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): February 4, 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)
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¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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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 February 4, 2021, Pro-Dex, Inc. (the “Company”) is issuing a press release announcing its financial performance for the second quarter and six months ended December 31, 2020. 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 February 4, 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:  February 4, 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 February 4, 2021.

Press Release

EXHIBIT 99.1

Contact:  Richard L. Van Kirk, Chief Executive Officer

(949) 769-3200

For Immediate Release

PRO-DEX, INC. ANNOUNCES FISCAL 2021 SECOND QUARTER

AND SIX-MONTH RESULTS

IRVINE, CA, February 4, 2021 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2021 second quarter ended December 31, 2020. The Company also filed its Quarterly Report on Form 10-Q for the second quarter of fiscal year 2021 with the Securities and Exchange Commission today.

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Quarter Ended December 31, 2020

Net sales for the three months ended December 31, 2020, increased $304,000, or 4%, to $8.3 million from $8.0 million for the three months ended December 31, 2019, due primarily to sales of our newest product, a thoracic driver, to an existing customer.

Gross profit for the three months ended December 31, 2020, decreased $268,000, or 9%, to $2.6 million from $2.9 million for the same period in fiscal 2020, due to under-absorbed fixed manufacturing costs and warranty accruals. Our under-absorbed fixed manufacturing costs increased during the three months ended December 31, 2020 compared to the corresponding period of the prior fiscal year due in part to COVID-19 related paid absences in our machine shop, assembly, and quality operations that did not occur in the corresponding quarter of fiscal 2020.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended December 31, 2020, increased $879,000, or 74%, to $2.1 million compared to $1.2 million in the prior fiscal year’s corresponding quarter, reflecting our planned investments in research and development, selling, and general and administrative expenses in an effort to release new products and garner new customer relationships.

Net income for the quarter ended December 31, 2020, was $337,000, or $0.08 per diluted share, compared to $1.2 million, or $0.31 per diluted share, for the corresponding quarter in fiscal 2020.

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Six Months Ended December 31, 2020

Net sales for the six months ended December 31, 2020, increased $1.6 million, or 11%, to $16.9 million from $15.2 million for the six months ended December 31, 2019, due primarily to sales of our new thoracic driver.

Gross profit for the six months ended December 31, 2020, increased $427,000, or 8%, compared to the same period in fiscal 2020 due to the increase in sales described above.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the six months ended December 31, 2020, increased $1.5 million, or 61% to $4.0 million from $2.5 million in the prior fiscal year’s corresponding period, reflecting our planned investments in research and development in an effort to release new products as well as increases in general and administrative expenses, in part due to expenses related to the new facility that we acquired in November, 2020, as we continue its build-out to ready it for our employees.

Net income for the six months ended December 31, 2020 was $1.6 million, or $0.40 per diluted share, compared to $2.4 million, or $0.58 per diluted share, for the corresponding period in fiscal 2020.

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CEO Comments

Richard L. (“Rick”) Van Kirk, the Company’s President and Chief Executive Officer, commented, “We are pleased with our second quarter and year-to-date results and our net sales growth.” Mr. Van Kirk continued, “We believe this will be a year of transition, as we complete the build-out of our new building and continue to make investments in facilities, personnel, and engineering projects to expand our foundation and allow for continued growth.”

The amount spent on projects under development as well as the estimated market launch date and estimated future annual revenue is summarized below (in thousands):

	Three and Six Months ended December 31, 2020				Three and Six Months ended December 31, 2019				Est Market Launch^(1)^	Est Annual Revenue
Total Research & Development costs:	$	989	$	2,080	$	397	$	881
Products in development:
ENT Shaver		76		258		66		155	Q4 2021	$	1,000
Vital Ventilator		8		65		—		—	Q1 2022	$	1,500
CMF Driver		279		468		29		46	Q3 2021	$	1,000
Sustaining & Other		626		1,289		302		680
Total	$	989	$	2,080	$	397	$	881

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^(1)^	Represents the calendar quarter of expected market launch.

We are nearing completion of an additional round of verification and validation of a new CMF driver, which we will be selling to our existing largest customer under a distribution agreement, that we executed in the first quarter of fiscal 2021. Additionally, as previously disclosed, we anticipate the release to manufacture of a new ENT Shaver in the fall of 2021 and our Director of Business Development is working with a promising medical device distributor to potentially commercialize this product.

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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 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. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)

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			June 30, 2020
ASSETS
Current Assets:
Cash and cash equivalents	5,523		$	6,421
Investments	2,884			2,560
Accounts receivable, net of allowance for doubtful accounts of 4 and 6 at December 31, 2020 and at June 30, 2020, respectively	4,621			5,155
Deferred costs	138			155
Inventory	9,152			8,238
Prepaid expenses and other current assets	392			145
Total current assets	22,710			22,674
Land and building, net	6,484			—
Equipment and leasehold improvements, net	2,704			2,686
Right of use asset, net	2,777			2,943
Intangibles, net	158			162
Deferred income taxes, net	259			259
Investments	3,238			2,360
Other assets	42			42
Total assets	38,372		$	31,126
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	2,470		$	1,965
Accrued expenses	1,785			2,411
Deferred revenue	200			200
Note payable and capital lease obligations	479			651
Total current liabilities	4,934			5,227
Lease liability, net of current portion	2,609			2,750
Income taxes payable	615			804
Notes and capital leases payable, net of current portion	8,375			3,283
Total non-current liabilities	11,599			6,837
Total liabilities	16,533			12,064
Shareholders’ equity:
Common shares; no par value; 50,000,000 shares authorized; 3,860,639 and 3,811,137 shares issued and outstanding at December 31, 2020 and June 30, 2020, respectively	12,621			12,752
Accumulated other comprehensive income (loss)	(280	)		(1,586	)
Retained earnings	9,498			7,896
Total shareholders’ equity	21,839			19,062
Total liabilities and shareholders’ equity	38,372		$	31,126

All values are in US Dollars.

PRO-DEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

(In thousands, except per share amounts)

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	Three Months EndedDecember 31,						Six Months EndedDecember 31,
	2020			2019			2020			2019
Net sales	$	8,265		$	7,961		$	16,855		$	15,201
Cost of sales		5,669			5,097			10,784			9,557
Gross profit		2,596			2,864			6,071			5,644
Operating expenses:
Selling expenses		150			135			280			277
General and administrative expenses		936			664			1,641			1,327
Research and development costs		989			397			2,080			881
Total operating expenses		2,075			1,196			4,001			2,485
Operating income		521			1,668			2,070			3,159
Interest expense		(75	)		(63	)		(129	)		(122	)
Interest and other income		20			33			61			68
Gain on sale of investments		—			—			12			—
Income from operations before income taxes		466			1,638			2,014			3,105
Income tax expense		(129	)		(389	)		(412	)		(751	)
Net income	$	337		$	1,249		$	1,602		$	2,354
Other comprehensive income, net of tax:
Unrealized income from marketable equity investments		1,413			705			1,306			649
Comprehensive income	$	1,750		$	1,954		$	2,908		$	3,003
Basic net income per share:
Net income	$	0.09		$	0.32		$	0.42		$	0.59
Diluted net income per share:
Net income	$	0.08		$	0.31		$	0.40		$	0.58
Weighted average common shares outstanding:
Basic		3,861			3,950			3,856			3,979
Diluted		4,012			4,053			4,014			4,082
Common shares outstanding		3,861			3,884			3,861			3,884