Company: PDEX
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0001079973-25-001655
Chunk: 23

Company: PRO DEX INC
Filing Date: 2025-10-30
Form: 10-Q
Item: Item 8
Chunk 23
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 generation
handpiece. As previously disclosed, late in the third quarter of fiscal 2025 the customer requested we hold off on next generation handpiece
shipments in favor of continued shipments and enhanced repair of the legacy handpieces. During the fourth quarter of fiscal 2025, at
the customer’s request, we resumed production and shipments of the next generation handpiece. Because certain of the sub-assemblies
included in the handpiece take several weeks of internal machining, the process to resume shipments at the requested levels has taken
several months. By September 2025, our shipments reached the recurring level that the customer has requested. Recurring revenue from
distributors of CMF drivers increased $627,000, or 29%, for the three months ended September 30, 2025, compared to the corresponding
period of the prior fiscal year. Our thoracic sales decreased by $515,000, or 51% for the three months ended September 30, 2025, compared
to the corresponding period of the prior fiscal year. While we do not have much visibility into
our customers’ distribution networks, this level of change (whether an increase or decrease) is not uncommon and fluctuations occur
based upon required inventory levels.

Sales
of our compact pneumatic air motors increased $29,000, or 20%, for the three months ended September
30, 2025, compared to the corresponding period of the prior fiscal year. The minimal and relatively flat sales volume is consistent with
our lack of substantive marketing efforts for our air motors. Our non-recurring engineering (“NRE”) and proto-type
revenue increased $428,000, or 892%, for the three months ended September 30, 2025 compared to the corresponding period of the prior
fiscal year, due to an increase in billable contracts. Our NRE and proto-type revenue is typically a small percentage of our total revenue
and can vary significantly from quarter to quarter.

Repair
revenue decreased by $1.3 million, or 25%, for the three months ended September 30, 2025, compared to the corresponding period of the
prior fiscal year, due to fewer repairs of the legacy orthopedic handpiece we sell to our largest customer. While we do not have much
visibility into our largest customer’s distribution networks, they may be reducing repairs of legacy handpieces in favor of replacing
them with the next generation handpiece.

Discounts
and other decreased by $