Company: PDEX
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001079973-25-000729
Chunk: 21

Company: PRO DEX INC
Filing Date: 2025-05-01
Form: 10-Q
Item: Item 8
Chunk 21
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 and related disclosures. We base our estimates on historical experience and various other assumptions that are believed
to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

An accounting policy is
deemed to be critical if it requires an accounting estimate to be made based on assumptions 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 and nine months ended March 31, 2025 to the items that we disclosed as our critical accounting policies in Management’s
Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June
30, 2024.

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
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 such that we shall continue to supply their surgical
handpieces to them through calendar 2025 and we are currently in discussions with them to renew the agreement.

Simultaneously, we are working
to build top-line sales through active proposals of new medical device products with new and existing customers. Our patented adaptive
torque-limiting software has been very well received in the CMF and thoracic markets.

In November 2020, we purchased
an approximate 25,000 square foot industrial building in Tustin, California (the “Franklin
Property”). This building is located approximately four miles from our Irvine, California headquarters and was acquired to provide
us additional capacity for our expected continued future growth, including anticipated expanded capacity for the manufacture of batteries
and new products. We began