What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-31 compared with 2024-05-02 · 321 added, 481 removed, 191 unchanged (81% of the section changed)

FINANCIAL STATEMENTS

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED

BALANCE SHEETS

(In thousands, except share amounts)

1 unchanged sentence

Cash and cash equivalents

Accounts receivable, net of allowance for expected credit losses of $ 1 and $ 0 at March 31, 2024 and at June 30, 2023, respectively

Accounts receivable, net of allowance for credit losses

of $ 3 and $ 0 at September 30, 2024 and at June 30, 2024, respectively

Deferred costs

5 unchanged sentences

Intangibles, net

Deferred income taxes

LIABILITIES AND SHAREHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

Accrued expenses

Deferred revenue

Accrued liabilities

Income taxes payable

Deferred revenue

Notes payable

Total current liabilities

Lease liability, net of current portion

Deferred income taxes, net

Notes payable, net of current portion

2 unchanged sentences

Shareholders’ Equity:

Common shares;

Common stock;

no par value;

50,000,000 shares authorized;

3,451,423 and 3,545,309 shares issued and outstanding at March 31, 2024 and June 30, 2023, respectively

3,297,510 and 3,363,412 shares issued and outstanding at September 30, 2024 and June 30, 2024, respectively

Retained earnings

1 unchanged sentence

Total liabilities and shareholders’ equity

The accompanying notes are an integral part of

these condensed consolidated financial statements.

accompanying notes are an integral part of these condensed consolidated financial statements.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

Three Months Ended

Nine Months Ended

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

Months Ended September 30,

Cost of sales

5 unchanged sentences

Operating income

Other income (expense):

Interest and dividend income

Unrealized gain (loss) on investments

Interest expense

Unrealized gain (loss) on marketable equity investments

Interest and other income

Gain on sale of investments

Income before income taxes

Income tax expense

Basic net income per share:

Diluted net income per share:

Total other income (loss)

Income (loss) before income taxes

Provision for income taxes

income (loss)

Basic and diluted net income per share:

Basic net income (loss) per share

Diluted net income (loss) per share

Weighted-average common shares outstanding:

Common shares outstanding

The accompanying notes are an integral part of

these condensed consolidated financial statements.

accompanying notes are an integral part of these condensed consolidated financial statements.

PRO-DEX, INC.

2 unchanged sentences

(In thousands)

Common shares:

September 30,

COMMON STOCK:

Balance, beginning of period

1 unchanged sentence

Share repurchases

Shares withheld from common stock issued to pay employee payroll taxes

Exercise of stock options

Shares withheld from common stock issued to employees to pay employee

payroll taxes

ESPP shares issued

Balance, at end of period

Balance, end of period

RETAINED EARNINGS:

Balance, beginning of period

Net income (loss)

Balance, at end of period

2 unchanged sentences

Total shareholders’ equity

The accompanying notes are an integral part of

these condensed consolidated financial statements.

accompanying notes are an integral part of these condensed consolidated financial statements.

PRO-DEX, INC.

2 unchanged sentences

(In thousands)

Three Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Amortization of loan fees, net

Share-based compensation

Unrealized (gain) loss on marketable equity investments

Non-cash straight-line lease amortization

Gain on sale of investments

Deferred income taxes

Bad debt expense

Non-cash lease (recovery)

Amortization of loan fees

Credit loss expense

Changes in operating assets and liabilities:

Accounts receivable and other current receivables

Accounts receivable and other receivables

Deferred costs

2 unchanged sentences

Deferred revenue

Income taxes payable

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of investments

Purchases of equipment and improvements

Proceeds from sale of investments

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on notes payable

Proceeds from Minnesota Bank & Trust loans, net of origination fees

Proceeds from stock option exercises and ESPP contributions

Payments of employee taxes on net issuance of common stock

Repurchases of common stock

Proceeds from exercise of options and ESPP contributions

Payment of employee payroll taxes on net issuance of common stock

Proceeds from Minnesota Bank & Trust revolving loan, net of fees

Principal payments on notes payable and revolving loan

Net cash used in financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

The accompanying notes are an integral part of

these condensed consolidated financial statements.

accompanying notes are an integral part of these condensed consolidated financial statements.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS - CONTINUED

(In thousands)

September 30,

Supplemental disclosures of cash flow information:

Cash paid during the period for:

The accompanying notes are an integral part of

these condensed consolidated financial statements.

Cash paid during the period for interest

Cash paid during the period for income taxes:

Federal income tax payments

California income tax payments

Massachusetts income tax payments

Total income tax payments

accompanying notes are an integral part of these condensed consolidated financial statements.

AND SUBSIDIARY

1 unchanged sentence

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements

of Pro-Dex, Inc.

(“we,” “us,” “our,” “Pro-Dex,” or the “Company”) have been

prepared in accordance with accounting principles generally accepted in the United States (“U.S.

GAAP”) for interim financial

information and the instructions to Form 10-Q and Regulation S-K.

Accordingly, they do not include all of the information and footnotes

required by U.S.

accompanying unaudited condensed consolidated financial statements of Pro-Dex, Inc.

(“we,” “us,” “our,”

“Pro-Dex,” or the “Company”) have been prepared in accordance with accounting principles

generally accepted in the United States (“U.S.

GAAP”) for interim financial information and with the instructions to Form 10-Q and

Regulation S-K.

Accordingly, they do not include all of the information and footnotes required

GAAP for complete financial statements.

These financial statements should be read in conjunction with the financial statements

presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

In the opinion of management, all adjustments considered

necessary for a fair presentation have been included.

The results of operations for such interim periods are not necessarily indicative

of the results that may be expected for the full year.

For further information, refer to the financial statements and footnotes thereto

included in our Annual Report on Form 10-K for the year ended June 30, 2023.

