net		5,024		5,079
Land and building, net		6,061		6,155
Right of use asset, net		1,473		1,872
Equipment and improvements, net		5,153		5,024
Intangibles, net		54		81
Right of use asset, net		1,050		1,473
Deferred income taxes, net		1,555		—
Intangibles, net		26		54
Investments		1,563		7,521
Deferred income taxes, net		1,415		1,555
Other assets		42		42
Investments		148		1,563
Total assets	$	52,477	$	51,823
Other assets		44		42
Total assets	$	61,192	$	52,477
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,~~513~~614	$	24,~~261~~513
Accrued liabilities		3,~~359~~479		3,~~135~~359
Income taxes payable		~~632~~186		~~453~~632
Deferred revenue		14202		—14
Notes payable		46,~~374~~148		34,~~827~~374
Total current liabilities		1214,~~892~~629		912,~~676~~892
Non-current liabilities:
Lease liability, net of current portion		~~1,182~~685		1,~~638~~182
Deferred income taxes, net		—		8
Notes payable, net of current portion		9,246		7,536
Notes payable, net of current portion		7,536		8,911
Total non-current liabilities		9,931		8,718
Total non-current liabilities		8,718		10,557
Total liabilities		24,560		21,610
Total liabilities		21,610		20,233
Commitments and Contingencies (Note 10):
Commitments and Contingencies (Note 9):		—		—
Shareholders’ equity:
Common stock, no par value, 50,000,000 shares authorized; 3,363,412 and 3,545,309 shares issued and outstanding at June 30, 2024 and 2023, respectively		3,917		6,767
Common stock, no par value, 50,000,000 shares authorized; 3,261,043 and 3,363,412 shares issued and outstanding at June 30, 2025 and 2024, respectively		704		3,917
Retained earnings		2635,~~950~~928		2426,~~823~~950
Total shareholders’ equity		3036,~~867~~632		3130,~~590~~867
Total liabilities and shareholders’ equity	$	5261,~~477~~192	$	5152,~~823~~477

See notes to consolidated financial statements.

2926

PRO-DEX, INC. AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(In thousands, except share and per share data)

	Years Ended June 30,
	2024			2023
	2025			2024
Net sales	$	5366,~~844~~593		$	4653,~~087~~844
Cost of sales		3947,~~293~~083			3339,~~338~~293
Gross profit		1419,~~551~~510			1214,~~749~~551
Operating expenses:
Selling expenses		~~117~~344			~~155~~117
General and administrative expenses		4,~~072~~841			4,~~028~~072
Research and development costs		3,~~189~~636			23,~~804~~189
Total operating expenses		78,~~378~~821			67,~~987~~378
Operating income		710,~~173~~689			57,~~762~~173
Other income (expense):
Interest and dividend income		~~144~~82			~~294~~144
Unrealized gain (loss) on marketable equity investments		(41,~~125~~521	)		3(4,~~899~~125	)
Gain on sale of investments		—595			6—
Interest expense		(~~558~~829	)		(~~533~~558	)
Total other income (expense)		(41,~~539~~369	)		3(4,~~666~~539	)
Income before income taxes		212,~~634~~058			92,~~428~~634
Income tax expense		~~507~~(3,080	)		~~2,354~~(507	)
Net income	$	28,~~127~~978		$	72,~~074~~127
Basic & Diluted income per share:
Basic net income per share	$	02.6173		$	10.9861
Diluted net income per share	$	02.6067		$	10.9560
Weighted-average common shares outstanding:
Basic		3,~~498~~287,~~807~~844			3,~~571~~498,~~044~~807
Diluted		3,~~571~~361,207			3,~~636~~571,~~944~~207

See notes to consolidated financial statements.

3027

PRO-DEX, INC. AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For The Years Ended June 30, ~~2024~~2025 and ~~2023~~2024

(In thousands, except share data)

	Common Shares
	Number of Shares			Amount			Retained Earnings		Total
Balance at June 30, 2022		3,596,131		$	7,682		$	17,749	$	25,431
Net income		—			—			7,074		7,074
ESPP shares issued		5,459			77			—		77
Shares issued in connection with performance award vesting		37,500			—			—		—
Shares withheld from common stock issued to pay employee payroll taxes		(13,859	)		(223	)		—		(223	)
Exercise of stock options		6,500			12			—		12
Share-based compensation		—			766			—		766
Share repurchases		(86,422	)		(1,547	)		—		(1,547	)
Balance at June 30, 2023		3,545,309		$	6,767		$	24,823	$	31,590
Net income		—			—			2,127		2,127
ESPP shares issued		3,004			50			—		50
Share-based compensation		—			605			—		605
Share repurchases		(184,901	)		(3,505	)		—		(3,505	)
Balance at June 30, 2024		3,363,412		$	3,917		$	26,950	$	30,867
Net income		—			—			8,978		8,978
ESPP shares issued		1,593			42			—		42
Shares issued in connection with performance award vesting		40,000			—			—		—
Shares withheld from common stock issued to pay employee payroll taxes		(14,866	)		(273	)		—		(273	)
Exercise of stock options		1,052			(33	)		—		(33	)
Share-based compensation		—			555			—		555
Share repurchases		(130,148	)		(3,504	)		—		(3,504	)
Balance at June 30, 2025		3,261,043		$	704		$	35,928	$	36,632

See notes to consolidated financial statements.

3128

PRO-DEX, INC. AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years Ended June 30,
	2024			2023
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	28,~~127~~978		$	72,~~074~~127
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,~~160~~239			~~857~~1,160
Unrealized (gain) loss on marketable equity investments		4(1,~~125~~521	)		(34,~~899~~125	)
Gain on sale of investments		—(595	)		(6—	)
Non-cash lease recovery		(17	)		(2	)
Non-cash straight-line lease amortization		(33	)		(17	)
Amortization of loan fees, net		~~(13~~9	)		12
Share-based compensation		~~605~~555			~~766~~605
Deferred income taxes		~~(1,563~~140	)		~~264~~(1,563	)
Changes in operating assets and liabilities:
Accounts receivable		(32,~~935~~546	)		5(3,~~432~~935	)
Deferred costs		~~232~~238			~~216~~232
Inventory		~~898~~(6,944	)		~~(3,489~~898	)
Prepaid expenses		(49	)		494
Prepaid expenses and other assets		(67	)		(49	)
Accounts payable and accrued expenses		~~2,436~~179			(12,~~153~~436	)
Deferred revenue		14188			~~(1,013~~14	)
Income taxes payable		179			(91	)
Income taxes		(1,502	)		179
Net cash provided by operating activities		6,199			5,462
Net cash provided by (used in) operating activities		(1,682	)		6,224
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and improvements		(~~983~~1,246	)		(~~974~~983	)
Proceeds from sale of investments		—1,907			89—
Investment in Monogram		(~~1,250~~899	)		—(1,250	)
Net cash used in investing activities		(~~2,233~~238	)		(~~885~~2,233	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable		(411,~~816~~528	)		(64,~~093~~841	)
Borrowing from Minnesota Bank & Trust, net of loan origination fees		4,000			5,284
Borrowing from Minnesota Bank & Trust		15,003			4,000
Repurchases of common stock		(3,~~505~~504	)		(13,~~547~~505	)
Payments of employee taxes on net issuance of common stock		—(305	)		~~(223~~—	)
Proceeds from exercise of stock options and ESPP contributions		5042			8950
Net cash used in financing activities		(~~4,271~~292	)		(24,~~490~~296	)
Net increase (decrease) in cash and cash equivalents		(305	)		2,087
Net decrease in cash and cash equivalents		(2,212	)		(305	)
Cash and cash equivalents, beginning of year		2,~~936~~631			~~849~~2,936
Cash and cash equivalents, end of year	$	~~2,631~~419		$	2,~~936~~631

See notes to consolidated financial statements.

3229

PRO-DEX, INC. AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

	Years Ended June 30,
	2024		2023
	2025		2024
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Cash paid during the period for interest	$	818	$	555
Income taxes, net of refunds	$	1,891	$	1,655
Cash paid during the period for income taxes by jurisdiction:
Interest	$	555	$	521
Federal income tax payments	$	3,030	$	1,515
California income tax payments		1,427		334
Colorado income tax payments		—		8
Massachusetts income tax payments		—		34
Total income tax payments	$	4,457	$	1,891
Non-cash investing and financing activity:
Cashless stock option exercise	$	117	$	—

See notes to consolidated financial statements.

3330

PRO-DEX, INC. AND ~~SUBSIDIARIES~~SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

We specialize in the design, ~~development~~ development and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic, thoracic, and craniomaxillofacial markets. We have patented adaptive torque-limiting technology and proprietary sealing solutions which appeal to our customers, primarily medical device distributors. We also manufacture and sell rotary air motors to a wide range of industries; however, these motors comprise a de minimis portion of our business.

In August 2020, we formed a wholly owned subsidiary, PDEX Franklin, LLC (“PDEX Franklin”), to hold title for an approximate 25,000 square foot industrial building in Tustin, California (the “Franklin Property”) that we acquired on November 6, 2020, in order to allow for the continued growth of our business. The consolidated financial statements include the accounts of the Company and PDEX Franklin and all significant inter-company accounts and transactions have been eliminated. This subsidiary has no separate operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies presented below is designed to assist the reader in understanding our consolidated financial statements. Such consolidated financial statements and related notes are the representations of management, who is responsible for their integrity and objectivity. In the opinion of management, these accounting policies conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) in all material respects and have been consistently applied in preparing the accompanying consolidated financial statements.

Net Sales

Net sales consists of the sale of products and services, as well as shipping and handling billed to our customers and is net of volume rebates and discounts and excludes sales tax.

Revenue Recognition

Revenue from product sales is recognized as promulgated by the Financial Accounting Standards Board (“FASB”) in Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers once our contract(s) with a customer and the performance obligations in the contract have been identified, and the transaction price has been allocated to the performance obligations and revenue is recorded when (or as) we satisfy each performance obligation, generally upon shipment.

Revenue from services, typically non-recurring engineering (“NRE”) services related to the design or customization of a medical device, is typically recognized over time. The customer funding for costs incurred for NRE services is deferred and subsequently recognized as revenue as under-lying products or services are delivered to the customers. Additionally, expenses incurred, up to the customer agreed funding amount, are deferred as an asset and recognized as cost of sales when the under-lying products or services are delivered to the customer. The deferred customer funding and costs result in recognition of deferred costs (asset) and deferred revenue (liability) on our consolidated balance sheets.

One of our customer contracts can give rise to variable consideration due to volume rebates. We estimate variable consideration at the most likely amount we will receive from this customer. Our estimates of variable consideration are based on an assessment of our anticipated performance and all information (historical, current, and forecasted) that is reasonably available to us.

Returns of our product for credit are minimal; accordingly, we do not establish a reserve for product returns at the time of sale.

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cost of Sales

Cost of sales consists primarily of the purchase price of goods and cost of services rendered including freight costs. Cost of sales also includes production labor and overhead costs for all of our manufacturing and assembly operations, which overhead includes all indirect labor and expenses associated with our inspection, warehousing, material planning and quality departments.

PRO-DEX, INC. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Estimated Losses on Product Development Services

Cost and revenue estimates related to the product development service portions of development and supply contracts are reviewed and updated quarterly. An expected loss on development service contracts is recognized immediately in cost of sales. Losses recorded in fiscal ~~2024~~2025 and ~~2023~~2024 related to these services totaled $~~118~~155,000 and $~~108~~118,000, respectively.

Warranties

Certain of our products are sold with a warranty that provides for repairs or replacement of any defective parts for a period, generally one to two years, after the sale. At the time of the sale, we accrue an estimate of the cost of providing the warranty based on prior experience with such factors as return rates and repair costs, which factors are reviewed quarterly.

The warranty accrual is based on historical costs of warranty repairs and expected future identifiable warranty expenses and is included in accrued expenses in the accompanying consolidated balance sheets. Warranty expenses are included in cost of sales in the accompanying consolidated statements of operations. Changes in estimates to previously established warranty accruals result from current period updates to assumptions regarding repair costs and warranty return rates and are included in current period warranty expense.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of ninety days or less to be cash equivalents. At June 30, ~~2024~~2025 and ~~2023~~2024, cash equivalents consisted of investments in money market funds.

Accounts Receivable

Trade receivables are stated at their original invoice amounts, less an allowance for doubtful portions of such accounts represented by expected credit losses. Management determines the allowance for credit losses based on facts and circumstances related to specific accounts and the age of accounts. ~~Trade~~As of ~~receivables~~June 30, 2025 and 2024 we have no allowance for doubtful accounts and expect to fully collect our trade receivable balances. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously reserved are offset against the allowance when received.

Leases

Our operating lease consists solely of our corporate headquarters located in Irvine, California. We do not have any leases classified as financing leases. We classify arrangements meeting the definition of a lease as operating or financing leases, and leases are recorded on the consolidated balance sheets as both a right-of-use asset (“ROU”) and lease liability, calculated by discounting the fixed lease payments over the term of the lease term at the rate implicit in the lease or ~~the~~our ~~Company’s~~ incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Variable lease expenses are recorded when incurred. We exclude short-term leases having an initial term of 12 ~~month~~months or less as an accounting policy election, and instead recognize rent expense on a straight-line basis over the term of the lease.

We assess the impairment of ROU assets when an event or change in circumstance indicates that the carrying value of such ROU assets may not be recoverable. If an event or a change in circumstance indicates that the carrying value of an ROU asset may not be recoverable and the estimated fair value attributable to the ROU asset is less than its carrying value, an impairment loss equal to the excess of the ROU’s carrying value over its estimated fair value is recognized.32

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred Costs

Deferred costs reflect costs incurred related to NRE services under the terms of the related development and/or supply contracts. These costs get recorded to cost of sales in the period that the revenue is recognized.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. Reductions to estimated market value are recorded and charged to cost of sales, when indicated based on a formula that compares on-hand quantities to both historical usage and estimated demand as of the measurement date. On an ongoing basis, we evaluate inventory for obsolescence and slow-moving items. This evaluation includes analysis of historical sales and usage, existing demand, as well as specific factors known to management. As of June 30, ~~2024~~2025 and ~~2023~~2024, there was approximately $~~275~~87,000 and $~~637~~275,000, respectively, of inventory in-transit from suppliers.

Investments

Investments at June 30, ~~2024~~ 2025 and ~~2023~~2024, consist of marketable equity securities of publicly held companies. Investments at June 30, 2023 also included a warrant (the “Monogram Warrant”) to purchase common stock of a company whose common stock first became publicly traded in May 2023, which we exercised in the second quarter of fiscal 2024 (See Note 4). The investments were made to realize a reasonable return, ~~although~~ although there is no assurance that positive returns will be realized. Investments are marked to market at each measurement date, with ~~unrealized~~ unrealized gains and losses presented separately within other income and expense on the consolidated income statement. All of our investments ~~consist~~ consist of common stocks of public companies that are either thinly traded or we hold a significant (in excess of 5%) interest in. These ~~investments~~ investments were subject to a valuation analysis as of June 30, ~~2024~~2025 and ~~2023~~2024.

