What changed in this filing

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Item 1. Financial Statements

2025-10-30 compared with 2025-05-01 · 358 added, 388 removed, 227 unchanged (77% of the section changed)

6 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance for expected credit losses of $ 0 at March 31, 2025 and at June 30, 2024, respectively

Accounts receivable, net of allowance for credit losses of $ 2 and $ 0 at September 30, 2025 and at June 30, 2025, respectively

Deferred costs

Income taxes receivable

Prepaid expenses and other current assets

4 unchanged sentences

Intangibles, net

Deferred income taxes, 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

4 unchanged sentences

Shareholders’ Equity:

Common shares;

Common stock;

no par value;

50,000,000 shares authorized;

3,261,043 and 3,363,412 shares issued and outstanding at March 31, 2025 and June 30, 2024, respectively

3,262,004 and 3,261,043 shares issued and outstanding at September 30, 2025 and June 30, 2025, respectively

Retained earnings

1 unchanged sentence

Total liabilities and shareholders’ equity

The accompanying notes are an integral part of

these condensed consolidated financial statements.

The 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)

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 on investments

Interest expense

Unrealized gain (loss) on marketable equity investments

Interest and other income

Gain on sale of investments

Total other income

Income before income taxes

Income tax expense

Provision for income taxes

Basic and diluted net income per share:

Basic net income per share

2 unchanged sentences

Common shares outstanding

The accompanying notes are an integral part of

these condensed consolidated financial statements.

The 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

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:

4 unchanged sentences

Total shareholders’ equity

The accompanying notes are an integral part of

these condensed consolidated financial statements.

The accompanying notes are an integral part

of these condensed consolidated financial statements.

PRO-DEX, INC.

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

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

Unrealized gain on marketable equity investments

Non-cash lease (recovery)

Amortization of loan fees

Credit loss expense

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable and other receivables

Deferred costs

2 unchanged sentences

Deferred revenue

Income taxes payable

Net cash provided by (used in) operating activities

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 provided by (used in) investing activities

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on notes payable

Proceeds from UMB Bank 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 provided by (used in) financing activities

Net cash used in financing activities

Net increase in cash and cash equivalents

1 unchanged sentence

Cash and cash equivalents, end of period

The accompanying notes are an integral part of

these condensed consolidated financial statements.

The 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)

Three Months Ended

September 30,

Supplemental disclosures of cash flow information:

Cash paid during the period for interest

Cash paid during the period for income taxes by jurisdiction:

Cash paid during the period for income taxes:

Federal income tax payments

California income tax payments

Massachusetts income tax payments

Total income tax payments

Non-cash investing and financing activity:

Cashless stock option exercise

The accompanying notes are an integral part of

these condensed consolidated financial statements.

The accompanying notes are an integral part

of these condensed consolidated financial statements.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

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 applicable provisions of Regulation S-K.

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 by U.S.

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

In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

of operations for such interim periods are not necessarily indicative of the results that may be expected for the full year.

information, refer to the financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended June

Issued and Not Yet Adopted Accounting Pronouncements

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, 2025.

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, 2025.

Recently Issued and Not Yet Adopted Accounting

Pronouncements

November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2024-03, Disaggregation of Income Statement Expenses.

The ASU’s purpose is to improve the disclosures about

a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses

(including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions

(such as cost of sales, SG&A, and research and development).

This ASU is effective for fiscal years beginning after December 15, 2026

and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating these new

expanded disclosure requirements, but this standard will not impact our results of operations or financial position.

December 2023, the FASB issued ASU No.

2023-09, Income Taxes:

Improvements to Income Tax 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.

The ASU’s purpose is to improve disclosures about a public

business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including

purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such

as cost of sales, selling, general and administrative, and research and development).

This ASU is effective for fiscal years beginning

after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

We are currently

evaluating these new expanded disclosure requirements, but this standard will not impact our results of operations or financial position.