Recently Adopted Accounting Pronouncements

In March 2022, the FASB issued

Accounting Standards Update (“ASU”) No 2022-02 (Topic 326) Financial Instruments – Credit Losses to create a

new model for credit losses that reflects current expected credit losses (“CECL”) over the lifetime of the underlying accounts

The CECL methodology is applicable to our trade accounts receivable and our deferred costs.

We adopted ASU 2022-02 effective

July 1, 2023, and the adoption did not have a material impact on our financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued

ASU No 2023-09 (Topic 740) Income Taxes – Improvements to Income Tax Disclosures to enhance disclosures for the income tax

rate reconciliation as well as cash income taxes paid by jurisdiction.

This amendment is effective for our fiscal year ending June 30,

While we are still evaluating the specifics of the adoption, we anticipate this guidance will have a significant impact on our annual

income tax disclosures.

Correction of Previously Reported Interim Condensed

Consolidated Financial Statements

As described in more detail

in Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2023,

we previously restated certain of our financial statements, including our financial statements for the three and nine months ended March

31, 2023, to correct the estimated fair value of our warrant to purchase up to five percent (5%) of the outstanding capital stock of Monogram

Orthopaedics Inc.

MGRM), calculated on a fully diluted basis (the “Monogram Warrant”).

The restatement recorded,

for all restated periods, the Monogram Warrant at its estimated fair value, an unrealized gain on investments, and the deferred income

tax expense associated with the corresponding unrealized gain on investments.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

below are the changes to each financial statement line item for the three and nine months ended March 31, 2023 that were affected by

the restatement (in thousands except per share amounts).

Three months ended March 31, 2023 Unaudited Income Statement (Third

Quarter Fiscal 2023)

Schedule of changes in financial statement

As Previously

Unrealized gain(loss) on investments

Total other income (expense)

Income before income taxes

Income tax expense

Basic income per share

Diluted income per share

(a) This amount represents the unrealized gain on the Monogram Warrant for the three months ended March 31, 2023.

(b) This amount represents the income tax expense related to the unrealized gain on the Monogram Warrant for

the three months ended March 31, 2023.

Nine months ended March 31, 2023 Unaudited Income Statement

As Previously

Unrealized gain(loss) on investments

Total other income (expense)

Income before income taxes

Income tax expense

Basic income per share

Diluted income per share

(a) This amount represents the unrealized gain on the Monogram Warrant for the nine months ended March 31, 2023.

(b) This amount represents the income tax expense related to the unrealized gain on the Monogram Warrant for

the nine months ended March 31, 2023.

These financial statements should be read

in conjunction with the financial statements presented in our Annual Report on Form 10-K

for the fiscal year ended June 30, 2024.

In the opinion of management, all adjustments considered necessary for a fair

presentation have been included and consist of a normal recurring nature.

The results of operations for such interim periods are not necessarily

indicative of the results that may be expected for the full year.

For further information, refer to the financial statements and footnotes

thereto included in our Annual Report on Form 10-K for the year ended June 30, 2024.

Issued and Not Yet Adopted Accounting Pronouncements

December 2023, the FASB issued ASU No.

2023-09, Income Taxes:

Improvements to Income Tas Disclosures (Topic 740) .

ASU 2023-09 expands

the existing rules on income tax disclosures.

This update requires entities to disclose specific categories in the tax rate reconciliation,

provide additional information for reconciling items that meet a quantitative threshold and disclose additional information about income

taxes paid on an annual basis.

The new disclosure requirements are effective for fiscal years beginning after December 15, 2024.

adoption is permitted.

We are currently evaluating these new expanded disclosure requirements, but this standard will not impact our results

of operations or financial position.

November 2023, the FASB issued ASU 2023-07, Segment Reporting:

Improvements to Reportable Segment Disclosures (Topic280) which

expands disclosure requirements to require entities to disclose significant segment expenses that are regularly provided to or easily

computed from information regularly provided to the chief operating decision maker.

This update also requires all annual disclosures currently

required by Topic 280 to be disclosed in interim periods.

The new disclosure requirements are effective for fiscal years beginning after

December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

business, as currently operated, has only one segment, we are evaluating the new disclosure requirements to ensure compliance.

DESCRIPTION OF BUSINESS

We specialize in the design, development

4 unchanged sentences

We also manufacture and sell rotary air motors to a wide range of industries.

In August 2020, we formed a wholly

owned subsidiary, PDEX Franklin, LLC (“PDEX Franklin”), to hold title for an approximate 25,000 square foot industrial building

in Tustin, California (the “Franklin Property”) that we acquired on November 6, 2020, in order to allow for the continued

growth of our business.

The condensed consolidated financial statements include the accounts of the Company and PDEX Franklin and all

significant inter-company accounts and transactions have been eliminated.

August 2020, we formed a wholly owned subsidiary, PDEX Franklin, LLC (“PDEX Franklin”), to hold title for an approximate 25,000

square foot industrial building in Tustin, California (the “Franklin Property”) that we acquired on November 6, 2020, in order

to allow for the continued growth of our business.

The condensed consolidated financial statements include the accounts of the Company

and PDEX Franklin and all significant inter-company accounts and transactions have been eliminated.

This subsidiary has no separate operations.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

The following table presents

the disaggregation of net sales by revenue recognition model (in thousands):

The following table presents the

disaggregation of net sales by revenue recognition model (in thousands):

Schedule of disaggregation of net sales

months ended September 30,

Over-time revenue recognition

10 unchanged sentences

based on costs incurred compared to the estimated total costs upon completion.

During the three and nine months ended March 31, 2024,

we did no t record any revenue that had been included in deferred revenue in the prior year.

During the three and nine months ended March

During the three months ended September 30, 2024 and 2023,

we recorded $ 14,000 and $ 0 , respectively, of revenue that had been included in deferred revenue in the prior year.

revenue recognized from the contract liabilities consisted of satisfying our performance obligations during the normal course of business.