Long-lived Assets

We review the recoverability of long-lived assets, consisting of the land and building that we own, equipment, and improvements, including leasehold improvements, when events or changes in circumstances occur that indicate carrying values may not be recoverable.

Our building, equipment and improvements are recorded at historical cost and depreciation is provided using the straight-line method over the following periods:


Building	Thirty years
Equipment	Three to ten years
Improvements	Shorter of the remaining life of the underlying building, lease term, or the asset’s estimated useful life

Intangibles

Intangibles consist of legal fees incurred in connection with patent applications. Our patent costs are being amortized over a period of four to seven years. The expense associated with the amortization of the patent costs is recognized in research and development costs.

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities along with net operating losses and tax credit carryovers. Net deferred tax assets or liabilities at both June 30, ~~2024~~2025 and ~~2023~~2024 consisted primarily of basis differences related to unrealized gain/loss related to investments, stock-based compensation, fixed assets, accrued expenses, and inventories. Our deferred tax assets also includes capitalization of our research expenditures as prescribed by the Tax Cuts and Jobs Act. While the One Big Beautiful Bill Act of 2025 (“OBBBA”) was enacted on July 4, 2025, we are continuing to evaluate the impact of OBBBA on our income tax provision and results of operations.

Significant management judgment is required in determining the provision for income taxes, the recoverability of deferred tax assets, and the extinguishment of deferred tax liabilities. Such determination is based on historical taxable income, with consideration given to estimates of future taxable income and the periods over which deferred tax assets will be recoverable and deferred tax liabilities will be extinguished. We record a valuation allowance against deferred tax assets to reduce the net carrying value to an amount that we believe is more likely than not to be realized. When we establish or reduce the valuation allowance against deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made.

PRO-DEX, INC. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Uncertain Tax Positions

We record uncertain tax positions in accordance with Accounting Standards Codification (“ASC”) 740 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position, and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

Shipping and Handling

Payments from customers for shipping and handling are included in net sales. Shipping expenses, consisting primarily of payments made to freight companies, are included in cost of sales.

Concentration of Credit Risk

Financial instruments that potentially subject us to credit risk consist principally of cash, cash equivalents, and trade receivables. We place our cash and cash equivalents with major financial institutions. At June 30, ~~2024~~2025 and ~~2023~~2024, and throughout the fiscal years then ended, we had deposits in excess of federally insured limits. Credit sales are made to medical device distributors, original equipment manufacturers, and resellers ~~throughout the world~~, and sales to such customers account for a substantial portion of our trade receivables. While such receivables are not collateralized, we evaluate their collectability based on several factors including customers’ payment histories.

Segment Reporting

We have identified one business segment which management also considers to be one reporting unit as our Chief Executive Officer (“CEO”) allocates resources, assesses performance, and manages our business as one segment. We have reached this conclusion because 99% of our fiscal 2025 business ~~relates~~related to designing, manufacturing, and repairing medical devices. We primarily design, sell, and repair handheld medical devices and accessories. We provide medical devices, NRE and proto-type services, as well as repairs to all our customers and we utilize one machine shop and purchasing team to procure and manufacture all the products that we sell. ~~Our CEO utilizes consolidated operating income to analyze our business operations.~~

The Company’s chief operating decision maker (“CODM”) is our CEO who reviews and evaluates consolidated operating income for purposes of assessing performance, making operating decisions, allocating resources and planning and forecasting for future periods. As our operations are managed at the consolidated level, there are no differences between the measurement of the reportable segment’s profit or loss and our consolidated statements of operations. Further, there are no differences between i) segment revenues and expenses included in the measurement of the reportable segment’s profit or loss and used by the CODM to manage operations and ii) those disclosed elsewhere in the consolidated financial statements. Segment asset measures are not used as a basis for the CODM to evaluate the performance of or to allocate resources.

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Compensation Plans

We recognize compensation expense for the share-based awards that vest subject to market conditions under ASC 718, Compensation-Stock Compensation by estimating their fair value using a Monte Carlo simulation. The fair value using a Monte Carlo simulation model is affected by assumptions regarding a number of complex judgments including expected stock price volatility, risk free interest rates, and the forecasted future value and trading volume of our stock. The awards are considered granted for accounting purposes on the date the awards were approved by the Compensation Committee of our Board of Directors and we recognize compensation expense, based on the estimated fair value of the award, on a straight-line basis over the requisite service period.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Our operations are affected by numerous factors including market acceptance of our products, supply chain disruptions, changes in technologies, and new laws, government regulations, and policies. We cannot predict what impact, if any, the occurrence of these or other events might have on our operations. Significant estimates and assumptions made by management include, but are not limited to, revenue recognition, share-based compensation, the allowance for credit losses, accrued warranty expense, investments, inventory valuation, the carrying value of long-lived assets, and the recoverability/extinguishment of deferred income tax assets and liabilities.

PRO-DEX, INC. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Basic and Diluted Per Share Information

Basic per share amounts are computed on the basis of the weighted-average number of common shares outstanding during each period presented. Diluted per share amounts assume the issuance of all potential common stock equivalents, consisting of outstanding stock options and performance awards as discussed in Note 1211, unless the effect of such exercise is to increase income, or decrease loss, per common share.

Fair Value Measurements

Fair value is measured based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Cash and cash equivalents: The carrying value of cash and cash equivalents is considered to be representative of their fair values based on the short-term nature of these instruments. As such, cash and cash equivalents are classified within Level 1 of the valuation hierarchy.

Investments: Investments consist of marketable equity securities of publicly held companies ~~as well as, at June 30, 2023, a warrant (the Monogram Warrant) to purchase outstanding stock of a publicly traded company~~. Due to either the thinly traded nature of these stocks or our significant ownership percentage, in excess of 5% of shares outstanding, all of our investments are classified within Level 2 of the valuation hierarchy as of June 30, ~~2024.~~ ~~Due~~2025 ~~to the lack of an active market for the Monogram Warrant, the estimated fair value of the warrant was measured using pricing models with no observable inputs~~ and ~~was therefore considered a Level 3 measurement within the valuation hierarchy~~2024. The fair value of all of our investments at June 30, ~~2024~~2025 and ~~2023~~2024 was based upon a valuation analysis.

Although the methods above may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values, we believe our valuation methods are appropriate.

Advertising

Advertising costs ~~are~~ are charged to selling or general and administrative expense as incurred and amounted to $1478,000 and $414,000 for the fiscal years ended June 30, 2025 ~~2024~~ and ~~2023~~2024, respectively.

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recently Adopted Accounting Pronouncements

In December ~~March 2022~~2023, the FASB issued ASU No. ~~2022~~2023-0209, Income Taxes: Improvements to Income Tas Disclosures (Topic ~~326~~740). ~~Financial~~ASU ~~Instruments~~2023-09 –expands the ~~Credit~~existing ~~Losses~~rules toon ~~create~~income atax ~~new~~disclosures. ~~model~~This ~~for~~update ~~credit~~requires ~~losses~~entities ~~that~~to ~~reflects~~disclose ~~current expected~~specific ~~credit~~categories ~~losses~~in ~~(“CECL”)~~the ~~over~~tax ~~the~~rate ~~lifetime~~reconciliation, provide ofadditional ~~the~~information ~~underlying~~for ~~accounts~~reconciling ~~receivable.~~items ~~The~~that ~~CECL~~meet ~~methodology~~a isquantitative ~~applicable to~~threshold ~~our~~and ~~trade~~disclose ~~accounts~~additional ~~receivable~~information ~~and~~about ~~our~~income taxes ~~deferred~~paid ~~costs~~on an annual basis. We adopted ASU ~~2022~~2023-0209 effective July 1, ~~2023~~2024, and the adoption did not have a material impact on our financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures (Topic280) which expands disclosure requirements to require entities to disclose significant segment expenses that are regularly provided to or easily computed from information regularly provided to the chief operating decision maker. This update also requires all annual disclosures currently required by Topic 280 to be disclosed in interim periods. We adopted ASU 2023-07 effective June 30, 2025, and the adoption did not have a material impact on our financial statements.

Recently Issued and Not Yet Adopted Accounting Pronouncements

In ~~December~~November ~~2023~~2024, the Financial Accounting Standards Board (“FASB”) issued Accounting ~~ASU~~Standards Update (“ASU”) No. ~~2023~~ 2024-0903, Disaggregation of Income ~~Taxes:~~Statement ~~Improvements~~Expenses. toThe ~~Income~~ASU’s ~~Tas~~purpose ~~Disclosures~~is ~~(Topic~~to ~~740).~~improve ~~ASU~~the ~~2023-09~~disclosures ~~expands~~about ~~the~~a ~~existing~~public ~~rules~~business onentity’s ~~income~~expenses ~~tax~~and ~~disclosures.~~address ~~This~~requests ~~update~~from ~~requires~~investors ~~entities~~for tomore ~~disclose~~detailed ~~specific~~information ~~categories~~about in the ~~tax~~types ~~rate~~of ~~reconciliation,~~expenses ~~provide~~(including ~~additional~~purchases ~~information~~of ~~for~~inventory, ~~reconciling~~employee ~~items~~compensation, ~~that~~depreciation, ~~meet~~amortization, aand ~~quantitative~~depletion) ~~threshold~~in ~~and~~commonly ~~disclose~~presented ~~additional~~expense ~~information~~captions (such ~~about~~as ~~income taxes~~cost ~~paid~~of onsales, anselling, ~~annual~~general ~~basis.~~and ~~The~~administrative, ~~new~~and ~~disclosure~~research ~~requirements~~and ~~are~~development). This ASU is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, ~~2024.~~2027, ~~Early adoption~~with isearly adoption permitted. We are currently evaluating these new expanded disclosure requirements, but this standard will not impact our results of operations or financial position.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures (Topic280) which expands disclosure requirements to require entities to disclose significant segment expenses that are regularly provided to or easily computed from information regularly provided to the chief operating decision maker. This update also requires all annual disclosures currently required by Topic 280 to be disclosed in interim periods. The new disclosure requirements are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Although our business, as currently operated, has only one segment, we are evaluating the new disclosure requirements to ensure compliance.

PRO-DEX, INC. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. NET SALES

The following table presents the disaggregation of net sales by revenue recognition model (in thousands):

Schedule of disaggregation of net sales
	Year ended June 30,
	2024		2023
	2025		2024
Net Sales:
Over-time revenue recognition	$	~~786~~698	$	~~2,695~~786
Point-in-time revenue recognition		5365,~~058~~895		4353,~~392~~058
Total net sales	$	5366,~~844~~593	$	4653,~~087~~844

The timing of revenue recognition, billings, and cash collections results in billed accounts receivables, unbilled receivables (presented as deferred costs on our consolidated balance sheets) and customer advances and deposits (presented as deferred revenue on our consolidated balance sheets), where applicable. Amounts are generally billed as work progresses in accordance with agreed upon milestones. The over-time revenue recognition model consists of NRE and prototype services and typically relates to NRE services related to the evaluation, design or customization of a medical device and is typically recognized over time utilizing an input measure of progress based on costs incurred compared to the estimated total costs upon completion. During the fiscal years ended June 30, ~~2024~~2025 and ~~2023~~2024, we recorded $014,000 and $1.0 ~~million~~, respectively, of revenue that had been included in deferred revenue in the prior year. The revenue recognized from the contract liabilities consisted of satisfying our performance obligations during the normal course of business.

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables summarize our contract assets and liability balances (in thousands):

Schedule of contract assets and liability
	June 30,
	2024			2023
	2025			2024
Contract assets at beginning of year	$	~~494~~262		$	~~710~~494
Expenses incurred during the year		~~502~~228			~~1,545~~502
Amounts reclassified to cost of sales		(~~691~~460	)		(~~1,710~~691	)
Amounts allocated to discounts for standalone selling price		(436	)		(5143	)
Contract assets at end of year	$	~~262~~24		$	~~494~~262

	June 30,
	2024			2023
	2025			2024
Contract liabilities at beginning of year	$	—14		$	~~1,013~~—
Payments received from customers		~~267~~202			~~781~~267
Amounts reclassified to revenue		(~~253~~14	)		(~~1,794~~253	)
Contract liabilities at end of year	$	14202		$	—14

394. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various valuation methodologies, including market, income, and cost approaches is permissible. We consider the principal or most advantageous market in which it would transact and assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy. The accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of a particular input to the fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels.

We have categorized our cash equivalents and investments within the fair value hierarchy as follows:

Level 1 – applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. These Level 1 assets include our money market accounts, which are classified as cash equivalents. We have categorized our cash equivalents as Level 1 assets as there are quoted prices in active markets for identical assets or liabilities.

Level 2 – applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by observable market data. At June 30, 2025 and 2024, we have categorized our investments in marketable equity securities as Level 2 assets and we utilized both a protective put option and a time-adjusted discount for the lack of marketability valuation method to estimate fair value.

Level 3 – applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. We held no Level 3 assets or liabilities at June 30, 2025 or 2024.

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Schedule of marketable equity
	Fair Value Measurement at June 30, 2025
	Level 1		Level 2		Level 3		Total

Financial Assets:
Cash equivalents	$	33		—	$	—	$	33
Marketable equity securities – short-term		—		6,740		—		6,740
Marketable equity securities – long-term		—		148		—		148
Total	$	33		6,888	$	—	$	6,921

Investments


	Fair Value Measurement at June 30, 2024
	Level 1		Level 2		Level 3		Total

Financial Assets:
Cash equivalents	$	45		—	$	—	$	45
Marketable equity securities – short-term		—		4,217		—		4,217
Marketable equity securities – long-term		—		1,563		—		1,563
Total	$	45		5,780	$	—	$	5,825

~~Investments~~Marketable ~~are~~equity ~~stated~~securities at ~~market~~June ~~value~~30, 2025 and ~~consist~~2024 had an aggregate cost basis of $3,551,000 and $3,964,000, respectively. Both current and long-term marketable equity securities include equity securities of public companies that are thinly traded. We classified certain investments as long term in nature because even if we decide to sell the ~~following~~stocks, we may not be able to sell our position within one year. At June 30, 2025, the investments included net unrealized gains of $3.3 million (ingross unrealized ~~thousands~~gains of $3.5 million offset by gross unrealized losses of $213,000):. At June 30, 2024, the investments included net unrealized gains of $1.8 million (gross unrealized gains of $2.1 million offset by gross unrealized losses of $261,000).