DESCRIPTION OF BUSINESS

We specialize in the design, development,

and manufacture of autoclavable, battery-powered, and electric, multi-function surgical drivers and shavers used primarily in the orthopedic,

thoracic, and maxocranial facial markets.

We have patented adaptive torque-limiting software and proprietary sealing solutions that

appeal to our customers, primarily medical device distributors.

We specialize in the design,

development and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily

in the orthopedic, thoracic, and maxocranial facial markets.

We have patented adaptive torque-limiting software and proprietary sealing

solutions which appeal to our customers, primarily medical device distributors.

Additionally, we provide engineering, quality, and regulatory

consulting services to our customers.

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

however, these motors

comprise a de minimis portion of our business.

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 in November 2020, 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.

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.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents

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

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

1 unchanged sentence

Total net sales

The timing of revenue recognition,

billings, and cash collections results in billed accounts receivables, unbilled receivables (presented as deferred costs on our condensed

consolidated balance sheets), and customer advances and deposits (presented as deferred revenue on our condensed consolidated balance

sheets), where applicable.

Amounts are generally billed as work progresses in accordance with agreed upon milestones.

The over-time revenue

recognition model consists of non-recurring engineering (“NRE”) and prototype services and typically relates to NRE services

related to the evaluation, design, or customization of a medical device and is typically recognized over time utilizing an input measure

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

During the three and nine months ended March

31, 2025, we recorded $ 0 and $ 14,000 respectively, of revenue that had been included in deferred revenue in the prior year.

three and nine months ended March 31, 2024, we did not record any revenue that had been included in deferred revenue in the prior year.

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

The following tables summarize

our contract assets and liability balances (in thousands):

timing of revenue recognition, billings, and cash collections results in billed accounts receivables, unbilled receivables (presented

as deferred costs on our condensed consolidated balance sheets) and customer advances and deposits (presented as deferred revenue on

our condensed consolidated balance sheets), where applicable.

Amounts are generally billed as work progresses in accordance with agreed

upon milestones.

The over-time revenue recognition model consists of non-recurring engineering (“NRE”) and prototype services

and typically relates to NRE services related to the evaluation, design or customization of a medical device and is typically recognized

over time utilizing an input measure of progress based on costs incurred compared to the estimated total costs upon completion.

the three months ended September 30, 2025 and 2024, we recorded $ 80,000 and $ 14,000 respectively, of revenue that had been included in

deferred revenue in the prior year.

The revenue recognized from the contract liabilities consisted of satisfying our performance obligations

during the normal course of business.

following tables summarize our contract assets and liability balances (in thousands):

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

Contract liabilities

beginning balance

received from customers

reclassified to revenue

liabilities ending balance

Three Months Ended

September 30,

Contract liabilities beginning balance

Payments received from customers

Amounts reclassified to revenue

Contract liabilities ending balance

AND SUBSIDIARY

27 unchanged sentences

or can be derived principally from, or corroborated by observable market data.

At March 31, 2025 and June 30, 2024, we have categorized

At September 30, 2025 and June 30, 2025, we categorized

our investments in marketable equity securities as Level 2 assets.

At September 30, 2025, our investment in Monogram Technologies,

(“Monogram”) was valued at the cash price received in October 2025, upon its acquisition by Zimmer Biomet Holdings, Inc.

(“Zimmer Biomet”) described below.

3 – applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant

to the measurement of the fair value of the assets or liabilities.

We held no Level 3 assets or liabilities at March 31, 2025 or June

We held no Level 3 assets or liabilities at September 30, 2025 or June

Schedule of fair value, assets and liabilities

Value Measurement at March 31, 2025

Value Measurement at September 30, 2025

Financial Assets:

9 unchanged sentences

Marketable equity securities – long-term

in marketable equity securities at March 31, 2025 and June 30, 2024 had an aggregate cost basis of $ 2,651,000

and $ 3,964,000 , 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.

the quarter ended March 31, 2025, we sold one of our marketable equity securities previously reported in long term investments for $1.9

million in cash and recorded a realized gain in the amount of $ 595,000 .