Our entire deferred revenue balance of $ 35,000 at March 31, 2024, is currently expected to be recognized in the next 12-month period.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

The revenue recognized

from the contract liabilities consisted of satisfying our performance obligations during the normal course of business.

The following tables summarize

1 unchanged sentence

Schedule of contract assets and liability

of and for the

Three Months Ended

September 30,

Contract assets beginning balance

3 unchanged sentences

Contract assets ending balance

of and for the

Three Months Ended

September 30,

Contract liabilities beginning balance

4 unchanged sentences

STATEMENT ITEMS

are stated at fair market value and consist of the following (in thousands):

Schedule of investments

Marketable equity securities

Total Investments

at September 30, 2024 and June 30, 2024 had an aggregate cost basis of $ 4.0 million .

Both current and long-term marketable equity securities include equity securities of public companies that are thinly traded.

We classified

certain investments as long-term in nature because if we decide to sell these securities, we may not be able to sell our position within

At September 30, 2024, the investments included unrealized gains of $ 2.2 million (gross

unrealized gains of $ 2.7 million offset by gross unrealized losses of $ 518,000 ) .

At June 30, 2024, the investments included net

unrealized gains of $ 1.8 million (gross unrealized gains of $ 2.1 million offset by gross unrealized losses of $ 261,000 ).

the total marketable equity securities at September 30, 2024 and June 30, 2024, $ 748,000 and $ 987,000 , respectively, represent an investment

in the common stock of Air T, Inc.

Two of our Board members are also board members of Air T, Inc.

and both either individually or through

affiliates, own an equity interest in Air T, Inc.

Our Chairman, one of the two Board members aforementioned, also serves as the Chief

Executive Officer and Chairman of Air T, Inc.

Another of our Board members is employed by Air T, Inc.

as its Chief of Staff.

were purchased through 10b5-1 Plans, that, in accordance with our internal policies regarding the approval of related-party transactions,

were approved by our then three Board members that are not affiliated with Air T, Inc.

We invest surplus

cash from time to time through our Investment Committee, which is comprised of one management director, Richard (“Rick”) Van

Kirk, and two non-management directors, Raymond (“Ray”) Cabillot and Nicholas (“Nick”) Swenson, who chairs the

Both Nick and Ray are active investors with extensive portfolio management expertise.

We leverage the experience of these committee

members to make investment decisions for our surplus operating capital or borrowed funds.

Additionally, many of our securities holdings

include stocks of public companies that either Nick or Ray or both may own from time to time either individually or through the investment

funds that they manage, or other companies whose boards they sit on, such as Air T, Inc.

is stated at the lower of cost (first-in, first-out) or net realizable value and consists of the following (in thousands):

5 unchanged sentences

Total inventory

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

are stated at market value and consist of the following (in thousands):

Schedule of investments

Marketable equity securities – short-term

Marketable equity securities – long-term

Total Investments

Investments at March

31, 2024 and June 30, 2023 had an aggregate cost basis of $ 3,964,000 and $ 2,714,000 , respectively.

The long-term investments include

equity investments of thinly traded securities that we classified as long term in nature because if we decide to sell these securities,

we may not be able to sell our position within one year.

At March 31, 2024, the investments included net unrealized gains of $ 2.2 million

(gross unrealized gains of $ 2.4 million offset by gross unrealized losses of $ 253,000 ).

At June 30, 2023, the investments, excluding

the Monogram Warrant, included net unrealized losses of $ 219,000 (gross unrealized losses of $ 286,000 offset by gross unrealized gains

of $ 67,000 ).

Of the total marketable

equity securities at March 31, 2024 and June 30, 2023, $ 1 .0 million and $ 1.1 million, respectively, represent an investment in the common

stock of Air T, Inc.

Two of our Board members are also board members of Air T, Inc.

and both either individually or through affiliates

own an equity interest in Air T, Inc.

Our Chairman, one of the two Board members aforementioned, also serves as the Chief Executive Officer

and Chairman of Air T, Inc.

Another of our Board members is employed by Air T, Inc.

as its Chief of Staff.

The shares were purchased

through 10b5-1 Plans, that, in accordance with our internal policies regarding the approval of related-party transactions, were approved

by our then three Board members that are not affiliated with Air T, Inc.

On October 6, 2023,

in conjunction with the execution of a supply agreement with Monogram, we exercised the Monogram Warrant in full in cash totaling $ 1,250,000

and received 1,828,551 shares of Monogram common stock (NasdaqCM:

On the date of exercise our unrealized loss on the investment

was approximately $ 38,000 .

The fair value of the Monogram common stock is reflected in marketable equity securities – short term

in the table above as of March 31, 2024.

Our Chief Executive Officer, Richard Van Kirk (“Rick”), is also a Monogram board

We invest surplus cash from time to time through our Investment Committee,

which is comprised of one management director, Rick, and two non-management directors, Raymond Cabillot (“Ray”) and Nicholas

Swenson (“Nick”), who chairs the committee.

Both Nick and Ray are active investors with extensive portfolio management expertise.

We leverage the experience of these committee members to make investment decisions for our surplus operating capital or borrowed funds.

Additionally, many of our securities holdings include stocks of public companies that Nick or Ray (or both) may own from time to time

either individually or through the investment funds they manage, or other companies whose boards they sit on, such as Air T, Inc.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

Land and building

Land and building consist

of the following (in thousands):

Schedule of land and building

accumulated depreciation

November 6, 2020, we acquired the Franklin Property for a total purchase price of $ 6.5 million, of which we paid $ 1.3 million in cash

and the balance of $ 5.2 we financed through Minnesota Bank & Trust (“MBT”) (See Note 10).

We substantially completed the

build-out of the property in the first quarter of fiscal 2022.

We began operations in the new facility during the fourth quarter of fiscal

For the three months ended March 31, 2024 and 2023 we recorded $ 23,000 of depreciation expense and for the nine months ended March

31, 2024 and 2023 we recorded $ 70,000 of depreciation expense.