Schedule of investments
	Years Ended June 30,
	2024		2023
Current:
Marketable equity securities – short-term	$	4,217	$	1,134
Long-term:
Monogram Warrant		—		6,160
Marketable equity securities – long-term		1,563		1,361
Total Investments	$	5,780	$	8,655

Of the total marketable equity securities at June 30, 2025 and 2024, $1.0 million and $987,000, respectively, represent an investment in the common stock of Air T, Inc. Two of our Board members, Messrs. Swenson and Cabillot, are also board members of Air T, Inc. and both either individually or through affiliates own an equity interest in Air T, Inc. Mr. Swenson, our Chairman, also serves as the chief executive officer and chairman of Air T, Inc. Another of our Board members is employed by Air T as its Chief of Staff. The shares have been purchased through 10b5-1 Plans that, in accordance with our internal policies regarding the approval of related-party transactions, were approved by our then three Board members that are not affiliated with Air T, Inc.

~~Marketable~~On October 6, 2023, ~~equity~~in ~~securities~~conjunction atwith ~~June~~the 30execution of a supply agreement with Monogram Technologies, ~~2024~~Inc., ~~and~~formerly ~~2023~~Monogram ~~had~~Orthopaedics anInc. ~~aggregate~~(“Monogram”), we ~~cost~~exercised ~~basis~~a warrant to purchase common stock of Monogram (the “Monogram Warrant”) in full in cash totaling $31,~~964~~250,000 and $2received 1,~~714~~828,~~000,~~551 ~~respectively.~~shares ~~Both~~of ~~current~~Monogram ~~and~~common ~~long-term~~stock ~~marketable~~(NasdaqCM: ~~equity~~MGRM). ~~securities~~Additionally, ~~include~~in ~~equity~~June ~~securities~~2025 ofwe ~~public~~exercised ~~companies that~~additional ~~are~~warrants ~~thinly~~in ~~traded.~~full in Wecash ~~classified~~totaling ~~certain~~$900,000 ~~investments~~and asreceived ~~long~~an ~~term~~additional in85,705 ~~nature~~shares ~~because~~of ~~even~~common ifstock weand ~~decide~~298,122 toshares ~~sell~~of ~~the~~Series ~~stocks,~~D wePreferred ~~may~~Stock. On ~~not~~July be14, ~~able~~2025, tothe ~~sell~~Series ~~our~~D ~~position~~preferred ~~within~~stock ~~one~~converted ~~year.~~into Atthe ~~June~~same ~~30,~~number ~~2024,~~of ~~the~~common ~~investments~~shares ~~included~~pursuant ~~net~~to ~~unrealized~~the ~~gains~~terms of ~~$1.8~~the ~~million~~underlying ~~(gross~~certificate. ~~unrealized~~The ~~gains~~fair value of ~~$2.1~~the ~~million~~Monogram ~~offset~~common bystock ~~gross~~and ~~unrealized~~preferred ~~losses~~stock ofis ~~$261,000).~~reflected Atin ~~June~~marketable ~~30,~~equity ~~2023,~~securities ~~the~~– ~~investments,~~short ~~excluding~~term ~~the~~in ~~Monogram~~the ~~Warrant,~~tables ~~included~~above. ~~net~~Our ~~unrealized~~Chief ~~losses~~Executive ~~of $219~~Officer,~~000~~ ~~(gross~~Mr. ~~unrealized~~Van ~~losses of $286~~Kirk,~~000~~ ~~offset~~is byalso ~~gross~~a ~~unrealized~~Monogram ~~gains~~board ~~of $67,000)~~member.

OfWe ~~the~~invest ~~total~~surplus cash ~~marketable~~from ~~equity~~time ~~securities~~to attime ~~June~~through ~~30,~~our ~~2024~~Investment ~~and 2023~~Committee, ~~$987,000~~which ~~and~~is ~~$1,134,000,~~comprised ~~respectively, represent an investment in the common stock~~ of ~~Air~~one Tmanagement director, ~~Inc~~Mr. ~~Two~~Van ofKirk, ~~our~~and ~~Board~~two ~~members~~non-management directors, ~~Messrs~~Mr. ~~Swenson~~Cabillot and ~~Cabillot~~Mr. Swenson, ~~are~~who ~~also~~chairs ~~board~~the ~~members~~committee. ofBoth ~~Air T, Inc~~Messrs. Cabillot and ~~both~~Swenson ~~either~~are ~~individually~~active orinvestors ~~through~~with ~~affiliates~~extensive portfolio ~~own~~management anexpertise. ~~equity~~We ~~interest~~leverage inthe ~~Air~~experience T,of ~~Inc.~~these ~~Mr.~~committee ~~Swenson,~~members ~~our~~to ~~Chairman,~~make ~~also~~investment ~~serves~~decisions as for the ~~chief~~investment of ~~executive~~our ~~officer~~surplus ~~and~~operating ~~chairman~~capital ofor ~~Air~~borrowed ~~T, Inc~~funds. ~~Another~~Additionally, many of our ~~Board~~securities ~~members~~holdings isinclude ~~employed~~stocks byof ~~Air~~public Tcompanies asthat either ~~its Chief of Staff~~Messrs. ~~The~~Swenson ~~shares have~~or ~~been~~Cabillot ~~purchased~~or ~~through~~both ~~10b5-1~~may ~~Plans~~own ~~that,~~from intime ~~accordance~~to ~~with~~time ~~our~~either ~~internal~~individually ~~policies~~or ~~regarding~~through the ~~approval~~investment offunds ~~related-party~~that ~~transactions~~they manage, ~~were~~or ~~approved~~other bycompanies ~~our~~whose ~~then~~boards ~~three~~they ~~Board~~sit ~~members~~on, ~~that~~such ~~are~~as ~~not affiliated with~~ Air T, Inc.

On October 6, 2023, in conjunction with the execution of a supply agreement with Monogram Technologies Inc., formerly Monogram Orthopaedics Inc. (“Monogram”), we exercised the Monogram Warrant in full in cash totaling $1,250,000 and received 1,828,551 shares of Monogram common stock (NasdaqCM: MGRM). On the date of exercise our unrealized loss on the investment was approximately $38,000. The fair value of the Monogram common stock of $3.2 million, is reflected in marketable equity securities – short term in the table above as of June 30, 2024. Our Chief Executive Officer, Richard Van Kirk (“Rick”), is also a Monogram board member.

At June 30, 2023, the Monogram Warrant was exercisable into a total of 1,823,058 shares of Monogram’s outstanding stock. The estimated fair value of the Monogram Warrant at June 30, 2023 was $6,160,000, using a Black-Scholes valuation model with the following assumptions:

Schedule of assumptions used
	June 30, 2023
Stock Price (common)	$	3.98
Strike Price (common)	$	.69
Time until expiration (years)		2.48
Volatility		60.0	%
Risk-free interest rate		4.68	%

We invest surplus cash from time to time through our Investment Committee, which is comprised of one management director, Mr. Van Kirk, and two non-management directors, Mr. Cabillot and Mr. Swenson, who chairs the committee. Both Mr. Cabillot and Mr. Swenson are active investors with extensive portfolio management expertise. We leverage the experience of these committee members to make investment decisions for the investment of our surplus operating capital or borrowed funds. Additionally, many of our securities holdings include stocks of public companies that either Messrs. Swenson or Cabillot or both may own from time to time either individually or through the investment funds that they manage, or other companies whose boards they sit on, such as Air T, Inc.

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Inventory

Inventory is stated at the lower of cost (first-in, first-out) or net realizable value and consists of the following (in thousands):

Schedule of inventory
	June 30,
	2024		2023
	2025		2024
Raw materials /purchased components	$	610,~~703~~397	$	86,~~824~~703
Work in process		57,~~103~~422		35,~~686~~103
Sub-assemblies /finished components		2,~~342~~874		2,~~387~~342
Finished goods		1,~~121~~520		1,~~270~~121
Total inventory	$	1522,~~269~~213	$	1615,~~167~~269

Land and Building

Land and building consist of the following (in thousands):

Schedule of land and building
	June 30,
	2024			2023
	2025			2024
Land	$	3,684		$	3,684
Building		2,815			2,815
Total		6,499			6,499
Less: accumulated depreciation		(~~344~~438	)		(~~250~~344	)
	$	6,~~155~~061		$	6,~~249~~155

On November 6, 2020, we acquired the Franklin Property in order to increase our operational capacity for a total purchase price of $6.5 million, of which we paid $1.3 million in cash and the balance of $5.2 million we financed (the “Property Loan”) through Minnesota Bank & Trust (“MBT”) (See Note 78). WeDepreciation ~~substantially~~expense ~~completed the~~for ~~build-out~~both ~~of the property in the first quarter of~~ fiscal ~~2022.~~years Inended ~~the~~June ~~fourth quarter of fiscal 2023~~30, we2025 ~~substantially completed all of our validation activities,~~ and we2024 ~~moved~~totaled ~~our repairs and assembly departments to the new facility~~$94,000. The building is being amortized on a straight-line basis over a period of 30 years.

Equipment and Improvements

Equipment and improvements consist of the following (in thousands):

Schedule of equipment and improvements
	June 30,
	2024			2023
	2025			2024
Office furnishings and fixtures	$	12,~~982~~078		$	1,~~957~~982
Machinery and equipment		78,~~292~~198			67,~~675~~292
Automobiles		21			21
Improvements		45,~~993~~205			4,~~737~~993
Total		1415,~~288~~502			1314,~~390~~288
Less: accumulated depreciation and amortization		(910,~~264~~349	)		(89,~~311~~264	)
	$	5,~~024~~153		$	5,~~079~~024

Depreciation expense for the years ended June 30, ~~2024~~2025 and ~~2023~~2024 amounted to $1~~,038,000~~.1 million and $~~727~~1.0 million,~~000,~~ respectively. During fiscal ~~2024~~2025 and ~~2023~~2024, ~~fully~~ fully depreciated assets in the amount of $8532,000 and $~~760~~85,000, respectively, were retired.

4139

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangibles

Intangibles consist of the following (in thousands):

Schedule of intangibles
	June 30,
	2024			2023
	2025			2024
Patent-related costs	$	208		$	208
Less accumulated amortization		(~~154~~182	)		(~~127~~154	)
	$	5426		$	8154

~~Amortization~~Patent-related costs consist of legal fees incurred in connection with both patent applications and patent issuances, and will be amortized over the estimated life of the product(s) that is or will be utilizing the technology, or expensed immediately in the event the patent office denies the issuance of the patent. All remaining costs are expected to be fully amortized in fiscal 2026. Amortization expense for ~~the~~both years ended June 30, ~~2024~~2025 and ~~2023~~2024 ~~amounted~~totaled to $28,000 ~~and $37,000, respectively~~.

Patent-related costs consist of legal fees incurred in connection with both patent applications and patent issuances, and will be amortized over the estimated life of the product(s) that is or will be utilizing the technology, or expensed immediately in the event the patent office denies the issuance of the patent. Future amortization expense is estimated to be no more than $30,000 per year and all remaining costs are expected to be fully amortized within two years.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

Schedule of accrued liabilities
	June 30,
	2024		2023
	2025		2024
Payroll and related items	$	~~668~~850	$	~~650~~668
Accrued inventory in transit		~~276~~87		~~637~~276
Accrued legal and professional fees		~~301~~267		~~216~~301
Accrued bonuses		~~353~~501		~~400~~353
Current portion of lease liability		~~455~~498		~~416~~455
Warranty		~~277~~357		~~200~~277
Accrued customer rebate		~~840~~690		~~480~~840
Other		~~189~~229		~~136~~189
Total	$	3,~~359~~479	$	3,~~135~~359

56. WARRANTY ACCRUAL

Information relating to the accrual for warranty costs for the years ended June 30, ~~2024~~2025 and ~~2023~~2024, is as follows (in thousands):

Schedule of accrual warranty costs
	June 30,
	2024			2023
	2025			2024
Balance at beginning of year	$	~~200~~277		$	~~340~~200
Accruals during the year		~~197~~336			~~161~~197
Change in estimates of prior period accruals		70(84	)		~~(109~~70	)
Warranty amortization/utilization		(~~190~~172	)		(~~192~~190	)
Balance at end of year	$	~~277~~357		$	~~200~~277

~~Warranty expense relating to new product sales and changes to estimates was $267,000 and $52,000, respectively, for the fiscal years ended June 30, 2024 and 2023.~~40

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

67. INCOME TAXES

The provision for income taxes consists of the following amounts (in thousands):

Schedule of provision for income taxes
	Years Ended June 30,
	2024			2023
	2025			2024
Current:
Federal	$	12,~~493~~114		$	1,~~745~~493
State		~~577~~826			~~345~~577
Deferred:
Federal		~~(1,210~~76	)		6(1,210	)
State		~~(353~~64	)		~~258~~(353	)
Income tax expense	$	~~507~~3,080		$	~~2,354~~507

The effective income tax rate from income from continuing operations differs from the United States statutory income tax rates for the reasons set forth in the table below (in thousands, except percentages).

Schedule of reconciliation federal statutory income tax rates
	Years Ended June 30,
	2024						2023
	2025						2024
	Amount			Percent Pretax Income			Amount			Percent Pretax Income
Income before income taxes	$	212,~~634~~058			100	%	$	92,~~428~~634			100	%
Computed “expected” income tax expense on income before income taxes	$	~~553~~2,532			21	%	$	~~1,979~~553			21	%
State tax, net of federal benefit		~~212~~964			8	%		~~672~~212			78	%
Tax incentives		(~~214~~149	)		(81	%)		(~~229~~214	)		(28	%)
Uncertain tax position		(88116	)		(31	%)		(~~119~~88	)		(13	%)
Stock based compensation		2(164	)		—(1	%)		~~(114~~2	)		(1—	%)
Other		4213			1—	%		~~165~~42			1	%
Income tax expense	$	~~507~~3,080			1926	%	$	~~2,354~~507			2519	%

4341

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred income taxes reflect the net effects of loss and credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities for federal and state income taxes are as follows (in thousands):

Schedule of deferred income tax assets and liabilities
	June 30,
	2024			2023
	2025			2024
Deferred tax assets:
Federal and state NOL carryforward	$	23		$	2223
Research and other credits		65			65
Reserves		~~146~~170			~~122~~146
Accruals		~~309~~436			~~267~~309
Stock based compensation		1,~~008~~096			~~814~~1,008
Section 174 capitalization		~~738~~756			~~830~~738
Lease liability		~~488~~353			~~599~~488
Inventory		~~596~~614			~~351~~596
Deferred state tax		5			31
Other		12			5
Total gross deferred tax assets	$	3,~~378~~525		$	3,~~101~~378
Less: valuation allowance		(90	)		(9190	)
Total deferred tax assets		3,~~288~~435			3,~~010~~288
Deferred tax liabilities:
Property and equipment, principally due to differing depreciation methods	$	(~~675~~651	)	$	(~~767~~675	)
Right of use asset		(~~439~~313	)		(~~546~~439	)
Deferred state tax		(7861	)		—(78	)
Unrealized gains		(~~541~~995	)		(~~1,705~~541	)
Total gross deferred tax liabilities		(12,~~733~~020	)		(31,~~018~~733	)
Net deferred tax assets (liabilities)	$	1,555		$	(8	)
Net deferred tax assets	$	1,415		$	1,555

Realization of our deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. As of June 30, ~~2024~~2025, our deferred tax asset valuation allowance primarily consists of state net operating loss carryforwards for states in which we have filed a final return. For the fiscal years ended June 30, ~~2024~~2025 and ~~2023~~2024, we recorded a net decrease to our valuation allowance of $~~1,000~~0 and $71,000, respectively, on the basis of management’s reassessment of the amount of our deferred tax assets that are more likely than not to be realized.

