8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 6, 2021

PRO-DEX, INC.

(Exact name of registrant as specified in its charter)

COLORADO	0-14942	84-1261240
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

2361 McGaw Avenue

Irvine, California 92614

(Address of principal executive offices)

(949) 769-3200

(Registrant’s telephone number including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the 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 whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ¨

If an emerging growth company, indicate by checkmark 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. ¨

Item 2.02.

Results of Operations and Financial Condition.

The information in this Item 2.02 of this Form 8-K, as well as Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On May 6, 2021, Pro-Dex, Inc. (the “Company”) is issuing a press release announcing its financial performance for the third quarter and nine months ended March 31, 2021. A copy of the press release is attached to this Form 8-K as Exhibit 99.1, which is incorporated herein by this reference.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
99.1	Press Release dated May 6, 2021.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  May 6, 2021	Pro-Dex, Inc.
	By:	/s/ Alisha K. Charlton
		Alisha K. Charlton
		Chief Financial Officer

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release dated May 6, 2021.

EX-99.1

EXHIBIT 99.1

Contact:  Richard L. Van Kirk, Chief Executive Officer

(949) 769-3200

For Immediate Release

PRO-DEX, INC. ANNOUNCES FISCAL 2021 THIRD QUARTER

AND NINE-MONTH RESULTS

IRVINE, CA, May 6, 2021 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2021 third quarter ended March 31, 2021. The Company also filed its Quarterly Report on Form 10-Q for the third quarter of fiscal year 2021 with the Securities and Exchange Commission today.

Quarter Ended March 31, 2021

Net sales for the three months ended March 31, 2021 increased $3.2 million, or 38%, to $11.7 million from $8.5 million for the three months ended March 31, 2020, due primarily to increased sales of $2.6 million of our thoracic driver, which was launched in the third quarter of the prior fiscal year, as well as increased sales of $923,000 of our CMF drivers, which we sell to various distributors including to our existing largest customer.

Gross profit for the three months ended March 31, 2020 increased $1.2 million, or 37%, to $4.4 million from $3.2 million for the same period in fiscal 2020.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended March 31, 2021 increased $1.0 million, or 67%, compared to the same period in fiscal 2021 mostly due to increased investment in internal product development and stock compensation expense.

Net income for the quarter ended March 31, 2021 was $2.0 million, or $0.50 per diluted share, compared to $1.2 million, or $0.30 per diluted share, for the corresponding quarter in fiscal 2020.

Nine Months Ended March 31, 2021

Net sales for the nine months ended March 31, 2021 increased $4.9 million, or 21%, to $28.6 million from $23.7 million for the nine months ended March 31, 2021, due primarily to increased sales of $4.9 million of our thoracic driver, which was launched in the third quarter of the prior fiscal year.

Gross profit for the nine months ended March 31, 2021 increased $1.6 million, or 18%, compared to the same period in fiscal 2020.  The gross profit increase is directly related to our 21% increase in revenue and our ability to better absorb our fixed manufacturing costs.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the nine months ended March 31, 2021 increased 63% to $6.5 million from $4.0 million in the prior fiscal year’s corresponding period, mostly due to increased investment in internal product development and sustaining engineering of $1.7 million  and increased general and administrative expenses of $0.9 million, including stock based compensation expense and operating costs related to our new commercial building.

Net income for the nine months ended March 31, 2021 was $3.6 million, or $0.90, per diluted share, compared to $3.6 million, or $0.88 per diluted share, for the corresponding period in fiscal 2020.

CEO Comments

 “We are extremely pleased with our third quarter results.  We are also very proud of the team here at Pro-Dex that produced quarterly and monthly shipment records while at the same time commissioning a new building and managing through a pandemic. We have come very far as a company and we could not be more pleased,” said the Company’s President and Chief Executive Officer Richard L. (“Rick”) Van Kirk.  “While not every quarter will set records, we will strive to execute properly and continue to drive year over year growth.”

R&D Projects

The amount spent on projects under development is summarized below (in thousands):

	Three and Nine Months Ended March 31, 2021				Three and Nine Months Ended March 31, 2020				Market Launch (1)		Est Annual Revenue
Total Research & Development costs:	$	1,104	$	3,184	$	620	$	1,501
Products in development:
ENT Shaver		192		450		136		291		Q4 2021	$	1,000
Vital Ventilator		26		91		—		—		Q1 2022	$	1,500
CMF Driver		263		731		60		106		(2)	$	1,000
Sustaining & Other		623		1,912		424		1,104
Total	$	1,104	$	3,184	$	620	$	1,501

———————

(1)

Represents the calendar quarter of expected market launch.