The building is being amortized on a straight-line basis over a period

consist of the following (in thousands):

Schedule of intangibles

September 30,

Patent-related costs

4 unchanged sentences

the issuance of the patent.

For the three months ended March 31, 2024, and 2023 we recorded $ 7,000

of amortization expense, respectively, and for the nine months ended March 31, 2024 and

2023 we recorded $ 21,000

of depreciation expense, respectively.

Future amortization expense is expected to be

for the remainder of fiscal 2024 and $ 28,000

per fiscal year through fiscal 2026, at which time we expect these costs to be fully

Future amortization expense is estimated to be $ 27,000 for fiscal 2025 and $ 20,000 for fiscal 2026.

warranty accrual is based on historical costs of warranty repairs and expected future identifiable warranty expenses and is included in

accrued expenses in the accompanying condensed consolidated balance sheets.

As of March 31, 2024 and June 30, 2023, the warranty reserve

As of September 30, 2024 and June 30, 2024, the warranty reserve

amounted to $ 300,000 and $ 277,000 , respectively.

Warranty expenses are included in cost of sales in the accompanying condensed consolidated

income statements.

statements of operations.

Changes in estimates to previously established warranty accruals result from current period updates to assumptions

regarding repair costs and warranty return rates and are included in current period warranty expense.

Warranty expense relating to new

product sales and changes to estimates for the three months ended March 31, 2024 and 2023, was $ 102,000 and $ ( 77,000 ), respectively, and

for the nine months ended March 31, 2024 and 2023, was $ 162,000 and $ 46,000 , respectively.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

Information regarding

the accrual for warranty costs for the three and nine months ended March 31, 2024 and 2023, are as follows (in thousands):

Information regarding the

accrual for warranty costs for the three months ended September 30, 2024 and 2023 are as follows (in thousands):

Schedule of accrual warranty costs

Three Months Ended

Beginning balance

Accruals during the period

Changes in estimates of prior period warranty accruals

Warranty amortization and utilization

Ending balance

Nine Months Ended

September 30,

Beginning balance

1 unchanged sentence

Changes in estimates of prior period warranty accruals

Warranty amortization and utilization

Warranty amortization/utilization

Ending balance

NET INCOME PER SHARE

NET INCOME (LOSS) PER SHARE

We calculate basic net

income per share by dividing net income by the weighted-average number of common shares outstanding during the reporting period.

The weighted-average

number of common shares outstanding used in the calculation of diluted income per share reflects the effects of potentially dilutive securities,

in income generating periods, which consist entirely of outstanding stock options and performance awards.

income (loss) per share by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting

Diluted income per share reflects the effects of potentially dilutive securities, which consist entirely of outstanding stock

options and performance awards.

The following table presents

reconciliations of the numerators and denominators of the basic and diluted earnings per share computations for net income.

In the tables

below, income amounts represent the numerator, and share amounts represent the denominator (in thousands, except per share amounts):

reconciliations of the numerators and denominators of the basic and diluted income per share computations.

For the three months ended

September 30, 2023, 64,800 dilutive securities, consisting exclusively of performance awards, were excluded from the diluted loss per

share because the impact would be anti-dilutive.

In the tables below, income amounts represent the numerator, and share amounts represent

the denominator (in thousands, except per share amounts):

Schedule of net income per share

Months Ended September 30,

Net income (loss)

Weighted-average shares outstanding

Basic income per share

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

Basic earnings (loss) per share

Net income (loss)

Weighted-average shares outstanding

1 unchanged sentence

Weighted-average shares used in calculation of diluted earnings per share

Diluted income per share

Deferred income taxes are provided on a liability method whereby deferred

tax assets and liabilities are recognized for temporary differences.

Temporary differences are the differences between the reported amounts

of assets and liabilities and their tax basis.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,

it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities

are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Significant management judgment is required in determining our provision

for income taxes and the recoverability of our deferred tax assets.

Such determination is based primarily on our historical taxable income,

with some consideration given to our estimates of future taxable income by jurisdictions in which we operate and the period over which

our deferred tax assets would be recoverable.

We recognize accrued interest and penalties related to unrecognized

tax benefits when applicable.

As of March 31, 2024 and 2023, we recognized accrued interest of $ 69,000 and $ 59,000 , respectively, related

to unrecognized tax benefits.

Diluted earnings (loss) per share

income taxes are provided on a liability method whereby deferred tax assets and liabilities

are recognized for temporary differences.

differences are the differences between the reported amounts of assets and liabilities and

their tax bases.

Deferred tax assets are reduced by a valuation

allowance when, in the opinion of management, it is more - likely - than - not

that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and

rates on the date of enactment.

management judgment is required in determining our provision for income taxes and the recoverability of our

deferred tax assets.

Such determination is based primarily on our historical taxable income or loss, with some consideration given to

our estimates of future taxable income or loss

by jurisdictions in which we operate and the period over which our deferred tax assets would be recoverable.

Our deferred tax asset is

net of a valuation allowance in the amount of $ 71,000 as of September 30, 2024 and June 30, 2024.

We recognize accrued interest and penalties

related to unrecognized tax benefits when applicable.

As of September 30, 2024 and 2023, we recognized accrued interest of $ 6,000 and

$ 7,000 , respectively, related to unrecognized tax benefits.

Our effective tax rate for both the three months ended September 30, 2024

and 2023, is 26 % and is slightly less than our combined expected federal and applicable state corporate income tax rates due primarily

to federal and state research credits.

We are subject to U.S.

federal income tax, as

well as income tax of multiple state tax jurisdictions.

We are currently open to audit under the statute of limitations by the Internal

Revenue Service for the years ended June 30, 2020 and later.

Our state income tax returns are open to audit under the statute of limitations

for the years ended June 30, 2019 and later.

However, because of our prior net operating losses and research credit carryovers, our tax

years from June 30, 2007 are open to audit.