As of June 30, ~~2024~~2025, we did not have any net operating losses for federal and state income tax purposes for state jurisdictions in which we currently operate. We have no federal or state research and development and alternative minimum tax credit carry forwards at June 30, ~~2024~~2025.

As of June 30, ~~2024~~2025, we have accrued $~~262~~159,000 of unrecognized tax benefits related to federal and state income tax matters that would reduce our income tax expense if recognized. If we are eventually able to recognize our uncertain tax positions, our effective tax rate would be reduced. Any adjustment to our uncertain tax positions would result in a cash outlay.

4442

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information with respect to our accrual for unrecognized tax benefits is as follows (in thousands):

Schedule of accrual unrecognized tax benefits
	June 30,
	2024			2023
	2025			2024
Unrecognized tax benefits:
Beginning balance	$	~~345~~262		$	~~509~~345
Additions based on federal tax positions related to the current year		1511			1615
Additions based on state tax positions related to the current year		1711			1917
Additions (reductions) for tax positions of prior years		3(10	)		~~(95~~3	)
Reductions due to lapses in statutes of limitation		(~~118~~115	)		(~~104~~118	)
Ending balance	$	~~262~~159		$	~~345~~262

Although it is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next twelve months due to tax examinations, settlement activities, expirations of statute of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities, we do not anticipate any significant changes to unrecognized tax benefits over the next twelve months.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense when applicable. As of June 30, ~~2024~~2025, $4128,000 of interest applicable to our unrecognized tax benefits ~~have~~has been accrued.

We are subject to U.S. federal income tax, as well as income tax of California, ~~Colorado,~~ and ~~Massachusetts~~Colorado. We are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended June 30, ~~2021~~2022, and later. However, because of our prior net operating losses and research credit carryovers, our tax years from June 30, ~~2013~~2020, are open to audit.

7Additionally, the One Big Beautiful Bill Act of 2025, or the 2025 Act, enacted on July 4, 2025, makes changes to U.S. ~~NOTES~~corporate ~~PAYABLE~~income ~~AND~~taxes ~~FINANCING~~including ~~TRANSACTIONS~~reinstating the option to claim 100% accelerated depreciation deductions on qualified property, with retroactive application beginning January 20, 2025 and immediate expensing of research and development costs, with retroactive application beginning January 1, 2025. We are currently in the process of evaluating the impact of adoption of the 2025 Act to our financial position and results of operations for income tax purposes for the fiscal year ending June 30, 2025.

~~Minnesota~~8. NOTES PAYABLE ~~Bank~~AND &FINANCING ~~Trust~~TRANSACTIONS

~~On November~~UMB 6,Bank/Minnesota ~~2020~~Bank ~~(the~~& “Closing Date”), PDEX Franklin, a newly created wholly owned subsidiary of the Company, purchased the Franklin Property. A portion of the purchase price was financed by a loan from MBT to PDEX Franklin in the principal amount of approximately $5.2 million (the “Property Loan”) pursuant to a Loan Agreement, dated as of the Closing Date, between PDEX Franklin and MBT (the “Property Loan Agreement”) and corresponding Term Note (the “Property Note”) issued by PDEX Franklin in favor of MBT on the Closing Date. The Property Loan is secured by the Franklin Property pursuant to a Deed of Trust with Assignment of Leases and Rents, Security Agreement and Fixture Filing in favor of MBT (the “Deed”) and by an Assignment of Leases and Rents by PDEX Franklin in favor of MBT (the “Rents Assignment”). We paid loan origination fees to MBT on the Closing Date in the amount of $26,037.

~~The~~As ~~Property~~previously ~~Loan~~disclosed, ~~bears~~we ~~interest~~have atseveral aoutstanding ~~fixed~~term ~~rate~~loans ofas ~~3.55%~~well ~~per~~as ~~annum,~~a ~~which~~revolving isloan ~~subject~~(the to“Amended aRevolving 3%Loan”) ~~increase~~under our ~~upon~~Amended anand ~~event~~Restated ofCredit ~~default.~~Agreement ~~Accrued~~with ~~interest was~~MBT ~~paid~~(as onsubsequently ~~December 1~~amended, ~~2020,~~the ~~and~~“Amended ~~both~~Credit ~~principal~~Agreement”). ~~and~~On ~~interest~~July 31, in2024 (the ~~amount~~“Fourth ofAmendment ~~approximately $30~~Date”),~~000~~ ~~are~~we ~~due~~entered ~~and~~into ~~payable~~Amendment onNo. 4 to the ~~first~~Amended Credit Agreement (the “Fourth ~~day~~Amendment”) ofwhich, ~~each~~(i) ~~subsequent~~provided ~~month~~for ~~until~~a ~~the~~new ~~maturity~~term ~~date~~loan, ofTerm ~~November~~Loan 1C, ~~2030~~in (the ~~“Maturity~~amount ~~Date”)~~of $5.0 million, at(ii) ~~which~~used ~~time~~the aproceeds ~~balloon~~from ~~payment~~Term inLoan ~~the~~C ~~amount~~to ofrepay the entire $3.10 million isbalance ~~due.~~that ~~Any~~was ~~prepayment~~outstanding ofon the ~~Property~~Fourth ~~Loan~~Amendment ~~(other~~Date ~~than~~under ~~monthly~~the ~~scheduled~~Amended ~~interest~~Revolving Loan, and (iii) terminated ~~principal~~our ~~payments)~~Supplemental Loan, is ~~subject~~under towhich ano ~~prepayment~~amounts ~~fee~~had ~~equal~~been todrawn. 4%Loan oforigination ~~the~~fees ~~principal~~in the amount ~~prepaid~~of ~~for~~$10,000 ~~any~~were paid ~~prepayment~~to ~~made~~MBT ~~during~~in ~~the~~conjunction ~~first~~with orTerm ~~second~~Loan ~~year,~~C. ~~3% of~~On ~~the~~December ~~principal~~23, ~~amount~~2024, ~~prepaid~~we ~~for~~entered ~~any~~into ~~prepayment~~Amendment ~~made~~No. ~~during~~5 to the ~~third~~Amended orCredit ~~fourth~~Agreement ~~year~~(the “Fifth Amendment”), 2%which ofextended the ~~principal~~maturity ~~amount~~date ~~prepaid~~of ~~for~~the ~~any~~Amended ~~prepayment made~~Revolving ~~during~~Loan ~~the~~from ~~fifth~~December or29, ~~sixth~~2025, ~~year~~to December 29, 2026. ~~and~~On 1%January of31, ~~the~~2025, ~~principal~~UMB ~~amount~~Bank ~~prepaid~~acquired ~~for~~MBT. ~~any~~On ~~prepayment~~April ~~made~~8, ~~during~~2025, ~~the~~we ~~seventh~~entered orinto ~~eighth~~Amendment ~~year~~No. ~~The~~ ~~Property~~6 ~~Loan~~to ~~Agreement,~~the ~~Property~~Amended ~~Note,~~Credit ~~Deed,~~Agreement ~~and~~(the “Sixth ~~Rents~~Amendment”), ~~Assignment~~which ~~each~~among ~~contain~~other ~~representations~~things, ~~warranties,~~increased ~~covenants,~~the ~~and~~revolving ~~events~~ line of ~~default~~credit ~~that~~under ~~are~~the ~~customary~~Amended ~~for~~Revolving aLoan ~~loan~~from $7,000,000 ofto ~~this type~~$11,000,000. ~~The~~Loan ~~balance~~origination ~~owed~~fees onin the ~~Property~~amount ~~Loan~~of at$8,000 ~~June~~were ~~30,~~paid ~~2024~~to isMBT ~~$4,551,000~~in connection with the Sixth Amendment.

4543

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~On the~~The ~~Closing~~balance ~~Date, we also entered into an Amended and Restated Credit Agreement with MBT (the “Amended Credit Agreement”),~~on ~~providing~~our for a $7,525,000 amended and restated term loan (the “Term Loan A”), a $1,000,000 term loan (the “Term Loan B”), and a $2,000,000 amended and restated revolving loan, evidenced by an Amended and Restated Term Note A (“Term Note A”), a Term Note B, and an Amended and Restated Revolving Credit Note (the “Revolving Note”) made by us in favor of MBT. The Term Note A had an outstanding ~~principal~~loans ~~balance~~at ofJune $330,~~770,331~~ as2025 ~~of the Closing Date~~ and ~~could~~June ~~be borrowed against through May~~ 30, ~~2021~~2024 (~~the “Commitment~~in ~~Period”~~thousands). ~~During~~is ~~the third quarter ended March 31, 2021, we borrowed an additional $3,000,000 against Term Note A for the purpose of repurchasing our common stock~~ as ~~described~~follows in(exclusive ~~Note 13. The Term Note B had a zero balance as~~ of ~~the~~unamortized ~~Closing~~loan ~~Date and we borrowed the full $1,000,000 during the third quarter ended March 31, 2021, for the purpose of making improvements to the Franklin property described in Note 4.~~ fees):

The Term Loan A matures on November 1, 2027 and bears interest at a fixed rate of 3.84% per annum. Initial payments on the Term Loan A of interest only were due on December 1, 2020 through June 1, 2021. Commencing July 1, 2021 and continuing on the first day of each month thereafter until the maturity date, we are required to make payments of principal and interest on Term Loan A of approximately $97,000 plus any additional accrued and unpaid interest through the date of payment. The balance owed on Term Loan A as of June 30, 2024, is $3,834,000.

Schedule of outstanding loans
	June 30, 2025		June 30, 2024
Notes Payable:
Term Loan A	$	2,795	$	3,834
Term Loan B		416		571
Term Loan C		4,167		—
Property Loan		4,347		4,551
Amended Revolving Loan		3,706		3,000
Total notes payable	$	15,431	$	11,956

~~The~~ Term Loan A and B ~~matures~~both onbear ~~November~~interest 1at a fixed rate of 3.84% per annum, ~~2027~~the ~~and~~Property Loan bears interest at a fixed rate of 3.8455% per annum. and ~~Initial~~Term ~~payments~~Note onC ~~the~~bears ~~Term~~interest ~~Loan~~at Ban ~~of interest~~annual ~~only~~rate ~~were~~equal ~~due~~to onthe ~~December~~greater 1of (a) 5%, ~~2020~~or ~~through~~(b) ~~June~~the 1,SOFR ~~2021~~one-month rate plus 2.5% ~~Commencing~~(the “Adjusted ~~July~~Term 1,SOFR ~~2021~~Rate”). ~~and~~The ~~continuing~~Amended onRevolving ~~the~~Loan ~~first~~bears ~~day~~interest ofat ~~each~~an ~~month~~annual rate ~~thereafter~~equal ~~until~~to the ~~maturity~~greater ~~date~~of (a) 4%, weor ~~are~~(b) ~~required~~the toAdjusted ~~make~~Term ~~payments~~SOFR ofRate. ~~principal~~Term ~~and~~Loan ~~interest~~A onand Term Loan B ofare ~~approximately~~both ~~$15~~fully amortizing and mature on November 1,~~000~~ 2027, ~~plus~~ ~~any~~Term ~~additional~~Loan ~~accrued~~C is fully amortizing and ~~unpaid~~matures ~~interest~~on ~~through~~August ~~the~~1, ~~date~~2029, ofthe ~~payment.~~Property AsLoan ofmatures ~~March~~on 31November 1, ~~2021~~2030, weat which ~~had~~time ~~drawn~~a ~~fully~~balloon ~~against~~payment ~~Term~~in ~~Note B~~the ~~and~~principal ~~the~~amount ~~balance~~of ~~outstanding~~$3.1 onmillion ~~Term~~is ~~Note~~due B(plus ~~was~~any ~~$571~~accrued and unpaid interest),~~000~~ and the Amended Revolving Loan matures on ~~June~~December 3029, ~~2024~~2026.

OnAny payment ~~December~~on ~~29,~~Term ~~2022 (the~~Loan ~~“Second~~A, ~~Amendment~~Term ~~Date”)~~Loan B, weTerm ~~entered~~Loan ~~into~~C, ~~Amendment~~the ~~No.~~Property 2Loan, toor Amended ~~and~~Revolving ~~Restated~~Loan ~~Credit Agreement~~ (collectively, the “~~Second Amendment~~Loans”) not ~~with~~made ~~MBT,~~within ~~which~~seven ~~amends~~days after the ~~Amended~~due ~~Credit~~date ~~Agreement~~is ~~and~~subject ~~provides~~to ~~for~~ a ~~supplemental~~late ~~line~~payment offee ~~credit~~equal into 5% of the overdue amount. ~~of $3,000,000~~Upon (the ~~“Supplemental~~occurrence and ~~Loan”).~~during ~~The~~the ~~Supplemental~~continuance ~~Loan~~of isan ~~evidenced~~event byof adefault ~~Supplemental~~under ~~Revolving~~any ~~Credit~~of ~~Note~~the (Loans, the ~~“Supplemental Note”)~~interest ~~made~~rate of all Loans will be increased by us3% inand ~~favor~~MBT may, at its option, declare all of ~~MBT~~the Loans immediately due and payable in full. The ~~purpose~~Loans are secured by substantially all of the ~~Supplemental~~Company’s assets ~~Loan~~pursuant isto ~~for~~a ~~financing~~Security ~~acquisitions~~Agreement ~~and~~entered ~~repurchasing~~into ~~shares~~between ~~of our~~the ~~common~~Company ~~stock~~and MBT. The ~~Supplemental~~Property Loan ~~may~~is besecured ~~borrowed~~by ~~against~~the ~~from~~Franklin ~~time~~Property pursuant to ~~time~~a ~~through~~Deed ~~its~~of ~~maturity~~Trust ~~date~~with Assignment of ~~December~~Leases ~~29,~~and ~~2024~~Rents, onSecurity ~~the terms~~Agreement ~~set~~and ~~forth~~Fixture Filing in ~~the~~favor ~~Amended~~of ~~Credit~~MBT ~~Agreement.~~and Asby an assignment of ~~June~~Leases ~~30,~~and ~~2024,~~Rents noby ~~amounts~~PDEX ~~have~~Franklin ~~been~~in ~~drawn~~favor ~~against~~of MBT (collectively, the ~~Supplemental~~“Property Loan Security Agreements”).

