8-K
PRO DEX INC (PDEX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 2021
PRO-DEX, INC.
(Exact name of registrant as specified in 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, zipcode)
(949) 769-3200
(Registrant’s telephone number includingarea 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(b) 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)) |
| --- | --- |
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. ☐
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 |
| 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 November 15, 2021, Pro-Dex, Inc. (the “Company”) is issuing a press release announcing its financial performance for the first quarter and three months ended September 30, 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 November 15, 2021. |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document) |
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: November 15, 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 November 15, 2021. |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document) |
EXHIBIT 99.1
Contact: Richard L. Van Kirk, Chief Executive Officer
(949) 769-3200
For Immediate Release
PRO-DEX, INC. ANNOUNCES FISCAL 2022 FIRST QUARTER RESULTS
IRVINE, CA, November 15, 2021 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2022 first quarter ended September 30, 2021. The Company also filed its Quarterly Report on Form 10-Q for the first quarter of fiscal year 2022 with the Securities and Exchange Commission today.
Net sales for the three months ended September 30, 2021, increased $1.4 million, or 16%, to $10.0 million from $8.6 million for the three months ended September 30, 2020. The increase is driven by increased sales of the surgical handpiece we sell to our largest customer as well as increases in sales of our CMF drivers. Offsetting these increases, sales of our newest thoracic driver declined due to the fulfillment of our customer’s distribution network. As previously described, sales are often not on a continuous upward trajectory due to variability in new product launches and customer planned inventory builds.
Gross profit for the three months ended September 30, 2021 decreased $47,000, or 1%, compared to the year-ago period. Gross margin decreased by 6 percentage points to 34% during the three months ended September 30, 2021, compared to 40% during the corresponding year-ago period due primarily to unfavorable product mix.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended September 30, 2021 increased $184,000 from the corresponding year-ago period. The increase is related to increased compensation expense related to non-qualified stock options granted in the prior fiscal year.
Net income for the quarter ended September 30, 2021 was $1.1 million, or $0.28 per diluted share, compared to $1.2 million, or $0.29 per diluted share, for the quarter ended September 30, 2020.
CEO Comments
Richard L. (“Rick”) Van Kirk, the Company’s President and Chief Executive Officer, commented, “We are pleased with our first quarter results. In the first quarter we have been awarded several NRE projects from new and existing customers to provide proof of concept analysis on several handpieces and attachments. Although these projects are not material to our first quarter results, we are pleased that these projects allow us the opportunity to continue to expand our portfolio of products. Finally,” concluded Mr. Van Kirk, “we are completing necessary validation activities to prepare to move some of our employees to the new Franklin facility in the near future.”
The amount spent on internal projects under development, along with the current estimated commercial launch date and estimated recurring annual revenue, is summarized below (in thousands):
| For the Three Months Ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Market Launch^(1)^ | Est. Annual Revenue | ||||||
| Total Research & Development costs: | $ | 980 | $ | 1,091 | |||||
| Products in development: | |||||||||
| ENT Shaver | $ | 232 | $ | 183 | Q4 2021 | $ | 1,000 | ||
| VITAL Ventilator | 115 | 57 | Q1 2022 | $ | 1,500 | ||||
| CMF Driver | — | 189 | (2 | ) | $ | 1,000 | |||
| Sustaining & Other | 633 | 662 | |||||||
| Total | $ | 980 | $ | 1,091 | |||||
| ^(1)^ | Represents the calendar quarter of expected market launch. | ||||||||
| --- | --- | ||||||||
| ^(2)^ | The CMF Driver was completed in the third quarter of fiscal 2021 and began shipping to our existing largest customer under a distribution agreement we executed in the first quarter of fiscal 2021. | ||||||||
| --- | --- |
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, replacement and enhancement of tooling and fixtures used in the machine shop, assembly operations, and inspection areas to improve efficiency and through-put. Additionally, these costs include development projects that may be in their infancy and may or may not result in a full-fledged product development effort.
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 that appeal to our customers, primarily medical device distributors. Pro-Dex also sells compact pneumatic air motors for a variety of industrial applications. 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 risk factors and other disclosures 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. ANDSUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
| June 30, 2021 | |||
|---|---|---|---|
| ASSETS | |||
| Current Assets: | |||
| Cash and cash equivalents | 5,177 | $ | 3,721 |
| Investments | 1,506 | 1,295 | |
| Accounts receivable, net of allowance for doubtful accounts of 7 and 2 at September 30, 2021 and at June 30, 2021, respectively | 10,093 | 10,933 | |
| Deferred costs | 184 | 193 | |
| Inventory | 8,907 | 8,437 | |
| Prepaid expenses and other current assets | 151 | 434 | |
| Total current assets | 26,018 | 25,013 | |
| Land and building, net | 6,413 | 6,437 | |
| Equipment and leasehold improvements, net | 4,535 | 3,845 | |
| Right of use asset, net | 2,518 | 2,605 | |
| Intangibles, net | 195 | 186 | |
| Deferred income taxes, net | 463 | 463 | |
| Investments | 1,656 | 1,704 | |
| Other assets | 67 | 67 | |
| Total assets | 41,865 | $ | 40,320 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
| Current Liabilities: | |||
| Accounts payable | 2,476 | $ | 2,288 |
| Accrued expenses | 2,195 | 2,198 | |
| Deferred revenue | 293 | 150 | |
| Note payable | 1,248 | 1,236 | |
| Total current liabilities | 6,212 | 5,872 | |
| Lease liability, net of current portion | 2,342 | 2,432 | |
| Income taxes payable | 709 | 397 | |
| Notes payable, net of current portion | 11,219 | 11,535 | |
| Total non-current liabilities | 14,270 | 14,364 | |
| Total liabilities | 20,482 | 20,236 | |
| Shareholders’ Equity: | |||
| Common stock; no par value; 50,000,000 shares authorized; 3,666,319 and 3,645,660 shares issued and outstanding at September 30, 2021 and June 30, 2021, respectively | 8,188 | 7,953 | |
| Retained earnings | 13,195 | 12,131 | |
| Total shareholders’ equity | 21,383 | 20,084 | |
| Total liabilities and shareholders’ equity | 41,865 | $ | 40,320 |
All values are in US Dollars.
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except share and per share amounts)
| Three Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Net sales | $ | 9,988 | $ | 8,590 | ||
| Cost of sales | 6,560 | 5,115 | ||||
| Gross profit | 3,428 | 3,475 | ||||
| Operating expenses: | ||||||
| Selling expenses | 37 | 130 | ||||
| General and administrative expenses | 1,093 | 705 | ||||
| Research and development costs | 980 | 1,091 | ||||
| Total operating expenses | 2,110 | 1,926 | ||||
| Operating income | 1,318 | 1,549 | ||||
| Other income (expense): | ||||||
| Interest and miscellaneous income | 24 | 53 | ||||
| Unrealized gain (loss) on marketable equity investments | 149 | (107 | ) | |||
| Interest expense | (120 | ) | (54 | ) | ||
| Total other expense | 53 | (108 | ) | |||
| Income before income taxes | 1,371 | 1,441 | ||||
| Provision for income taxes | 307 | 283 | ||||
| Net income | $ | 1,064 | $ | 1,158 | ||
| Basic and diluted income per share: | ||||||
| Basic net income per share | $ | 0.29 | $ | 0.30 | ||
| Diluted net income per share | $ | 0.28 | $ | 0.29 | ||
| Weighted average common shares outstanding: | ||||||
| Basic | 3,651,334 | 3,850,838 | ||||
| Diluted | 3,777,118 | 3,975,063 | ||||
| Common shares outstanding | 3,666,319 | 3,858,251 |