We do not anticipate a significant change to the total amount of unrecognized tax benefits

within the next 12 months.

income tax, as well as income tax of California and Colorado, as well as Massachusetts through fiscal year ended June 30, 2024.

currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended June 30, 2021, and later.

However, because of our prior net operating losses and research credit carryovers, our tax years from June 30, 2013, are open to audit.

We do not anticipate a significant change to

the total amount of unrecognized tax benefits within

the next 12 months.

SHARE-BASED COMPENSATION

Our 2016 Equity Incentive

Plan provides for the award of up to 1,500,000 shares of our common stock in the form of incentive stock options, nonstatutory stock options,

stock appreciation rights, restricted shares, restricted stock units, performance awards, and other stock-based awards.

As of December

31, 2023, 200,000 performance awards and 372,000 non-qualified stock options have been granted under the 2016 Equity Incentive Plan.

In September 2016, our Board

approved the establishment of the 2016 Equity Incentive Plan, which was approved by our shareholders at our 2016 Annual Meeting.

Equity Incentive Plan provides for the award of up to 1,500,000 shares of our common stock in the form of incentive stock options, nonstatutory

stock options, stock appreciation rights, restricted shares, restricted stock units, performance awards, and other stock-based awards.

Performance Awards

In October 2023, the Compensation

Committee reallocated an additional 15,200 previously forfeited awards, having the same remaining terms and conditions, to other employees.

The weighted average fair value of the performance awards reallocated in 2023 was $ 10.17 , calculated using the weighted average fair market

In December 2017, the Compensation

Committee of our Board of Directors granted 200,000 performance awards to our employees under our 2016 Equity Incentive Plan, which will

generally be paid in shares of our common stock.

Whether any performance awards vest, and the amount that does vest, is tied to the completion

of service periods that range from 7 months to 9.5 years at inception and the achievement of our common stock trading at certain pre-determined

The weighted-average fair value of the performance awards granted was $ 4.46 , calculated using the weighted-average fair market

value for each award, using a Monte Carlo simulation.

During the three months ended March 31, 2024 and 2023, we recorded share-based compensation

expense of $ 31,000 and $ 30,000 , respectively, related to outstanding performance awards.

During the nine months ended March 31, 2024 and

2023, we recorded share-based compensation expense of $ 76,000 and $ 91,000 , respectively, related to outstanding performance awards.

March 31, 2024, there was approximately $ 86,000 of unrecognized compensation cost related to non-vested performance awards expected to

be expensed over the weighted-average period of 1.23 years.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

In February 2020, the Compensation Committee reallocated 48,000 previously forfeited

awards, having the same remaining terms and conditions, to certain employees.

The weighted-average fair value of the performance awards

reallocated in 2020 was $ 16.90 , calculated using the weighted-average fair market value for each award, using a Monte Carlo simulation.

In December 2021, the Compensation Committee reallocated an additional 17,500 previously forfeited awards, having the same remaining terms

and conditions, to other employees.

The weighted average fair value of the performance awards reallocated in 2021 was $ 20.34 , calculated

using the weighted average fair market value for each award, using a Monte Carlo simulation.

In October 2023, the Compensation Committee

reallocated an additional 15,200 previously forfeited awards, having the same remaining terms and conditions, to other employees.

weighted average fair value of the performance awards reallocated in 2023 was $ 10.04 , calculated using the weighted average fair market

value for each award, using a Monte Carlo simulation.

We recorded share-based compensation expense of $ 7,000 and $ 15,000 for the three

months ended September 30, 2024 and 2023, respectively, related to these performance awards.

On September 30, 2024, there was approximately

$ 48,000 of unrecognized compensation cost related to these non-vested performance awards, which is expected to be expensed over the weighted-average

period of 1.75 years.

On July 1, 2024, it was

8 unchanged sentences

The vesting of these stock options is tied to the completion of service periods that range from 18 months to 10.5

years from the date of grant and the achievement of our common stock trading at certain pre-determined prices.

The weighted average fair

value of the stock options granted was $ 16.72 , calculated using a Monte Carlo simulation.

In December 2021, the Compensation Committee

reallocated 5,000 previously forfeited non-qualified stock options, having the same remaining terms and conditions, to another employee

at a weighted average fair value of $ 6.69 calculated using a Monte Carlo simulation.

During each of the three months ended March 31, 2024

and 2023, we recorded compensation expense of $ 168,000 related to these stock options.

During the nine months ended March 31, 2024 and

2023, we recorded compensation expense of $ 503,000 and $ 479,000 , respectively, related to these stock options.

As of March 31, 2024, none

of these stock options have vested and there was approximately $ 1.8 million of unrecognized compensation cost related to these non-vested

non-qualified stock options.

years from inception and the achievement of our common stock trading at certain pre-determined prices.

We recorded compensation expense

of $ 104,000 and $ 168,000 for the three months ended September 30, 2024 and 2023, respectively, related to these stock options.

The weighted-average

fair value of the stock option awards granted was $ 16.72 , calculated using a Monte Carlo simulation.

As of September 30, 2024, none of

these stock options had vested and there was approximately $ 1.5 million of unrecognized compensation cost related to these non-vested

stock options.

Employee Stock Purchase Plan

In September 2014, our Board

approved the establishment of an Employee Stock Purchase Plan (the “ESPP”), which was approved by our shareholders at our

2014 Annual Meeting.

The ESPP conforms to the provisions of Section 423 of the Internal Revenue Code, has coterminous offering and purchase

periods of six months, and bases the pricing to purchase shares of our common stock on a formula so as to result in a per share purchase

price that approximates a 15% discount from the market price of a share of our common stock at the end of the purchase period .

of Directors also approved that 704,715 shares, be reserved for issuance pursuant to the ESPP.

An amendment to the ESPP to extend its

term for an additional ten years (through 2035) was approved by our Board in October 2023 and by our shareholders at our 2023 Annual Meeting.

approved the establishment of an Employee Stock Purchase Plan (the “ESPP”).