The ~~Revolving Loan~~ ~~was~~Amended ~~also~~Credit ~~amended~~Agreement, ~~(the~~Security ~~“Amended~~Agreement, ~~Revolving~~Property Loan”) inSecurity ~~connection~~Agreements, ~~with~~Term ~~the~~Loan ~~Second Amendment to extend the maturity date from November 5~~A, ~~2023~~Term toLoan ~~December 29~~B, ~~2024,~~Term ~~to increase the Revolving~~ Loan ~~facility from $2~~C,~~000,000~~ toProperty $7Loan,~~000,000,~~ and toAmended ~~increase the interest rate on the~~ Revolving Loan ~~(as~~contain ~~described~~representations ~~below)~~and warranties, ~~evidenced~~affirmative, bynegative ~~an Amended~~ and ~~Restated~~financial ~~Revolving~~covenants, ~~Credit~~and ~~Note~~events ~~(the~~of ~~“Amended Revolving Note”)~~default ~~made~~that byare uscustomary infor ~~favor~~loans of ~~MBT~~this type. ~~The~~We ~~Amended~~believe ~~Revolving~~that ~~Loan~~we ~~may~~are bein ~~borrowed~~compliance ~~against~~with ~~from~~all ~~time~~of toour ~~time~~debt bycovenants usas ~~through its maturity date on the terms set forth in the Amended Credit Agreement. As~~ of June 30, ~~2024~~2025, webut there ~~had~~can ~~drawn~~be ~~$3,000,000~~no ~~against~~assurance ~~the~~that ~~Amended~~we ~~Revolving~~will ~~Loan.~~remain ~~Loan origination~~in ~~fees~~compliance infor the ~~amount~~duration of ~~$16,000 were paid to MBT in conjunction with~~ the ~~Amended~~term ~~Revolving~~of ~~Loan and~~ the ~~Supplemental Loan~~Loans.

~~The Amended Revolving Loan and Supplemental~~Scheduled ~~Loan~~principal ~~bear~~maturities ~~interest at an annual rate equal to the greater~~ of ~~(a) 5.0% or (b) SOFR for a one-month period from~~ the ~~website~~Loans, ofassuming ~~the~~repayment ~~CME Group Benchmark Administration Limited plus 2.5% (the “Adjusted Term SOFR Rate”). Commencing on the first day~~ of ~~each month after we initially borrow against~~ the Amended Revolving Loan ~~and/or~~in ~~the~~full ~~Supplemental~~in ~~Loan~~fiscal 2026 and ~~each~~exclusive ~~month~~of ~~thereafter until maturity, we are required~~unamortized toloan ~~pay~~origination ~~all~~fees ~~accrued~~in ~~and unpaid interest on~~ the ~~Amended~~amount ~~Revolving Loan and Supplemental Loan through the date~~ of ~~payment.~~$37,000, ~~Any~~for ~~principal on~~future ~~the~~fiscal ~~Amended~~years ~~Revolving~~ending ~~Loan~~June ~~and/or~~30 ~~Supplemental~~are ~~Loan~~as ~~that~~follows ~~is not previously prepaid shall be due and payable~~ (in ~~full on the maturity date (or earlier termination of the Amended Revolving Loan and/or Supplemental Loan~~thousands).:

On December 29, 2023, we entered into Amendment No. 3 to Amended and Restated Credit Agreement, which extended the maturity date of the Amended Revolving Loan and the Supplemental Loan from December 29, 2024, to December 29, 2025.


	Term Loan Principal Payments
Fiscal Year:
2026	$	6,158
2027		2,508
2028		1,908
2029		1,235
2030		410
Thereafter		3,212
Total principal payments	$	15,431

4644

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Any payment on the Term Loan A, the Term Loan B, the Amended Revolving Loan or the Supplemental Loan (collectively, the “Loans”) not made within seven days after the due date is subject to a late payment fee equal to 5% of the overdue amount9. ~~Upon the occurrence~~ and during the continuance of an event of default, the interest rate of all Loans will be increased by 3% and MBT may, at its option, declare all of the Loans immediately due and payable in full. The Loans are secured by substantially all of our assets pursuant to a Security Agreement entered into between us and MBT on September 6, 2018.LEASES

~~The Amended~~Our ~~Credit~~operating ~~Agreement,~~lease ~~Security~~ROU ~~Agreement,~~asset and ~~Term~~long-term ~~Note~~liability A,are ~~Term~~presented ~~Note~~separately B,on ~~Amended~~our ~~Revolving~~consolidated ~~Note~~balance ~~and~~sheet. ~~Supplemental~~The ~~Note~~current ~~contain~~portion ~~representations and~~of ~~warranties,~~our ~~affirmative,~~operating ~~negative~~lease ~~and~~liability, exclusive ~~financial~~of ~~covenants~~imputed interest, ~~and~~as ~~events~~ of ~~default~~June ~~that~~30, ~~are~~2025, ~~customary~~in ~~for~~the ~~loans~~amount of ~~this~~$498,000, ~~type.~~is Wepresented ~~believe that~~within weaccrued ~~are~~expenses inon ~~compliance~~the ~~with~~consolidated balance ~~all~~sheet. ofAs ~~our debt covenants as~~ of June 30, ~~2024~~2025, ~~but there can be no assurance that we will remain in compliance for~~ the ~~duration~~maturity of ~~the~~our ~~term~~lease ofliability ~~these~~is ~~loans.~~as follows:

Scheduled principal maturities of our loans, assuming repayment of the Amended Revolving Loan in full next fiscal year and exclusive of unamortized loan origination fees in the amount of $46,000, for future fiscal years ending June 30 are as follows (in thousands):


	Operating Lease

Fiscal Year:
2026	$	551
2027		567
2028		143
Total lease payments		1,261
Less imputed interest:		(78	)
Total	$	1,183

Schedule of maturities of term loan for future fiscal years
	Term Loan Principal Payments
Fiscal Year:
2025	$	4,398
2026		1,451
2027		1,508
2028		908
2029		235
Thereafter		3,456
Total principal payments	$	11,956

As of June 30, 2025 and 2024, our operating lease has a remaining lease term of 2.25 years and 3.25 years, respectively, and an imputed interest rate of 5.3%. Our lease agreement does not provide an implicit rate and, as a result, we used our estimated incremental borrowing rate at the time we adopted ASC 842 to determine the present value of future lease payments. Cash paid for amounts included in the lease liability for the fiscal years ended June 30, 2025 and 2024 was $535,000 and $519,000, respectively.

810. COMMITMENTS ~~LEASES~~AND CONTINGENCIES

Our operating lease ROU asset and long-term liability are presented separately on our consolidated balance sheet. The current portion of our operating lease liability, exclusive of imputed interest, as of June 30, 2024, in the amount of $455,000, is presented within accrued expenses on the consolidated balance sheet. As of June 30, 2024, the maturity of our lease liability is as follows:

Schedule of maturities of lease liabilities
	Operating Lease
Fiscal Year:
2025	$	535
2026		551
2027		567
2028		143
Total lease payments		1,796
Less imputed interest:		(158	)
Total	$	1,638

As of June 30, 2024 and 2023, our operating lease has a remaining lease term of 3.25 years and 4.25 years, respectively, and an imputed interest rate of 5.3%. Our lease agreement does not provide an implicit rate and, as a result, we used our estimated incremental borrowing rate at the time we adopted ASC 842 to determine the present value of future lease payments. Cash paid for amounts included in the lease liability for the fiscal years ended June 30, 2024 and 2023 was $519,000 and $504,000, respectively.

9. COMMITMENTS AND CONTINGENCIES

Leases

We lease our office, production, and warehouse facility in Irvine, California (our “corporate office”) under an agreement that expires in September 2027. Our corporate office lease requires us to pay insurance, taxes, and other expenses related to the leased space.

Rent expense in fiscal ~~2024~~2025 and ~~2023~~2024 was $~~559~~609,000 and $~~563~~559,000, respectively.

47Additionally, beginning in fiscal 2025 we began renting on a month-to-month basis some parking spaces at a neighboring location near our Franklin Property. In fiscal 2025, we incurred rent expense in the amount of $23,000 for parking.

PRO-DEX, INC. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Compensation Arrangements

Retirement Savings 401(k) Plan

The Pro-Dex, Inc. Retirement Savings 401(k) Plan (the “401(k) Plan”) is a defined contribution plan we administer that covers substantially all our employees and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. Employees are eligible to participate in the 401(k) Plan when they have attained 19 years of age and then can enter into the 401(k) Plan on the first ~~day~~ of ~~each~~the ~~calendar~~month ~~quarter.~~following 60 days of service. Participants are eligible to receive non-discretionary matching contributions by the Company equal to ~~25% of their contributions up to 5% of eligible compensation through December 15, 2022 and~~ 50% of their contributions up to 5% of eligible compensation ~~thereafter~~. For the fiscal years ended June 30, ~~2024~~2025 and ~~2023~~2024, we recognized compensation expense amounting to $~~188~~259,000 and $~~164~~188,000, respectively, in connection with the 401(k) Plan. During our fiscal years ended June 30, ~~2024~~2025 and ~~2023~~ 2024, we used approximately $6323,000 and $1363,000, respectively, of forfeited match contributions to reduce our match expense.

Legal Matters

We may be involved in legal proceedings arising either in the ordinary course of our business or incidental to our business. There can be no certainty, however, that we may not ultimately incur liability or that such liability will not be material or adverse.

~~10. SHARE-BASED COMPENSATION~~45

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. SHARE-BASED COMPENSATION

Stock Option Plans

~~Through~~Our ~~2014, we~~2016 ~~had~~Equity ~~two~~Incentive Plan ~~equity~~provides ~~compensation~~for ~~plans,~~ the ~~Second~~award ~~Amended~~of ~~and~~up ~~Restated~~to ~~2004~~1,500,000 ~~Stock~~shares ~~Option~~of ~~Plan~~our ~~(the “Employee~~common ~~Stock~~stock ~~Option~~in ~~Plan”) and~~ the ~~Amended~~form ~~and~~of ~~Restated~~incentive ~~2004~~stock ~~Directors’~~options, ~~Stock~~nonstatutory ~~Option~~stock ~~Plan (the “Directors’~~options, ~~Stock~~stock ~~Option~~appreciation ~~Plan”) (collectively~~rights, ~~the~~restricted ~~“Former~~shares, ~~Stock~~restricted ~~Option~~stock ~~Plans”).~~units, ~~The~~performance ~~Employee~~awards, ~~Stock Option Plan~~ and ~~Director’s Stock~~other ~~Option~~stock-based ~~Plan~~awards. ~~were~~As ~~terminated~~of in June ~~2014 and December 2014~~30, 2025, ~~respectively.~~performance Noawards ~~options~~for ~~were~~200,000 ~~granted~~shares ~~under~~of ~~the~~common ~~Former~~stock, ~~Stock~~non-qualified ~~Option Plans~~stock ~~during~~options ~~the~~for ~~fiscal~~372,000 ~~years~~shares ~~ended~~of ~~June~~common 30stock, ~~2024~~ and ~~2023~~18,000 restricted ~~and~~shares ~~all~~of ~~remaining~~common ~~outstanding~~ stock ~~options~~have ~~were~~been ~~exercised~~granted ~~during~~under ~~fiscal~~the ~~2023~~2016 Equity Incentive Plan.

In September 2016, our Board approved the establishment of the 2016 Equity Incentive Plan, which was approved by our shareholders at our 2016 Annual Meeting. The 2016 Equity Incentive Plan provides for the award of up to 1,500,000 shares of our common stock in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted shares, restricted stock units, performance awards, and other stock-based awards.

Performance Awards

In ~~December~~October ~~2017~~2023, the Compensation Committee ofreallocated ~~our~~previously ~~Board~~forfeited ~~of Directors granted 200,000~~ performance awards tofor ~~our employees under the 2016 Equity Incentive Plan~~15,200 ~~which upon vesting will generally be paid in~~ shares of ~~our~~ common stock. ~~Whether any performance awards vest, and the amount that does vest, is tied~~ to ~~the~~other ~~completion of service periods that range from 7 months to 9~~employees.5 ~~years at inception and the achievement of our common stock trading at certain pre-determined prices.~~ The weighted~~-average~~ average fair value of the performance awards ~~granted was $4.46, calculated using the weighted-average fair market value for each award, using a Monte Carlo simulation. In February 2020, the Compensation Committee~~ reallocated ~~48,000~~in ~~previously forfeited~~2023 ~~awards,~~which ~~having~~were ~~the~~expected ~~same remaining terms and conditions,~~ to ~~certain~~vest ~~current employees. The weighted average fair value of the performance awards granted in fiscal 2020~~ was $1610.~~90, calculated using the weighted-average fair market value for each award, using a Monte Carlo simulation. In December 2021, the Compensation Committee reallocated an additional~~ 17,~~500~~ ~~previously forfeited awards, having the same remaining terms and conditions, to other employees. The weighted average fair value of the performance awards reallocated in 2021 was $20.34,~~ calculated using the weighted average fair market value for each award, using a Monte Carlo simulation. InDuring ~~October 2023,~~ the ~~Compensation~~fiscal ~~Committee~~years ~~reallocated~~ended anJune ~~additional 15~~30,~~200~~ ~~previously~~2025 ~~forfeited awards, having the same remaining terms~~ and ~~conditions, to~~2024 ~~other~~we employees. The weighted average fair value of the performance awards reallocated in 2023 was $10.04, calculated using the weighted average fair market value for each award, using a Monte Carlo simulation. We recorded share-based compensation expense of $~~106~~28,000 ~~in each of the fiscal years ended June 30, 2024~~ and ~~2023~~$106,000, respectively, related to ~~these~~outstanding performance awards. ~~We recognize forfeitures for our performance awards as they occur.~~ On June 30, ~~2024~~2025, there was approximately $5528,000 of unrecognized compensation cost related to ~~these~~ non-vested performance awards expected to be expensed over the weighted-average period of 1.0 ~~years~~year.

48On July 1, 2024, it was determined by the Compensation Committee that the vesting of performance awards for 40,000 shares of common stock had been achieved. Each participant elected a net issuance to cover their individual withholding taxes and, therefore, we issued participants 25,134 shares of common stock and paid $273,000 of participant-related payroll tax liabilities.

~~PRO-DEX,~~The ~~INC.~~following ~~AND~~is ~~SUBSIDIARYNOTES~~a TOsummary of ~~CONSOLIDATED~~performance ~~FINANCIAL~~awards ~~STATEMENTS~~activity for the fiscal years ended June 30, 2025 and 2024:

On July 1, 2022, it was determined by the Compensation Committee of our Board of Directors that the vesting of performance awards for 37,500 shares of common stock had been achieved. Each participant elected a net issuance to cover their individual withholding taxes and therefore we issued 23,641 shares and paid $223,000 of participant-related payroll tax liabilities.