At March 31, 2025, the investments included net unrealized gains

of $ 2.9 million (gross unrealized gains of $ 3.4 million offset by gross unrealized losses of $ 493,000 ).

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 gains of $ 261,000 ).

the total marketable equity securities at March 31, 2025 and June 30, 2024, $ 797,000 and $ 987,000 , respectively, represent an investment

in the common stock of Air T, Inc.

at September 30, 2025 and June 30, 2025 had an aggregate cost basis of $ 3.5 million .

Both short-term 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, 2025, the investments included unrealized gains of $ 6.6 million (gross unrealized

gains of $ 6.8 million offset by gross unrealized losses of $ 185,000 ) .

At June 30, 2025, the investments included net unrealized

gains of $ 3.3 million (gross unrealized gains of $ 3.5 million offset by gross unrealized losses of $ 213,000 ).

the total marketable equity securities at September 30, 2025 and June 30, 2025, $ 1,100,000 and $ 1,040,000 , 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.

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.

6, 2023, in conjunction with the execution of a supply agreement with Monogram Technologies, Inc., formerly Monogram Orthopaedics Inc.

(“Monogram”), we exercised a warrant to purchase common stock of Monogram (the “Monogram Warrant”) in full in

cash totaling $1,250,000 and received 1,828,551 shares of Monogram common stock (NasdaqCM:

The fair value of the Monogram common

stock is reflected in marketable equity securities – short term in the tables above.

Our Chief Executive Officer, Richard Van Kirk

(“Rick”), is also a Monogram board member.

surplus cash from time to time through our Investment Committee, which is comprised of one management director, Rick Van Kirk, and two

non-management directors, Raymond Cabillot and Nicholas Swenson, who chairs the committee.

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.

October 7, 2025, Zimmer Biomet announced that it had completed its acquisition of Monogram and soon after the announcement we received

$4.04 per share in cash for each of the 2,212,378 common shares we owned of Monogram prior to the close of the acquisition, for total

proceeds of $8.9 million.

Accordingly, in our second quarter of fiscal 2026, we will record a realized gain in the amount of $6.8 million.

In addition, we received 2,212,378 non-tradeable contingent value rights (“CVR’s”) payable in cash if Monogram completes

five milestones related to proof-of concept, FDA 510(k) approval, and specific revenue milestones.

The CVR payments, if made, range in

value from $1.04 to $3.43 per CVR for a total amount of $12.37 should all milestones be attained.

There is no guarantee or assurance

that any milestones will be achieved.

As disclosed previously, in conjunction with making our original investment in Monogram during

fiscal 2017, we were granted the exclusive right to develop, engineer, manufacture and supply certain products on its behalf.

were transferred to Zimmer Biomet and remain in effect post-acquisition.

We made this investment in the hope that it could generate meaningful

additional revenue which has yet to occur but may be more likely to occur in the future because Zimmer Biomet has more financial resources

to assist with commercialization of Monogram’s products.

However, there is no guarantee or assurance as to the amount of revenue,

if any, that we may ultimately recognize from our exclusive right to develop, engineer, manufacture and supply certain products for Monogram.

invest surplus cash from time to time through our Investment Committee, which is comprised of one management director, Mr.

and two non-management directors, Mr.

Cabillot and Mr.

Swenson, who chairs the committee.

Cabillot and Swenson are active

4 unchanged sentences

that either Messrs.

Cabillot or Swenson 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.

Swenson or Cabillot 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.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMPOSITION OF CERTAIN FINANCIAL

STATEMENT ITEMS

COMPOSITION OF CERTAIN FINANCIAL STATEMENT

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

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 million we financed (the “Property Loan”) through Minnesota Bank & Trust (“MBT”) (See

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 2023.