The ESPP conforms to the provisions of Section

423 of the Internal Revenue Code, has coterminous offering and purchase periods of six months, and bases the pricing to purchase shares

of our common stock on a formula so as to result in a per-share purchase price that approximates a 15% discount from the market price

of a share of our common stock at the end of the purchase period.

Our Board of Directors also approved the provision that shares formerly

reserved for issuance under former stock option plans in excess of shares issuable pursuant to outstanding options, aggregating 704,715

shares, be reserved for issuance pursuant to the ESPP.

The ESPP was approved by our shareholders at our 2014 Annual Meeting.

In October 2023, our Board

approved an amendment to the ESPP (the “ESPP Amendment”), which extended the term of the ESPP for an additional ten years

from January 2025 to January 2035.

The ESPP Amendment was approved by our shareholders at our 2023 Annual Meeting.

During the three months

ended March 31, 2024 and 2023, we recorded ESPP share-based compensation expense in the amount of $ 3,000 and $ 8,000 , respectively.

the three months ended March 31, 2024 and 2023, 983 and 2,956 shares were purchased, respectively, and allocated to employees based upon

their contributions at prices of $ 18.32 and $ 14.79 , respectively, per share.

During the nine months ended March 31, 2024 and 2023, we

recorded ESPP share-based compensation expense in the amount of $ 9,000 and $ 14,000 , respectively.

On a cumulative basis, since the inception

of the ESPP, employees have purchased a total of 35,502 shares of our common stock.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

MAJOR CUSTOMERS AND SUPPLIERS

ended September 30, 2024 and 2023, 940 and 2,021 shares were purchased, respectively, under the ESPP and allocated to employees based

upon their contributions at discount prices of $ 16.22 and $ 15.82 , respectively, per share.

As of September 30, 2024, on a cumulative

basis, since the inception of the ESPP plan, employees have purchased a total of 36,442 shares.

During the three months ended September

30, 2024 and 2023, we recorded stock compensation expense in the amount of $ 3,000 and $ 6,000 , respectively, relating to the ESPP.

MAJOR CUSTOMERS & SUPPLIERS

with respect to customers that accounted for sales in excess of 10% of our total sales in

either of the three-month and the nine-month periods

ended March 31, 2024 and 2023, is as follows (in thousands, except percentages):

either of the three-month periods ended September 30,

2024 and 2023 is as follows (in thousands, except percentages):

Schedule of sales by major customers

Months Ended March 31,

Customer concentration:

Months Ended March 31,

Percent of Total

Months Ended September 30,

Total revenue

Customer concentration:

Information with respect

to accounts receivable from those customers who comprised more than 10% of our gross accounts receivable at either March 31, 2024 or June

30, 2023, is as follows (in thousands, except percentages):

to accounts receivable from those customers that comprised more than 10% of our gross accounts receivable at either September 30, 2024

and June 30, 2024 is as follows (in thousands, except percentages):

Schedule of accounts receivable

1 unchanged sentence

Customer concentration:

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

three and nine months ended March 31, 2024 and 2023, we had two and three suppliers, respectively, accounting for 10% or more of total

inventory purchases.

Amounts owed to the suppliers who comprised more than 10% of total accounts payable at either March 31, 2024 or June

30, 2023, is as follows (in thousands, except percentages).

Schedule of accounts payable

Total accounts payable

Supplier concentration:

PAYABLE AND FINANCING TRANSACTIONS

Minnesota Bank & Trust

November 6, 2020 (the “Closing Date”), PDEX Franklin, our wholly owned subsidiary, purchased an approximate 25,000 square

foot industrial building in Tustin, California (the “Franklin Property”).

A portion of the purchase price was financed by

a loan from MBT to PDEX Franklin in the principal amount of approximately $ 5.2 million (the “Property Loan”) pursuant to a

Loan Agreement, dated as of the Closing Date, between PDEX Franklin and MBT (the “Property Loan Agreement”) and corresponding

Term Note (the “Property Note”) issued by PDEX Franklin in favor of MBT on the Closing Date.

The Property Loan is secured

by the Franklin Property pursuant to a Deed of Trust with Assignment of Leases and Rents, Security Agreement and Fixture Filing in favor

of MBT (the “Deed”) and by an Assignment of Leases and Rents by PDEX Franklin in favor of MBT (the “Rents Assignment”).

We paid loan origination fees to MBT on the Closing Date in the amount of $ 26,037 .

Property Loan bears interest at a fixed rate of 3.55 % per annum, which is subject to a 3% increase upon an event of default.

Accrued interest

was paid on December 1, 2020, and both principal and interest in the amount of approximately $ 30,000 are due and payable on the first

day of each subsequent month until the maturity date of November 1, 2030 (the “Maturity Date”), at which time a balloon payment

in the amount of $ 3.1 million is due.

Any prepayment of the Property Loan (other than monthly scheduled interest and principal payments),

is subject to a prepayment fee equal to 4% of the principal amount prepaid for any prepayment made during the first or second year, 3%

of the principal amount prepaid for any prepayment made during the third or fourth year, 2% of the principal amount prepaid for any prepayment

made during the fifth or sixth year, and 1% of the principal amount prepaid for any prepayment made during the seventh or eighth year.

The Property Loan Agreement, Property Note, Deed, and Rents Assignment each contain representations, warranties, covenants, and events

of default that are customary for a loan of this type.

The balance owed on the Property Loan at March 31, 2024 is $ 4,599,000 .

the Closing Date, we also entered into an Amended and Restated Credit Agreement with MBT (the “Amended Credit Agreement”),

providing for a $ 7,525,000 amended and restated term loan (the “Term Loan A”), a $ 1,000,000 term loan (the “Term Loan

B”), and a $ 2,000,000 amended and restated revolving loan, evidenced by an Amended and Restated Term Note A (“Term Note A”),

a Term Note B, and an Amended and Restated Revolving Credit Note (the “Revolving Note”) made by us in favor of MBT.

under the Amended Credit Agreement are secured by substantially all of our assets pursuant to a Security Agreement entered into on September

6, 2018, between us and MBT.