	2025					2024
	Number of Shares			Weighted-Average Grant Date Fair Value		Number of Shares		Weighted-Average Grant Date Fair Value
Outstanding at July 1,		80,000		$	7.00		64,800	$	7.03

Granted		—			—		15,200		10.04
Vested		(40,000	)		7.39		—		—
Forfeited		—			—		—		—
Outstanding at June 30		40,000		$	6.65		80,000	$	7.00

The following is a summary of performance awards activity for the fiscal years ended June 30, 2024 and 2023:

Schedule of summary of stock option activity
	2024				2023
	Number of Shares		Weighted-Average Grant Date Fair Value		Number of Shares			Weighted-Average Grant Date Fair Value
Outstanding at July 1,		64,800	$	7.03		117,500		$	8.52
Granted		15,200		10.04		—			—
Vested		—		—		(37,500	)		7.84
Forfeited		—		—		(15,200	)		16.54
Outstanding at June 30		80,000	$	7.00		64,800		$	7.03

Non-Qualified Stock Options

In December 2020, the Compensation Committee of our Board of Directors granted ~~310,000~~ non-qualified stock options for 310,000 shares of our common stock to our directors and certain employees under the 2016 Equity Incentive Plan. Whether any stock options vest, and the amount that does vest, is tied to the completion of service periods that range from 18 months to 10.5 years at inception and the achievement of our common stock trading at certain pre-determined prices. We recorded compensation expense of $~~490~~416,000 and $~~647~~490,000 for the fiscal year ended June 30, ~~2024~~2025 and ~~2023~~2024, respectively, related to these options. The weighted average fair value of the stock option awards granted was $16.72, calculated using a Monte Carlo simulation. We recognize forfeitures for our non-qualified stock options as they occur. As of June 30, ~~2024~~2025, there was approximately $1.61 million of unrecognized compensation cost related to these non-vested non-qualified stock options expected to be expensed over the weighted-average period of 44.6 months.

In February 2021, the Compensation Committee of our Board of Directors granted ~~62,000~~ non-qualified stock options for 62,000 shares of our common stock to our directors and certain employees under the 2016 Equity Incentive Plan. Whether any stock options vest, and the amount that does vest, was tied to the completion of service periods that ranged from 4 months to 1.3 years at inception and the achievement of our common stock trading at certain pre-determined prices. Of these ~~62,000~~ stock options, the right to acquire 57,750 shares vested on July 1, 2021, as our common stock met the pre-determined prices set forth in the underlying agreements. We recorded compensation expense of $182,000 for the fiscal year ended June 30, 2021 related to these options. The weighted average fair value of the stock option awards granted was $3.16, calculated using a Monte Carlo simulation. In December 2021, the Compensation Committee of our Board of Directors granted 5,000 previously forfeited non-qualified stock options to another employee.

~~The following is a summary of non-qualified stock option activity under the 2016 Equity Incentive Plan for the fiscal year ended June 30, 2024 and 2023:~~46

Schedule of summary of stock option activity
	2024					2023
	Number of Shares			Weighted-Average Exercise Price		Number of Shares			Weighted-Average Exercise Price
Outstanding at July 1,		298,937		$	42.19		346,500		$	41.83
Options granted		—			—		—			—
Options exercised		—			—		—			—
Options forfeited		(31,187	)		42.88		(47,563	)		39.60
Outstanding at June 30		267,750		$	42.11		298,937		$	42.19
Stock Options Exercisable at June 30,		57,750		$	27.50		57,750		$	27.50

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of non-qualified stock option activity under the 2016 Equity Incentive Plan for the fiscal year ended June 30, 2025 and 2024:


	2025					2024
	Number of Shares			Weighted-Average Exercise Price		Number of Shares			Weighted-Average Exercise Price
Outstanding at July 1,		267,750		$	42.11		298,937		$	42.19
Options granted		—			—		—			—
Options exercised		(4,250	)		27.50		—			—
Options forfeited/expired		(26,250	)		42.00		(31,187	)		42.88
Outstanding at June 30		237,250		$	42.38		267,750		$	42.11
Stock Options Exercisable at June 30,		79,750		$	32.27		57,750		$	27.50

The aggregate intrinsic value of options, which represents the cumulative difference between the fair market value of the underlying common stock and the option exercise prices, exercised was $82,000 in fiscal 2025. On June 30, 2025 the options outstanding and exercisable had intrinsic values of $299,000 and $907,000, respectively. On June 30, 2024 the options outstanding and exercisable had no intrinsic value.

Restricted Shares

In November 2024, the Compensation Committee awarded 18,000 restricted shares of common stock to our directors and certain employees under the 2016 Equity Incentive Plan. The shares vest ratably over five years from the date of grant. The fair value of the restricted shares on the date of grant was $857,000, based upon the closing price of our common stock on the date of grant. During the fiscal year ended June 30, 2025, we recorded $105,000 of compensation expense related to these restricted shares. As of June 30, 2025, there was approximately $753,000 of unrecognized compensation cost related to these restricted shares expected to be expensed over the weighted-average period of 53 months.

Employee Stock Purchase Plan

In September 2014, our Board approved the establishment of an Employee Stock Purchase Plan (the “ESPP”), which was approved by our shareholders at our 2014 Annual Meeting. The ESPP conforms to the provisions of Section 423 of the Internal Revenue Code, has coterminous offering and purchase periods of six months, and bases the pricing atto ~~which participant’s~~ purchase shares of our common stock on a formula so as to result in a per share purchase price that approximates a 15% discount from the market price of a share of our common stock at the end of the purchase period. Our Board of Directors also approved ~~the provision~~ that ~~shares~~ ~~formerly reserved for issuance under the Former Stock Option Plans in excess of shares issuable pursuant to outstanding options, aggregating~~ 704,715 shares, be reserved for issuance pursuant to the ESPP. ~~The~~An ~~ESPP~~amendment ~~was~~to ~~approved~~the byESPP to ~~our~~extend ~~shareholders~~its atterm ~~our~~for ~~2014~~an ~~Annual Meeting.~~additional Onten ~~February~~years 2,(through ~~2015,~~2035) ~~the~~was ~~Company~~approved ~~filed~~by aour ~~Registration~~Board ~~Statement~~in onOctober ~~Form~~2023 ~~S-8~~and ~~registering~~by ~~the~~our ~~704,715~~shareholders ~~shares~~at ~~issuable under the~~our ~~ESPP~~2023 ~~under~~Annual ~~the Securities Act of 1933~~Meeting.

InDuring ~~October~~the ~~2023,~~fiscal ~~our~~years ~~Board~~ended ~~approved~~June an30, ~~amendment~~2025 and 2024, shares totaling 1,593 and 3,004, respectively, were purchased pursuant to the ESPP ~~(the~~and ~~“ESPP~~allocated ~~Amendment”)~~to participating employees based upon their contributions at weighted- average prices of $26.42 and $16.64, ~~which~~respectively. ~~extended~~On a cumulative basis, since the ~~term~~inception of the ESPP, ~~for~~employees anhave ~~additional~~purchased ~~ten~~a total of 37,095 shares. During the fiscal years ~~from~~ ~~January~~ended June 30, 2025 toand ~~January~~2024, ~~2035.~~we recorded ~~The~~stock ~~ESPP~~compensation ~~Amendment~~expense ~~was~~in ~~approved~~the byamount ~~our~~of ~~shareholders~~$7,000 atand ~~our~~$9,000, ~~2023~~respectively, ~~Annual~~relating ~~Meeting~~to the ESPP.

During the fiscal years ended June 30, 2024 and 2023, shares totaling 3,004 and 5,459, respectively, were purchased pursuant to the ESPP and allocated to participating employees based upon their contributions at weighted- average prices of $16.64 and $14.21, respectively. On a cumulative basis, since the inception of the ESPP, employees have purchased a total of 35,502 shares. During the fiscal years ended June 30, 2024 and 2023, we recorded stock compensation expense in the amount of $9,000 and $14,000, respectively, relating to the ESPP.47

11. MAJOR CUSTOMERS & SUPPLIERS

Customers that accounted for more than 10% of our total sales in either of fiscal year 2024 or 2023, is as follows (in thousands, except percentages):

Schedule of sales by major customers
	Years Ended June 30,
	2024					2023
	Amount		Percent of Total			Amount		Percent of Total
Net sales	$	53,844		100	%	$	46,087		100	%
Customer concentration:
Customer 1	$	38,159		71	%	$	30,892		67	%
Customer 2		6,502		12	%		7,583		16	%
Total	$	44,661		83	%	$	38,475		83	%

Information with respect to accounts receivable from those customers who comprised more than 10% of our gross accounts receivable at either June 30, 2024 or June 30, 2023 is as follows (in thousands, except percentages):

Schedule of accounts receivable, inventory purchases and accounts payable of major customers and suppliers
	June 30, 2024				June 30, 2023
Total gross accounts receivable	$	13,887	100	%	$	9,952	100	%
Customer concentration:
Customer 1	$	10,488	76	%	$	7,231	73	%
Customer 2		2,423	17	%		1,951	19	%
Total	$	12,911	93	%	$	9,182	92	%

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~During fiscal 2024 and 2023,~~12. MAJOR weCUSTOMERS ~~had~~& ~~three~~SUPPLIERS ~~and four suppliers, respectively, that accounted for more than 10% of total inventory purchases, as follows (in thousands, except percentages):~~

	June 30, 2024				June 30, 2023
Total inventory purchases	$	20,926	100	%	$	19,835	100	%
Supplier concentration:
Supplier 1	$	5,004	24	%	$	4,595	23	%
Supplier 2		2,401	11	%		2,406	12	%
Supplier 3		3,351	16	%		2,135	11	%
Supplier 4		158	1	%		2,059	10	%
Total.	$	10,914	52	%	$	11,195	56	%

Customers that accounted for more than 10% of our total sales in either of fiscal year 2025 or 2024, is as follows (in thousands, except percentages):

Information with respect to accounts payable due to our top three suppliers at June 30, 2024 or June 30, 2023 is as follows (in thousands, except percentages):

Schedule of sales by major customers
	Years Ended June 30,
	2025					2024
	Amount		Percent of Total			Amount		Percent of Total

Net sales	$	66,593		100	%	$	53,844		100	%

Customer concentration:
Customer 1	$	49,930		75	%	$	38,159		71	%
Customer 2		8,271		12	%		6,502		12	%
Total	$	58,201		87	%	$	44,661		83	%

	June 30, 2024				June 30, 2023
Total accounts payable	$	4,513	100	%	$	2,261	100	%
Supplier concentration:
Supplier 1	$	1,405	31	%	$	620	27	%
Supplier 3		416	9	%		158	7	%
Supplier 2		371	8	%		41	2	%
Total.	$	2,192	48	%	$	819	36	%

Information with respect to accounts receivable from those customers who comprised more than 10% of our gross accounts receivable at either June 30, 2025 or June 30, 2024 is as follows (in thousands, except percentages):

12. NET INCOME PER SHARE


	June 30, 2025				June 30, 2024
Total gross accounts receivable	$	16,433	100	%	$	13,887	100	%

Customer concentration:
Customer 1	$	11,895	72	%	$	10,488	76	%
Customer 2		2,768	17	%		2,423	17	%
Total	$	14,663	89	%	$	12,911	93	%

~~We calculate~~During ~~basic~~fiscal ~~earnings~~2025 ~~per~~and ~~share by dividing net income by the weighted-average number of common shares outstanding during the reporting~~2024, ~~period.~~we ~~Diluted~~had ~~earnings~~three ~~per~~suppliers ~~share~~that ~~reflects~~accounted ~~the~~for ~~effects~~more ofthan ~~potentially~~10% ~~dilutive securities. The summary~~ of ~~the~~total ~~basic~~inventory ~~and diluted earnings per share calculations for the years ended June 30~~purchases, ~~2024 and 2023 is~~ as follows (in thousands, except ~~per share data~~percentages):

Schedule of net income per share
	June 30, 2025					June 30, 2024
	Years Ended June 30,
Total inventory purchases	$	32,556		100	%	$	20,926	100	%
	2024		2023
Supplier concentration:
Basic:
Supplier 1	$	7,018		22	%	$	5,004	24	%
Net income	$	2,127	$	7,074
Supplier 2		4,554		14	%		2,401	11	%
Weighted-average shares outstanding		3,499		3,571
Supplier 3		4,192		13	%		3,351	16	%
Basic earnings per share	$	0.61	$	1.98
Total	$	15,764		49	%	$	10,756	51	%
Diluted:
Net income	$	2,127	$	7,074
Weighted-average shares outstanding		3,499		3,571
Effect of dilutive securities – stock options & performance awards		72		66
Weighted-average shares used in calculation of diluted earnings per share		3,571		3,637
Diluted earnings per share	$	0.60	$	1.95

5148

PRO-DEX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~13.~~Information ~~COMMON~~with ~~STOCK~~respect –to ~~Share~~accounts ~~Repurchase~~payable ~~Program~~due to our top three suppliers at June 30, 2025 or June 30, 2024 is as follows (in thousands, except percentages):

In December 2019, our Board approved a new share repurchase program authorizing us to repurchase up to one million shares of our common stock, as the prior repurchase plan authorized by our Board in 2013 was nearing completion. In accordance with, and as part of, these shares repurchase programs, our Board approved the adoption of several prearranged share repurchase plans intended to qualify for the safe harbor provided by Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (“10b5-1 Plan” or “Plan”). During the fiscal year ended June 30, 2024, we repurchased 184,901 shares at an aggregate cost, inclusive of fees under the Plan, of $3.5 million. During the fiscal year ended June 30, 2023, we repurchased 86,422 shares at an aggregate cost, inclusive of fees under the Plan, of $1.5 million. On a cumulative basis, since 2013 we have repurchased a total of 1,381,349 shares under the share repurchase programs at an aggregate cost, inclusive of fess under the Plan, of $20.7 million. All repurchases under the 10b5-1 Plans were administered through an independent broker.


