Company: PDEX
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0001079973-25-001655
Chunk: 19

Company: PRO DEX INC
Filing Date: 2025-10-30
Form: 10-Q
Item: Item 8
Chunk 19
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 about matters that are
highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the
accounting estimate that are reasonably likely to occur could materially change the financial statements. Management believes that there
have been no significant changes during the three months ended September 30, 2025, to the items that we disclosed as our critical accounting
policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report
on Form 10-K for our fiscal year ended June 30, 2025.

Business Strategy and Future Plans

Our business today is almost
entirely driven by sales of our medical devices. Many of our significant customers place purchase orders for specific products that were
developed by us under various development and/or supply agreements. Our customers may request that we design and manufacture a custom
surgical 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 with autoclavable, battery-powered and electric, multi-function surgical drivers, and shavers. We continue to focus a significant
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 for us to supply their surgical handpieces
to them through calendar 2025. Currently, we are in negotiations with our largest customer to extend the contract through calendar 2028.
While we are still negotiating some of the specific commercial terms, we have no reason to believe that the contract amendment will not
be executed and further, the customer has placed purchase orders to us through the end of calendar 2026. Additionally, based on the planned
volumes of the next generation handpiece that we supply to our largest customer, we are simultaneously pursuing negotiations with one
of our existing suppliers to acquire their business to help meet the expected increased demand currently being contemplated by our largest
customer. In the event we do not acquire this business we will be obligated to reimburse the supplier for legal fees incurred in relation
to the acquisition due diligence. This amount, not to exceed $62,500, is not accrued for, but is expected to be paid at the end of the
current exclusivity period of October 31,2025, if not extended by mutual agreement of the parties, and will be credited towards the purchase
price upon an acquisition.

We