(2)

The CMF Driver was completed in the third quarter of fiscal 2021 and shipped to our existing largest customer under a distribution agreement we executed in the first quarter of fiscal 2021. We generated revenue of $220,000 related to these initial shipments during the third quarter ended March 31, 2021. This project is now complete and future engineering expenses related to this project will be included in sustaining and other.

About Pro-Dex, Inc.:

Pro-Dex, Inc. 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 maxocranial facial markets. We have patented adoptive torque-limiting software and proprietary sealing solutions which appeal to our customers, primarily medical device distributors. Pro-Dex also manufactures and sells rotary air motors to a wide range of industries. Pro-Dex's products are found in hospitals and medical engineering labs around the world. For more information, visit the Company's website at www.pro-dex.com.

Statements herein concerning the Company's plans, growth, and strategies may include 'forward-looking statements' within the context of the federal securities laws. Statements regarding the Company's future events, developments, and future performance (including, but not limited to, estimated product launch dates and estimated future revenue), as well as management's expectations, beliefs, plans, estimates, or projections relating to the future, are forward-looking statements within the meaning of these laws. The Company's actual results may differ materially from those suggested as a result of various factors. Interested parties should refer to the disclosure concerning the operational and business concerns of the Company set forth in the Company's filings with the Securities and Exchange Commission.

(tables follow)

PRO-DEX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)

	March 31, 2021			June 30, 2020
ASSETS
Current Assets:
Cash and cash equivalents	$	3,874		$	6,421
Investments		1,123			2,560
Accounts receivable, net of allowance for doubtful accounts of $9 and $6 at March 31, 2021 and at June 30, 2020, respectively		11,921			5,155
Deferred costs		173			155
Inventory		8,368			8,238
Prepaid expenses and other current assets		1,108			145
Total current assets		26,567			22,674
Land and building, net		6,460			—
Equipment and leasehold improvements, net		3,106			2,686
Right of use asset, net		2,692			2,943
Intangibles, net		163			162
Deferred income taxes, net		259			259
Investments		3,026			2,360
Other assets		42			42
Total assets	$	42,315		$	31,126
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	2,524		$	1,965
Accrued expenses		2,642			2,411
Deferred revenue		200			200
Note payable and finance lease obligations		1,110			651
Total current liabilities		6,476			5,227
Lease liability, net of current portion		2,521			2,750
Income taxes payable		1,207			804
Notes and finance lease payable, net of current portion		11,703			3,283
Total non-current liabilities		15,431			6,837
Total liabilities		21,907			12,064
Shareholders’ equity:
Common shares; no par value; 50,000,000 shares authorized; 3,700,540 and 3,811,137 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively		9,059			12,752
Accumulated other comprehensive loss		(144	)		(1,586	)
Retained earnings		11,493			7,896
Total shareholders’ equity		20,408			19,062
Total liabilities and shareholders’ equity	$	42,315		$	31,126

PRO-DEX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2021			2020			2021			2020
Net sales	$	11,739		$	8,508		$	28,594		$	23,710
Cost of sales		7,354			5,298			18,138			14,855
Gross profit		4,385			3,210			10,456			8,855
Operating expenses:
Selling expenses		136			161			415			438
General and administrative expenses		1,280			725			2,922			2,052
Research and development costs		1,104			620			3,184			1,501
Total operating expenses		2,520			1,506			6,521			3,991
Operating income		1,865			1,704			3,935			4,864
Interest expense		(102	)		(58	)		(231	)		(180	)
Interest and other income		41			9			102			77
Gain on sale of investments		783			—			795			—
Income before income taxes		2,587			1,655			4,601			4,761
Income tax expense		(592	)		(442	)		(1,004	)		(1,194	)
Net income	$	1,995		$	1,213		$	3,597		$	3,567
Other comprehensive income (loss), net of tax:
Unrealized income (loss) from marketable equity investments		136			(1,262	)		1,442			(613	)
Comprehensive income (loss)	$	2,131		$	(49	)	$	5,039		$	2,954
Basic net income per share:
Net income	$	0.52		$	0.31		$	0.94		$	0.90
Diluted net income per share:
Net income	$	0.50		$	0.30		$	0.90		$	0.88
Weighted average common shares outstanding:
Basic		3,817			3,871			3,843			3,944
Diluted		3,966			3,999			3,998			4,071
Common shares outstanding		3,701			3,837			3,701			3,837