	June 30, 2025				June 30, 2024
Total accounts payable	$	4,614	100	%	$	4,513	100	%

Supplier concentration:
Supplier 1	$	735	16	%	$	1,405	31	%
Supplier 2		1,016	22	%		371	8	%
Supplier 3		298	6	%		416	9	%
Total	$	2,049	44	%	$	2,192	48	%

1413. NET ~~SUBSEQUENT~~INCOME ~~EVENTS~~PER SHARE

OnWe ~~July~~calculate ~~31,~~basic ~~2024 (the~~earnings ~~“Fourth~~per ~~Amendment~~share ~~Date”),~~by wedividing ~~entered~~net ~~into~~income ~~Amendment~~by ~~No.~~the 4weighted-average tonumber ~~our~~of ~~Amended~~common ~~and~~shares ~~Restated~~outstanding ~~Credit~~during ~~Agreement (~~the ~~“Fourth Amendment”)~~reporting ~~with MBT which amends the Company’s Amended Credit Agreement~~period. ~~The~~Diluted ~~Fourth Amendment (i) provides for a new term~~earnings ~~loan,~~per ~~Term~~share ~~Loan~~reflects ~~C, in~~ the ~~amount~~effects of ~~$5,000,000,~~potentially ~~(ii)~~dilutive ~~uses~~securities ~~the~~based ~~proceeds~~upon ~~from~~the ~~Term~~treasury ~~Loan~~stock Cmethod tofor ~~repay~~ in-the-money ~~entire~~stock ~~$3,000,000 balance that was~~options ~~outstanding~~and on the ~~Fourth~~fully ~~Amendment~~diluted ~~Date~~shares ~~under~~outstanding ~~the~~method ~~Amended~~for ~~Revolving~~restricted ~~Loan,~~stock and ~~(iii) terminates~~performance ~~the~~awards. ~~Supplemental~~The ~~Loan,~~summary ~~under~~of ~~which no~~the ~~amounts~~basic ~~had~~and ~~been~~diluted ~~drawn.~~earnings per ~~Loan~~share ~~origination~~calculations ~~fees~~for in the ~~amount~~years ofended ~~$10~~June 30,~~000~~ ~~were~~2025 ~~paid~~and to2024 ~~MBT~~is as follows (in ~~conjunction~~thousands, ~~with~~except ~~Term~~per ~~Loan~~share C.data):

Schedule of net income per share
	Years Ended June 30,
	2025		2024
Basic:
Net income	$	8,978	$	2,127
Weighted-average shares outstanding		3,288		3,499
Basic earnings per share	$	2.73	$	0.61
Diluted:
Net income	$	8,978	$	2,127
Weighted-average shares outstanding		3,288		3,499
Effect of dilutive securities – stock options & performance awards		73		72
Weighted-average shares used in calculation of diluted earnings per share		3,361		3,571
Diluted earnings per share	$	2.67	$	0.60

14. COMMON STOCK – Share Repurchase Program

In December 2019, our Board approved a new share repurchase program authorizing us to repurchase up to one million shares of our common stock, as the prior repurchase plan authorized by our Board in 2013 was nearing completion. In accordance with, and as part of, these shares repurchase programs, our Board approved the adoption of several prearranged share repurchase plans intended to qualify for the safe harbor provided by Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (“10b5-1 Plan” or “Plan”). During the fiscal year ended June 30, 2025, we repurchased 130,148 shares at an aggregate cost, inclusive of fees under the Plan, of $3.5 million. During the fiscal year ended June 30, 2024, we repurchased 184,901 shares at an aggregate cost, inclusive of fees under the Plan, of $3.5 million. On a cumulative basis, since 2013 we have repurchased a total of 1,511,497 shares under the share repurchase programs at an aggregate cost, inclusive of fees under the Plan, of $24.2 million. All repurchases under the 10b5-1 Plans were administered through an independent broker.

15. SUBSEQUENT EVENTS

We have evaluated subsequent events through the date of this filing. There were no subsequent events that require disclosure.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer and principal accounting officer) have concluded, based on their evaluation as of June 30, ~~2024~~2025, that the design and operation of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) ~~were not~~are effective at a reasonable assurance level to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of our management, including our principal executive officer, principal financial officer, and principal accounting officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in May 2013. Based on this evaluation, ~~and as a result of the material weaknesses described below,~~ our management concluded that our internal control over financial reporting was ~~not~~ effective as of June 30, ~~2024~~2025.

Our internal control over financial reporting is supported by written policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of our Company are being made only in accordance with authorizations of our management and directors; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that apply to certain smaller reporting companies that permit us to provide only management’s attestation in this annual report.

~~Material~~Remediation ~~Weaknesses~~Measures Related to the Controls over the Existence of Inventory

AAs ~~material~~previously ~~weakness is described as a deficiency~~disclosed, we ordetected a ~~combination~~material ofweakness ~~deficiencies,~~related into ~~internal~~controls ~~control~~ over ~~financial~~the ~~reporting,~~existence ~~such~~of ~~that~~inventory ~~there~~during isfiscal a2024. ~~reasonable~~During ~~possibility~~fiscal ~~that~~2025 awe ~~material misstatement~~hired of a ~~company’s~~warehouse manager, ~~annual~~ and ~~interim~~we ~~financial~~reinforced ~~statements~~the ~~will not be prevented or detected on a timely basis.~~following:

~~The~~· ~~Company~~Continued ~~did not maintain effective controls related to the existence of inventory. In connection with~~ our ~~year-end~~robust ~~procedures,~~cycle wecount ~~performed~~process ~~a full physical inventory~~ which ~~contained errors. Although~~ we ~~successfully~~implemented ~~completed~~in ~~our physical inventory observation and recorded all errors identified, based on~~ the ~~material~~fourth ~~value~~quarter of ~~inventory~~fiscal we own, management determined that reliance on other compensating controls, including cycle counts and controls related to inventory receipts and issuances, was insufficient to ensure that there is not a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected in a timely basis.2024

~~These~~· ~~material~~Ensured ~~weaknesses did~~adequate ~~not~~review ~~result~~and inoversight ~~any~~of ~~material~~cycle ~~misstatement~~count inprocedures our financial statements or disclosures. Management has concluded that our consolidated financial statements included in this report present fairly, in all material respects, our financial position, results of operations, and ~~cash flows for the periods presented, in conformity with U.S. GAAP.~~results

53· Provided training related to standard operating procedures and internal controls key to stakeholders within the stockroom, material handling and operations teams.

~~Remediation Measures~~50

To address the material weakness related to controls over the existence of inventory, the Company will reinforce the following:

· Continue our robust cycle count process which we implemented in the fourth quarter of fiscal 2024 for all of fiscal 2025

· Ensure adequate review and oversight of cycle count procedures and results

· Providing training related to standard operating procedures and internal controls to key stakeholders within the stockroom, material handling and operations teams.

Remediation Measures related to the Valuation and Disclosure of Investments

As previously disclosed, material weaknesses existed relating to the controls related to the valuation and disclosure of level 3 investments during fiscal 2023 and level 2 investments during the three months ended December 31, 2023. During fiscal 2024, we designed internal controls related to valuation and disclosure of level 3 financial instruments pursuant to the guidance in ASC Topic, Derivatives and Hedging, and determined that we did not hold any level 3 financial instruments as of June 30, 2024. These new internal controls will be applied to any future derivative or level 3 instrument that we receive. We also designed and implemented internal controls related to the review and approval of the valuation and disclosure of level 2 investments that were implemented during the fourth quarter of fiscal 2024.

Changes in Internal Control Over Financial Reporting

~~Except~~During ~~as discussed above, during~~ the quarter ended June 30, ~~2024~~2025, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B.

OTHER INFORMATION

Insider Trading Arrangements and Policies

During the quarter ended June 30, ~~2024~~2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K.

ITEM 9C.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

5451

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item is incorporated herein by reference to our definitive Proxy Statement, which will be filed within 120 days of June 30, ~~2024~~ 2025, and delivered to shareholders in connection with our ~~2024~~2025 annual meeting of shareholders.

ITEM 11.

EXECUTIVE COMPENSATION

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

5552

PART IV

ITEM 15.

EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Financial Statement Schedules

(1)

Financial Statements are listed in the index included under Item 8 of this Report.

(b) Exhibits

Exhibit				Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
3.1	Articles of Incorporation	8-K	3.1	4/23/2007
3.2	Articles of Amendment to Articles of Incorporation	8-K	3.1	12/5/2007
3.3	Articles of Amendment to Articles of Incorporation	8-K	3.1	6/18/2010
3.4	Amended and Restated Bylaws, dated January 31, 2011	8-K	3.1	2/4/2011
4.1	Description of Company's Common Stock Registered Pursuant to Section 12 of the Securities Act of 1934				X
10.1*	~~Second~~Pro-Dex, ~~Amended~~Inc. ~~and~~2016 ~~Restated~~Equity ~~2004~~Incentive ~~Stock Option~~ Plan	~~S-8~~14A	~~4.1~~Appendix A	210/1517/~~2012~~2016
10.2*	~~Amended~~Form ~~and~~of ~~Restated~~Indemnification ~~2004~~Agreement ~~Directors~~for ~~Stock~~directors ~~Option~~and ~~Plan~~certain officers	S-8-K	410.21	210/1529/~~2012~~2008
10.3*	Pro-Dex, Inc. 2016 Equity Incentive Plan	14A	Appendix A	10/17/2016
10.3	Lease agreement with Irvine Business Properties, dated August 3, 2007	8-K	10.1	8/23/2007
10.4*	Form of Indemnification Agreement for directors and certain officers	8-K	10.1	10/29/2008
10.4	First Amendment to Lease - July 2013 by and between Irvine Business Properties and Pro-Dex, Inc. dated effective July 1, 2013	8-K	10.1	7/17/2013
10.5	Lease agreement with Irvine Business Properties, dated August 3, 2007	8-K	10.1	8/23/2007
10.5*	Pro-Dex, Inc. Amended and Restated Employee Severance Policy effective as of September 16, 2016	10-Q	10.5	5/14/2015
10.6	~~First~~Second ~~Amendment~~Amended to ~~Lease~~Standard Industrial/Commercial Multi-Tenant ~~July~~Lease ~~2013~~- Net by and between Irvine Business Properties and Pro-Dex, Inc., dated ~~effective~~September ~~July 1~~19, ~~2013~~2017	8-K	10.1	79/1720/~~2013~~2017
10.7*	~~Pro-Dex,~~Form ~~Inc.~~of ~~Amended~~Performance ~~and~~Award ~~Restated~~Agreement ~~Employee~~for ~~Severance~~Employees ~~Policy~~of ~~effective~~Pro-Dex, asInc. of- ~~September~~2016 ~~16,~~Equity ~~2016~~Incentive Plan	108-QK	10.51	512/148/~~2015~~2017
10.8	~~Second~~Security ~~Amended~~Agreement, todated ~~Standard~~September ~~Industrial/Commercial~~6, ~~Multi-Tenant~~2018 ~~Lease - Net~~ by ~~and between Irvine Business Properties and~~ Pro-Dex, Inc., ~~dated~~in ~~September~~favor ~~19,~~of ~~2017~~Minnesota Bank & Trust	8-K	10.12	9/207/~~2017~~2018
10.9	Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate by and between Pro-Dex, Inc. and 14401 Franklin, LLC	8-K	10.1	9/8/2020
10.10	Loan Agreement dated November 6, 2020 made by and between PDEX Franklin LLC and Minnesota Bank & Trust	8-K	10.1	11/12/2020

5653

Exhibit				Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
10.9*	Form of Performance Award Agreement for Employees of Pro-Dex, Inc. - 2016 Equity Incentive Plan	8-K	10.1	12/8/2017
10.11	Term Note dated November 6, 2020 made by PDEX Franklin LLC in favor of Minnesota Bank & Trust	8-K	10.2	11/12/2020
10.10	Credit Agreement, dated September 6, 2018 between Pro-Dex, Inc. and Minnesota Bank & Trust	8-K	10.1	9/7/2018
10.12	Deed of trust with Assignment of Leases and Rents, Security Agreement and Fixture Filing dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust	8-K	10.3	11/12/2020
10.11	Security Agreement, dated September 6, 2018 by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.2	9/7/2018
10.13	Assignment of Leases and Rents dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust	8-K	10.4	11/12/2020
10.12	Term Note A, dated September 6, 2018 by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.3	9/7/2018
10.14	Amended and Restated Credit Agreement dated November 6, 2020 by and between Pro-Dex, Inc. and Minnesota Bank & Trust	8-K	10.5	11/12/2020
10.13	Revolving Credit Note, dated September 6, 2018 by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.4	9/7/2018
10.15	Amended and Restated Term Note A dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.6	11/12/2020
10.14	Change in Terms Agreement dated September 6, 2018 by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.1	10/1/2019
10.16	Term Note B dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.7	11/12/2020
10.15	Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate by and between Pro-Dex, Inc. and 14401 Franklin, LLC	8-K	10.1	9/8/2020
10.17*	Form of Stock Option Agreement for Directors and Employees of Pro-Dex, Inc. - 2016 Equity Incentive Plan	8-K	10.1	12/11/2020
10.16	Loan Agreement dated November 6, 2020 made by and between PDEX Franklin LLC and Minnesota Bank & Trust	8-K	10.1	11/12/2020
10.18	Amendment No. 1 to Amended and Restated Credit Agreement dated November 5, 2021 by and between Pro-Dex, Inc. and Minnesota Bank & Trust	8-K	10.1	11/9/2021
10.17	Term Note dated November 6, 2020 made by PDEX Franklin LLC in favor of Minnesota Bank & Trust	8-K	10.2	11/12/2020
10.19	Amendment No. 2 to Amended and Restated Credit Agreement dated December 29,2022 by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.1	1/5/2023
10.18	Deed of trust with Assignment of Leases and Rents, Security Agreement and Fixture Filing dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust	8-K	10.3	11/12/2020
10.20	Amended and Restated Revolving Credit Note dated December 29, 2022 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.2	1/5/2023
10.19	Assignment of Leases and Rents dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust	8-K	10.4	11/12/2020
10.21	Supplemental Revolving Credit Note dated December 29, 2022 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.3	1/5/2023
10.20	Amended and Restated Credit Agreement dated November 6, 2020 by and between Pro-Dex, Inc. and Minnesota Bank & Trust	8-K	10.5	11/12/2020
10.22	Warrant to Purchase Stock dated December 20, 2018 made by Monogram Orthopaedics Inc. in favor of Pro-Dex, Inc.	10-K	10.31	10/13/2023
10.23	Amendment No. 3 to Amended and Restated Credit Agreement dated December 29, 2023 by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.1	1/3/2024
10.24	Amendment No 4 to Amended and Restated Credit Agreement dated July 31, 2024 by and between Pro-Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.1	8/5/2024
10.25	Promissory Note dated July 31, 2024 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.2	8/5/2024
10.26*	Form of Restricted Shares Award Agreement by and between Pro-Dex, Inc. and non-employee directors and select employees dated November 20, 2024	8-K	10.1	11/25/2024