The Term Note A had an outstanding principal balance of $ 3,770,331 as of the Closing Date and could be borrowed

against through May 30, 2021 (the “Commitment Period”).

During the third quarter ended March 31, 2021, we borrowed an additional

$ 3,000,000 against Term Note A for the purpose of repurchasing shares of our common stock.

The Term Note B had a zero balance as of the

Closing Date and we borrowed the full $ 1,000,000 during the third quarter ended March 31, 2021, for the purpose of making improvements

to the Franklin Property.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

Term Loan A matures on November 1, 2027 , and bears interest at a fixed rate of 3.84 % per annum.

Initial payments on the Term Loan A of

interest only were due on December 1, 2020 through June 1, 2021.

Commencing July 1, 2021 and continuing on the first day of each month

thereafter until the maturity date, we are required to make payments of principal and interest on Term Loan A of approximately $ 97,000

plus any additional accrued and unpaid interest through the date of payment.

The balance owed on Term Loan A as of March 31, 2024, is

$ 4,086,000 .

Term Loan B matures on November 1, 2027 , and bears interest at a fixed rate of 3.84 % per annum.

Initial payments on the Term Loan B of

interest only were due on December 1, 2020 through June 1, 2021.

Commencing July 1, 2021 and continuing on the first day of each month

thereafter until the maturity date, we are required to make payments of principal and interest on Term Loan B of approximately $ 15,000 ,

plus any additional accrued and unpaid interest through the date of payment.

The balance owing on Term Note B was $ 608,000 on March 31,

On December 29, 2022 (the “Amendment

Date”), we entered into Amendment No.

2 to Amended and Restated Credit Agreement (the “Amendment”) with MBT, which amends

the Amended Credit Agreement and provides for a supplemental line of credit in the amount of $ 3,000,000 (the “Supplemental Loan”).

The Supplemental Loan is evidenced by a Supplemental Revolving Credit Note (the “Supplemental Note”) made by us in favor of

The purpose of the Supplemental Loan is for financing acquisitions and repurchasing shares of our common stock.

The Supplemental

Loan may be borrowed against from time to time through its current maturity date of December 29, 2025, on the terms set forth in the Amended

Credit Agreement.

As of March 31, 2024, no amounts have been drawn against the Supplemental Loan.

The Revolving Loan was also amended

(the “Amended Revolving Loan”) in connection with the Amendment to extend the maturity date from November 5, 2023 to December

29, 2024 , to increase the Revolving Loan facility from $ 2,000,000 to $ 7,000,000 , and to increase the interest rate on the Revolving Loan

(as described below), evidenced by an Amended and Restated Revolving Credit Note (the “Amended Revolving Note”) made by us

in favor of MBT.

The Amended Revolving Loan may be borrowed against from time to time by us through its current maturity date of December

29, 2025, on the terms set forth in the Amended Credit Agreement.

On December 29, 2023, we entered into Amendment No.

3 to the Agreement

to amend the termination date of the Supplemental Loan and Amended Revolving Loan from December 29, 2024, to December 29, 2025.

March 31, 2024, we had drawn $ 2,500,000 against the Amended Revolving Loan.

Loan origination fees in the amount of $ 16,000 each were paid

to MBT in conjunction with the Revolving Loan and the Supplemental Loan in conjunction with both the Amendment on December 29, 2022 and

on December 29, 2023.

The Amended Revolving Loan and

Supplemental Loan bear interest at an annual rate equal to the greater of (a) 5.0 % or (b) SOFR for a one-month period from the website

of the CME Group Benchmark Administration Limited plus 2.5% (the “Adjusted Term SOFR Rate”).

Commencing on the first day of

each month after we initially borrow against the Amended Revolving Loan and/or the Supplemental Loan and each month thereafter until maturity,

we are required to pay all accrued and unpaid interest on the Amended Revolving Loan and Supplemental Loan through the date of payment.

Any principal on the Amended Revolving Loan and/or Supplemental Loan that is not previously prepaid shall be due and payable in full on

the maturity date (or earlier termination of the Amended Revolving Loan and/or Supplemental Loan).

payment on the Term Loan A, the Term Loan B, the Amended Revolving Loan or the Supplemental Loan (collectively, the “Loans”)

During the three months ended September 30, 2024 and

2023, we had two and three suppliers, respectively, that each accounted for more than 10 % of total inventory purchases.

Amounts owed to

the fiscal 2024 significant suppliers at September 30, 2024 totaled $ 1.7 million, and $ 248,000 , respectively, and at June 30, 2024 totaled

$ 1.4 million and $ 416,000 , respectively.

NOTES PAYABLE AND FINANCING TRANSACTIONS

Minnesota Bank & Trust (“MBT”)

previously disclosed, we have several outstanding term loans as well as a revolving loan (the “Amended Revolving Loan”) with

Additionally, on July 31, 2024 (the “Fourth Amendment Date”), we entered into Amendment No.

4 to our Amended and

Restated Credit Agreement (the “Fourth Amendment”) with MBT which amends the Company’s Amended and Restated Credit Agreement.

The Fourth Amendment (i) provides for a new term loan, Term Loan C, in the amount of $ 5.0 million, (ii) uses the proceeds from Term Loan

C to repay the entire $ 3.0 million balance that was outstanding on the Fourth Amendment Date under the Amended Revolving Loan, and (iii) terminates

our Supplemental Loan, under which no amounts had been drawn.

Loan origination fees in the amount of $ 10,000 were paid to MBT in conjunction

with Term Loan C.

