Company: PDEX
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001079973-25-000729
Chunk: 29

Company: PRO DEX INC
Filing Date: 2025-05-01
Form: 10-Q
Item: Item 8
Chunk 29
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. Research and development costs for the three and
nine months ended March 31, 2025, increased $187,000, or 25%, and $378,000, or 16%, compared to the corresponding periods of the prior
fiscal year. This relates to an increase in legal fees related to intellectual property matters as well as an increase in spending related
to in-house battery production and sustaining engineering efforts related to our existing products.

The majority of our research and
development costs relate to sustaining activities related to products we currently manufacture and sell, but we also have created a product
roadmap to develop future products. Many of our product development efforts are undertaken only upon completion of an analysis of the
size of the market, our ability to differentiate our product from our competitors’, as well as an analysis of our specific sales
prospects with new and/or existing customers. The research and development costs represent between 41% and 44% of total operating expenses
for all periods presented and are expected to increase in the future as we continue to invest in product development efforts.

22 

Interest & Other
Income

Interest income for the three
and nine months ended March 31, 2025 and 2024, includes interest and dividends from our money market accounts and investment portfolio.

Interest Expense

Interest expense consists primarily
of interest expense related to the notes payable described more fully in Note 11 to the condensed consolidated financial statements contained
elsewhere in this report.

Unrealized Gain (Loss)
on Marketable Equity Investments

The unrealized gain (loss) on
marketable equity investments relates to our investment portfolio more fully described in Note 4 to the condensed consolidated financial
statements contained elsewhere in this report. All of these investments are recorded at estimated fair value and as of March 31, 2025,
all of these investments relate to common stock of publicly traded companies whose stock price is subject to significant volatility.

Gain on Sale of Investments

During the third quarter ended
March 31, 2025, we sold some of the stocks in our portfolio of equity investments receiving proceeds of $1.9 million and recording a gain
on the sale in the amount of $595,000.

Income Tax Expense

The effective tax rate
for each of the three months ended March 31, 2025 and 2024 was 28%. These tax rates are consistent with our combined expected federal
and applicable state corporate income tax rates. The effective tax rate for the nine months ended March