5754

Exhibit				Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
10.21	Amended and Restated Term Note A dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.6	11/12/2020
10.27	Amendment No. 5 to Amended and Restated Credit Agreement dated December 23, 2024, by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.1	12/27/2025
10.22	Term Note B dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.7	11/12/2020
10.28	Amendment and Restated Revolving Credit Note dated December 23, 2024, made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.2	12/27/24
10.23	Amended and Restated Revolving Credit Agreement dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.8	11/12/2020
10.29	Amendment No. 6 to Amended and Restated Credit Agreement dated April 8, 2025, by and between Pro-Dex, Inc. and UMB Bank, N.A. D/B/A Minnesota Bank and Trust, a division of UMB Bank N.A., successor-in-interest to Minnesota Bank and Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed April 11, 2025).	8-K	10.1	4/11/2025
10.24*	Form of Stock Option Agreement for Directors and Employees of Pro-Dex, Inc. - 2016 Equity Incentive Plan	8-K	10.1	12/11/2020
10.30	Second Amended and restated revolving Credit Note dated April 8, 2025, made by Pro-Dex, Inc. in favor of UMB Bank, N.A. D/B/A Minnesota Bank and Trust, a division of UMB Bank N.A., successor-in-interest to Minnesota Bank and Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed April 11, 2025).	8-K	10.2	04/11/2025
10.25	At the Market Offering Agreement dated December 31, 2020, by and between Pro-Dex, Inc. and Ascendiant Capital Markets, LLC	8-K	10.1	12/31/2020
19	Policy on Insider Trading				X
10.26	Amendment No. 1 to Amended and Restated Credit Agreement dated November 5, 2021 by and between Pro-Dex, Inc. and Minnesota Bank & Trust	8-K	10.1	11/9/2021
21	Subsidiaries				X
10.27	Amended and Restated Revolving Credit Note dated November 5, 2021 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust	8-K	10.2	11/9/2021
23	Consent of Independent Registered Public Accounting Firm				X
10.28	Amendment No. 2 to Amended and Restated Credit Agreement dated December 29,2022 by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.1	1/5/2023
31.1	Certification of the Chief Executive Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
10.29	Amended and Restated Revolving Credit Note dated December 29, 2022made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.2	1/5/2023
31.2	Certification of the Chief Financial Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
10.30	Supplemental Revolving Credit Note dated December 29, 2022 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.3	1/5/2023
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
10.31	Warrant to Purchase Stock dated December 20, 2018 made by Monogram Orthopaedics Inc. in favor of Pro-Dex, Inc.	10-K	10.31	10/13/2023
101.INS	Inline XBRL Instance Document				X
10.32	Amendment No. 3 to Amended and Restated Credit Agreement dated December 29, 2023 by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank	8-K	10.1	1/3/2024
101.SCH	Inline XBRL Taxonomy Extension Schema Document				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				X
104	Cover Page Interactive Date File				X

Exhibit				Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
21	Subsidiaries				X
23	Consent of Independent Registered Public Accounting Firm				X
31.1	Certification of the Chief Executive Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Certification of the Chief Financial Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
97	Pro-Dex, Inc. Compensation Recovery Policy adopted by the Compensation Committee of the Board of Directors on December 1, 2023.				X
101.INS	Inline XBRL Instance Document				X
101.SCH	Inline XBRL Taxonomy Extension Schema Document				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				X
104	Cover Page Interactive Date File				X

Denotes management contract or compensatory arrangement.

ITEM 16.

FORM 10-K SUMMARY

None.

5955

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on September 54, ~~2024~~2025.

PRO-DEX, INC.

By: Richard L. Van Kirk

Richard L. Van Kirk
President, Chief Executive Officer and Director

(Principal Executive Officer)

POWER OF ATTORNEY

We, the undersigned directors and officers of Pro-Dex, Inc., do hereby constitute and appoint Richard L. Van Kirk, as our true and lawful attorney-in-fact and agent with power of substitution, to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which such attorney-in-fact and agent may deem necessary or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Annual Report on Form 10-K, including specifically but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments hereto; and we do hereby ratify and confirm all that said attorney-in-fact and agent shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Richard L. Van Kirk Richard L. Van Kirk	President, Chief Executive Officer, and Director (Principal Executive Officer)	September 54, ~~2024~~2025
/s/ Alisha K. Charlton Alisha K. Charlton	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	September 54, ~~2024~~2025
/s/ Nicholas J. Swenson Nicholas J. Swenson	Chairman of the Board, Director	September 54, ~~2024~~2025
/s/ Raymond E. Cabillot Raymond E. Cabillot	Director	September 54, ~~2024~~2025
/s/ Angelita R. Domingo Angelita R. Domingo	Director	September 54, ~~2024~~2025
/s/ William J. Farrell III William J. Farrell III	Director	September 54, ~~2024~~2025
/s/ David C. Hovda David C. Hovda	Director	September 54, ~~2024~~2025
/s/ Katrina M.K. Philp Katrina M.K. Philp	Director	September 54, ~~2024~~2025

6056

INDEX TO EXHIBITS

Exhibit No.		~~Description~~	Description
~~3.1~~	3.1	~~Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed April 23, 2007).~~	Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed April 23, 2007).
~~3.2~~	3.2	~~Articles of Amendment to Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed December 5, 2007).~~	Articles of Amendment to Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed December 5, 2007).
~~3.3~~	3.3	~~Articles of Amendment to Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed June 18, 2010).~~	Articles of Amendment to Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed June 18, 2010).
~~3.4~~	3.4	~~Amended and Restated Bylaws, dated January 31, 2011 (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed February 4, 2011).~~	Amended and Restated Bylaws, dated January 31, 2011 (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed February 4, 2011).
~~4.1 Ω~~	4.1 Ω	~~Description of the Company’s Common Stock Registered Pursuant to Section 12 of the Securities Act of 1934.~~	Description of the Company’s Common Stock Registered Pursuant to Section 12 of the Securities Act of 1934.
10.1*	10.1*	~~Second Amended and Restated 2004 Stock Option Plan (incorporated herein by reference to Exhibit 4.1 to the Company’s Form S-8 filed February 15, 2012).~~	Pro-Dex, Inc. 2016 Equity Incentive Plan (incorporated herein by reference to Appendix A to our Schedule 14A filed October 17, 2016).
10.2*	10.2*	~~Amended and Restated 2004 Directors Stock Option Plan (incorporated herein by reference to Exhibit 4.2 to the Company’s Form S-8 filed February 15, 2012).~~	Form of Indemnification Agreement for directors and certain officers (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed October 29, 2008).
10.3*		Pro-Dex, Inc. 2016 Equity Incentive Plan (incorporated herein by reference to Appendix A to our Schedule 14A filed October 17, 2016).
	10.3		Lease agreement with Irvine Business Properties, dated August 3, 2007 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed August 23, 2007).
10.4*		Form of Indemnification Agreement for directors and certain officers (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed October 29, 2008).
	10.4		First Amendment To Lease – July 2013 by and between Irvine Business Properties and Pro-Dex, Inc., dated effective July 1, 2013 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed July 17, 2013).
10.5		Lease agreement with Irvine Business Properties, dated August 3, 2007 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed August 23, 2007).
	10.5*		Pro-Dex, Inc. Amended and Restated Employee Severance Policy effective as of September 16, 2014 (incorporated herein by reference to Exhibit 10.5 to the Company’s Form 10-Q filed May 14, 2015).
~~10.6~~	10.6	First Amendment To Lease – July 2013 by and between Irvine Business Properties and Pro-Dex, Inc., dated effective July 1, 2013 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed July 17, 2013).	Second Amendment to Standard Industrial/Commercial Multi-Tenant Lease – Net by and between Irvine Business Properties and Pro-Dex, Inc., dated September 19, 2017 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 20, 2017).
10.7*	10.7*	~~Pro-Dex, Inc. Amended and Restated Employee Severance Policy effective as of September 16, 2014 (incorporated herein by reference to Exhibit 10.5 to the Company’s Form 10-Q filed May 14, 2015).~~	Form of Performance Award Agreement for Employees of Pro-Dex, Inc. – 2016 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on December 8, 2017).
~~10.8~~	10.8	Second Amendment to Standard Industrial/Commercial Multi-Tenant Lease – Net by and between Irvine Business Properties and Pro-Dex, Inc., dated September 19, 2017 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 20, 2017).	Security Agreement, dated September 6, 2018 by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on September 7, 2018).
10.9*		Form of Performance Award Agreement for Employees of Pro-Dex, Inc. – 2016 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on December 8, 2017).
	10.9		Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate by and between Pro-Dex, Inc. and 14401 Franklin, LLC. (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 8, 2020).
~~10.10~~	10.10	~~Credit Agreement, dated September 6, 2018 between Pro-Dex, Inc. and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 7, 2018).~~	Loan Agreement dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed November 12, 2020).

6157

~~10.11~~	10.11	Security Agreement, dated September 6, 2018 by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on September 7, 2018).	Term Note dated November 6, 2020 made by PDEX Franklin LLC in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed November 12, 2020).
~~10.12~~	10.12	~~Term Note A, dated September 6, 2018 by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed on September 7, 2018).~~	Deed of Trust with Assignment of Leases and Rents, Security Agreement and Fixture Filing dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed November 12, 2020).
~~10.13~~	10.13	Revolving Credit Note, dated September 6, 2018 by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.4 to the Company’s Form 8-K filed on September 7, 2018).	Assignment of Leases and Rents dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.4 to the Company’s Form 8-K filed November 12, 2020).
~~10.14~~	10.14	Change in Terms Agreement dated September 6, 2019 by and between Minnesota Bank & Trust and Pro-Dex, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 1, 2019).	Amended and Restated Credit Agreement dated November 6, 2020 by and between Pro-Dex, Inc. and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.5 to the Company’s Form 8-K filed November 12, 2020).
~~10.15~~	10.15	Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate by and between Pro-Dex, Inc. and 14401 Franklin, LLC. (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 8, 2020).	Amended and Restated Term Note A dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.6 to the Company’s Form 8-K filed November 12, 2020).
~~10.16~~	10.16	Loan Agreement dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed November 12, 2020).	Term Note B dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.7 to the Company’s Form 8-K filed November 12, 2020).
~~10.17~~	10.17	~~Term Note dated November 6, 2020 made by PDEX Franklin LLC in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed November 12, 2020).~~*	Form of Stock Option Agreement for Directors and Employees of Pro-Dex, Inc. – 2016 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed December 11, 2020).
~~10.18~~	10.18	Deed of Trust with Assignment of Leases and Rents, Security Agreement and Fixture Filing dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed November 12, 2020).	Amendment No. 1 to Amended and Restated Credit Agreement dated November 5, 2021 by and between Pro-Dex, Inc. and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed November 9, 2021).
~~10.19~~	10.19	Assignment of Leases and Rents dated November 6, 2020 by and between PDEX Franklin LLC and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.4 to the Company’s Form 8-K filed November 12, 2020).	Amendment No. 2 to Amended and Restated Credit Agreement dated December 29, 2022 by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 5, 2023).
~~10.20~~	10.20	Amended and Restated Credit Agreement dated November 6, 2020 by and between Pro-Dex, Inc. and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.5 to the Company’s Form 8-K filed November 12, 2020).	Amendment and Restated Revolving Credit Note dated December 29, 2022 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed January 5, 2023).
~~10.21~~	10.21	Amended and Restated Term Note A dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.6 to the Company’s Form 8-K filed November 12, 2020).	Supplemental Revolving Credit Note dated December 29, 2022 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed January 5, 2023).
~~10.22~~	10.22	~~Term Note B dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.7 to the Company’s Form 8-K filed November 12, 2020).~~	Warrant to Purchase Stock dated December 20, 2018 made by Monogram Orthopaedics Inc. in favor of Pro-Dex, Inc. (incorporated herein by reference to Exhibit 10.31 to the Company’s Form 10-K filed October 13, 2023).
~~10.23~~	10.23	Amended and Restated Revolving Credit Agreement dated November 6, 2020 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.8 to the Company’s Form 8-K filed November 12, 2020).	Amendment No. 3 to Amended and Restated Credit Agreement dated December 29, 2023 by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 3, 2024).
	10.24		Amendment No 4 to Amended and Restated Credit Agreement dated July 31, 2024 by and between Pro-Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed August 5, 2024).
	10.25		Promissory Note dated July 31, 2024 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed August 5, 2024).
	10.26	*	Form of Restricted Shares Award Agreement by and between Pro-Dex, Inc. and non-employee directors and select employees dated November 20, 2024 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed November 25, 2024).
	10.27		Amendment No. 5 to Amended and Restated Credit Agreement dated December 23, 2024, by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed December 27, 2024).
	10.28		Amendment and Restated Revolving Credit Note dated December 23, 2024, made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed December 27, 2024).
	10.29		Amendment No. 6 to Amended and Restated Credit Agreement dated April 8, 2025, by and between Pro-Dex, Inc. and UMB Bank, N.A. D/B/A Minnesota Bank and Trust, a division of UMB Bank N.A., successor-in-interest to Minnesota Bank and Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed April 11, 2025).
	10.30		Second Amended and restated revolving Credit Note dated April 8, 2025, made by Pro-Dex, Inc. in favor of UMB Bank, N.A. D/B/A Minnesota Bank and Trust, a division of UMB Bank N.A., successor-in-interest to Minnesota Bank and Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed April 11, 2025).

6258

10.24*		Form of Stock Option Agreement for Directors and Employees of Pro-Dex, Inc. – 2016 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed December 11, 2020).
19 Ω		Policy on Insider Trading
10.25		At the Market Offering Agreement dated December 31, 2020, by and between Pro-Dex, Inc. and Ascendiant Capital Markets, LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed December 31, 2020).
21 Ω		Subsidiaries
10.26		Amendment No. 1 to Amended and Restated Credit Agreement dated November 5, 2021 by and between Pro-Dex, Inc. and Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed November 9, 2021).
23 Ω		Consent of Independent Registered Public Accounting Firm
10.27		Amended and Restated Revolving Credit Note dated November 5, 2021 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed November 9, 2021).
10.28		Amendment No. 2 to Amended and Restated Credit Agreement dated December 29, 2022 by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 5, 2023).
10.29		Amendment and Restated Revolving Credit Note dated December 29, 2022 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed January 5, 2023).
10.30		Supplemental Revolving Credit Note dated December 29, 2022 made by Pro-Dex, Inc. in favor of Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed January 5, 2023.
10.31		Warrant to Purchase Stock dated December 20, 2018 made by Monogram Ortohpaedics Inc. in favor of Pro-Dex, Inc. (incorporated herein by reference to Exhibit 10.31 to the Company’s Form 10-K filed October 13, 2023).
10.32		Amendment No. 3 to Amended and Restated Credit Agreement dated December 29, 2023 by and between Pro-Dex, Inc. and Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 3, 2024).
21 Ω		Subsidiaries
23 Ω		Consent of Independent Registered Public Accounting Firm.
31.1 Ω		Certification of the Chief Executive Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Ω		Certification of the Chief Financial Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Ω		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97		Pro-Dex, Inc. Compensation Recovery Policy adopted by the Compensation Committee of the Board of Directors on December 1, 2023 (incorporated herein by reference to Exhibit 97 to the Company’s Form 10-K filed September 5, 2024).
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
Ω		Filed herewith.
*		Denotes management contract or compensatory arrangement.

Filing Compare · PRO DEX INC