The balance on our

outstanding loans (in thousands) is as follows (exclusive of unamortized loan fees):

Schedule of unamortized loan

Notes Payable:

Property Loan

Amended Revolving Loan

Total notes payable

Loan A and B both bear interest at a fixed rate of 3.84 % per annum, the Property Loan bears interest at a fixed rate of 3.55 % per annum

and both Term Note C and the Amended Revolving Loan bear interest at an annual rate equal to the greater of (a) 5 % , or (b) SOFR

for a one-month period from the website of the CME Group Benchmark Administration Limited plus 2.5% (the “Adjusted Term SOFR Rate”).

Term Loan A and B are both fully amortizing and mature on November 1, 2027 , Term Loan C is fully amortizing and matures on August 1, 2029 ,

the Property Loan matures on November 1, 2030 , at which time a balloon payment of $ 3.1 million is due, and the Amended Revolving Loan

matures on December 29, 2025 .

payment on Term Loan A, Term Loan B, Term Loan C, the Property Loan, or Amended Revolving Loan (collectively, the “Loans”)

not made within seven days after the due date is subject to a late payment fee equal to 5 % of the overdue amount.

2 unchanged sentences

declare all of the Loans immediately due and payable in full.

Amended Credit Agreement, Amended Security Agreement, Term Note A, Term Note B, Amended Revolving Note and Supplemental Note contain representations

and warranties, affirmative, negative and financial covenants, and events of default that are customary for loans of this type.

that we are in compliance with all of our debt covenants as of March 31, 2024, but there can be no assurance that we will remain in compliance

for the duration of the term of these loans.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

The Loans are secured by substantially all of the Company’s assets

pursuant to a Security Agreement entered into on September 6, 2018, between the Company and MBT.

Amended Credit Agreement, Amended Security Agreement, Term Note A, Term Note B, Term Note C, Property Note, and Amended Revolving Note

contain representations and warranties, affirmative, negative and financial covenants, and events of default that are customary for loans

of this type.

We believe that we are in compliance with all of our debt covenants as of September 30, 2024, but there can be no assurance

that we will remain in compliance for the duration of the term of these loans.

Share Repurchase Program

December 2019, our Board approved a new share repurchase program authorizing us to repurchase up to one million shares of our common

stock, as the prior repurchase plan authorized by our Board in 2013 was nearing completion.

In accordance with, and as part of,

these share repurchase programs, our Board approved the adoption of several prearranged share repurchase plans intended to qualify

for the safe harbor provided by Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (“10b5-1 Plan” or

During the three and nine months ended March 31, 2024, we repurchased 90,605

shares, respectively, at an aggregate cost, inclusive of fees under the Plan, of $ 1,723,000

and $ 1,830,000 ,

respectively.

During the three and nine months ended March 31, 2023, we repurchased 11,576

shares, respectively, at an aggregate cost, inclusive of fees under the Plan, of $ 198,000

and $ 1,547,000 ,

respectively.

On a cumulative basis, since implementation of the share repurchase program in 2013, we have repurchased a

total of 1,293,338

shares under the share repurchase program at an aggregate cost of $ 19 .0

All repurchases under the 10b5-1 Plans were administered through an independent broker.

In December 2019, our Board

approved a new share repurchase program authorizing us to repurchase up to 1 million shares of our common stock, as the prior repurchase

plan authorized by our Board in 2013 was nearing completion.

In accordance with, and as part of, these share repurchase programs, our

Board has approved the adoption of several prearranged share repurchase plans intended to qualify for the safe harbor Rule 10b5-1 under

the Securities Exchange Act of 1934, as amended (“10b5-1 Plan” or “Plan”).

During the three months ended September

30, 2024, we repurchased 91,976 shares at an aggregate cost, inclusive of fees under the Plan, of $ 2.3 million.

During the three months

ended September 30, 2023 we did not repurchase any shares.

On a cumulative basis since 2013, we have repurchased a total of 1,473,325

shares under the share repurchase programs at an aggregate cost, inclusive of fees, of $ 23.0 million.

All repurchases under the 10b5-1

Plans were administered through an independent broker.

Our operating lease right-of-use

1 unchanged sentence

The current portion of our operating

lease liability as of March 31, 2024, in the amount of $ 445,000 , is presented within accrued expenses on the condensed consolidated balance

As of March 31, 2024, the

maturity of our lease liability is as follows (in thousands):

Schedule of maturity of lease liability

lease liability as of September 30, 2024, in the amount of $ 466,000 , is presented within accrued expenses on the condensed consolidated

balance sheet.

As of September 30, 2024,

our operating lease has a remaining lease term of three years and an imputed interest rate of 5.53 % .

Cash paid for amounts included in

the lease liability was $ 130,000 for the three months ended September 30, 2024, excluding $ 41,000 paid for common area maintenance charges.

As of September 30, 2024,

the maturity of our lease liability is as follows (in thousands):

Schedule of maturities of lease liabilities

Operating Lease

1 unchanged sentence

Less imputed interest

As of March 31, 2024, the

operating lease for our Irvine, California headquarters has a remaining lease term of three years and six months and an imputed interest

rate of 5.53 %.

Cash paid for amounts included in the lease liability for the three and nine months ended March 31, 2024, was $ 143,000

and $ 425,000 , respectively.

Cash paid for amounts included in the lease liability for the three and nine months ended March 31, 2023,

was $ 139,000 and $ 418,000 , respectively.

PRO-DEX, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(In thousands)

COMMITMENTS AND CONTINGENCIES

Legal Matters

We may be involved from

time to time in various legal proceedings arising either in the ordinary course of our business or incidental to our business.

be no certainty, however, that we may not ultimately incur liability or that such liability will not be material and adverse.

We may be involved from time to

time in legal proceedings arising either in the ordinary course of our business or incidental to our business.

There can be no certainty,

however, that we may not ultimately incur liability or that such liability will not be material or adverse.

SUBSEQUENT EVENTS

We have evaluated subsequent

events through the date of this filing.

We have evaluated subsequent events through the date

of this filing.

There were no subsequent events that require disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements