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): November 5, 2020

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 November 5, 2020, Pro-Dex, Inc. (the “Company”) is issuing a press release announcing its financial performance for the first quarter and three months ended September 30, 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 November 5, 2020.

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 5, 2020	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 5, 2020.

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 FIRST QUARTER RESULTS

IRVINE, CA, November 5, 2020 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2021 first quarter ended September 30, 2020. The Company also filed its Quarterly Report on Form 10-Q for the first quarter of fiscal year 2021 with the Securities and Exchange Commission today.

Net sales for the three months ended September 30, 2020, increased $1.4 million, or 19%, to $8.6 million from $7.2 million for the three months ended September 30, 2019.  The increase is driven by sales of our newest thoracic driver.

Gross profit for the three months ended September 30, 2020, increased $695,000, or 25%, to $3.5 million, compared to $2.8 million for the year-ago period. Gross margin increased by 2 percentage points to 40% during the three months ended September 30, 2020, compared to 38% during the corresponding year-ago period due to favorable product mix and increased absorption of our fixed manufacturing overhead expenses.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended September 30, 2020, increased $637,000 from the corresponding year-ago period. We are increasing these expenditures in an effort to release new products and garner new customer relationships.

Net income for the quarter ended September 30, 2020, was $1.3 million, or $0.32 per diluted share, compared to $1.1 million, or $0.27 per diluted share, for the quarter ended September 30, 2019.

CEO Comments

Richard L. (“Rick”) Van Kirk, the Company’s President and Chief Executive Officer, commented, “We are pleased with our first quarter results. We continue to reinvest our profits in research and development to continue to grow our core medical device business and expect to close on the purchase of a new building to expand our operations as early as tomorrow. Finally,” concluded Mr. Van Kirk, “we expect to introduce another CMF driver and our ENT shaver by the end of the current fiscal year.”

The amount spent on 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,
	2020		2019		Market Launch^(1)^	Est Annual Revenue
Total Research & Development costs:	$	1,091	$	484
Products in development:
Thoracic Driver^(2)^	$	—	$	19	^(2)^	$4,000
Arthroscopic Shaver^(3)^		—		6	^(3)^	$   600
ENT Shaver		183		89	Q2 2021	$1,000
VITAL Ventilator		57		—	Q3 2021	$1,500
CMF Driver		189		17	Q1 2021	$1,000
Sustaining & Other		662		353
Total	$	1,091	$	484

^(1)^

Represents the calendar quarter of expected market launch.

^(2)^

We completed the thoracic driver and began initial shipments of a private-labeled version to an existing CMF customer during the third quarter of fiscal 2020. We incurred cumulative expenditures of $1.1 million spanning from fiscal 2017 to fiscal 2020 related to this product development. Current thoracic related expenditures are included in sustaining and other. We generated sales from this product of $3.1 million and $1.6 million during fiscal 2020 and the first quarter of fiscal 2021, respectively. Accordingly, we will remove this product from the above table next quarter.

^(3)^

This product has been internally pushed back to focus on our Pro-Dex branded ENT shaver. Accordingly, we will remove this product from the above table next quarter until such time as we reinstate this project.

In the fourth quarter of fiscal 2020, we were one of eight US-based companies awarded a license to manufacture the Jet Propulsion Laboratory’s Ventilator Intervention Technology Accessible Locally (“VITAL”), a high-pressure, lower cost ventilator.  In order to manufacture this product, we will require a full clean room, which we plan to install in our Tustin facility (assuming we close on the property, which is expected to occur on or around November 6, 2020). We are also nearing completion on the 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.  Finally, we also anticipate the release to manufacture of a new ENT Shaver in the spring of 2021 and our Director of Business Development is working with a promising medical device distributor to commercialize this product.

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, 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.

CONDENSED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)

		****	June 30, 2020		****
ASSETS
Current Assets:
Cash and cash equivalents	5,202		$	6,421
Investments	2,400			2,560
Accounts receivable, net of allowance for doubtful accounts of 9 and 6 at September 30, 2020 and at June 30, 2020, respectively	6,138			5,155
Deferred costs	142			155
Inventory	8,313			8,238
Prepaid expenses and other current assets	343			145
Total current assets	22,538			22,674
Equipment and leasehold improvements, net	2,629			2,686
Right of use asset, net	2,861			2,943
Intangibles, net	159			162
Deferred income taxes, net	259			259
Investments	2,309			2,360
Other assets	42			42
Total assets	30,797		$	31,126
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	1,834		$	1,965
Accrued expenses	1,757			2,411
Deferred revenue	200			200
Note payable and capital lease obligations	660			651
Total current liabilities	4,451			5,227
Lease liability, net of current portion	2,695			2,750
Income taxes payable	486			804
Notes and capital leases payable, net of current portion	3,114			3,283
Total non-current liabilities	6,295			6,837
Total liabilities	10,746			12,064
Shareholders’ Equity:
Common shares; no par value; 50,000,000 shares authorized; 3,858,251 and 3,811,137 shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively	12,583			12,752
Accumulated other comprehensive loss	(1,693	)		(1,586	)
Retained earnings	9,161			7,896
Total shareholders’ equity	20,051			19,062
Total liabilities and shareholders’ equity	30,797		$	31,126

All values are in US Dollars.

PRO-DEX, INC.

CONDENSED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME

(Unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended September 30,
	2020			2019
Net sales	$	8,590		$	7,240
Cost of sales		5,115			4,460
Gross profit		3,475			2,780
Operating expenses:
Selling expenses		130			142
General and administrative expenses		705			663
Research and development costs		1,091			484
Total operating expenses		1,926			1,289
Operating income		1,549			1,491
Other income (expense):
Interest and miscellaneous income		53			35
Interest expense		(54	)		(59	)
Total other income (expense)		(1	)		(24	)
Income before income taxes		1,548			1,467
Provision for income taxes		283			363
Net income		1,265			1,104
Other comprehensive income (loss), net of tax:
Unrealized loss from marketable equity investments, net of taxes		(107	)		(57	)
Comprehensive income	$	1,158		$	1,047
Basic and diluted income per share:
Basic net income per share	$	0.33		$	0.28
Diluted net income per share	$	0.32		$	0.27
Weighted average common shares outstanding:
Basic		3,850,838			4,008,017
Diluted		3,975,063			4,110,414
Common shares outstanding		3,858,251			3,990,995