For each of the three months ended March 31, 2025, and 2024 we recorded $ 23,000 of

depreciation expense and for each of the nine months ended March 31, 2025 and 2024 we recorded $ 70,000 of depreciation expense.

is being amortized on a straight-line basis over a period of 30 years

consist of the following (in thousands):

1 unchanged sentence

Patent-related costs

accumulated amortization

Less accumulated amortization

Intangible assets, net

Patent-related

costs consist of legal fees incurred in connection with both patent applications and a patent issuance and will be amortized over the

estimated life of the product(s) that is or will be utilizing the technology or expensed immediately in the event the patent office denies

the issuance of the patent.

For each of the three months ended March 31, 2025 and 2024, we recorded $ 7,000 of amortization expense and

for each of the nine months ended March 31, 2025 and 2024, we recorded $ 21,000 of amortization expense.

Future amortization expense is

expected to be $ 7,000 for the remainder of fiscal 2025 and $ 26,000 during fiscal 2026, at which time we expect these costs to be fully

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

estimated life of the product(s) that is or will be utilizing the technology, or expensed immediately in the event the patent office

denies the issuance of the patent.

These patent-related costs are expected to be fully amortized during 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, 2025 and June 30, 2024, the warranty reserve

amounted to $ 326,000 and $ 277,000 , respectively.

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

income statements.

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.

Information regarding the accrual

for warranty costs for the three and nine months ended March 31, 2025 and 2024, are as follows (in thousands):

As of September 30, 2025 and June 30, 2025, the warranty

reserve amounted to $ 379,000 and $ 357,000 , respectively.

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

consolidated 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.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

regarding the accrual for warranty costs for the three months ended September 30, 2025 and 2024 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

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, restricted shares, and performance awards.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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):

calculate basic net income per share by dividing net income 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, restricted shares and performance awards.

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

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

Schedule of net income per share

Months Ended September 30,

Weighted-average shares outstanding

Basic income per share

Basic earnings per share

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, 2025 and 2024, we recognized accrued interest of $ 60,000 and $ 69,000 , respectively, related

to unrecognized tax benefits.

The effective tax rate for each of the three months ended March 31, 2025 and 2024 was 28 % .

The effective

tax rate for the nine months ended March 31, 2025 and 2024 was 26 % and 23 % , respectively.

The increase in the fiscal 2025 effective tax

rate is due primarily to the release in fiscal 2024 of a $ 60,000 valuation allowance related to previously recognized unrealized losses

on investments.

We have not had a similar release of a valuation allowance during fiscal 2025.

We are subject to U.S.

federal income tax, as well as income tax of California and Colorado.

We were also subject to income tax of Massachusetts through fiscal

year ended June 30, 2024.

federal income taxes are currently open to audit under the statute of limitations by the Internal

Revenue Service for the fiscal years ended June 30, 2021 and after.

However, because of our prior net operating losses and

research credit carryovers, our tax years from June 30, 2013 and after are open to audit.

We do not anticipate a significant change to

the total amount of unrecognized tax benefits within the next 12 months.

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 March 31,

2025, performance awards for 200,000 shares of common stock, non-qualified stock options for 372,000 shares of common stock, and 18,000

restricted shares of common stock have been granted under the 2016 Equity Incentive Plan.

Diluted earnings 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

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 gross amount of $ 90,000 as of September

30, 2025 and June 30, 2025.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Performance Awards

In October 2023, the Compensation

Committee reallocated previously forfeited performance awards for 15,200 shares of common stock, 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 value for each award, using a Monte Carlo simulation.

During the three months ended March 31, 2025 and 2024, we recorded

share-based compensation expense of $ 7,000 and $ 31,000 , respectively, related to outstanding performance awards.

During the nine months

ended March 31, 2025 and 2024, we recorded share-based compensation expense of $ 20,000 and $ 76,000 , respectively, related to outstanding

recognize accrued interest and penalties related to unrecognized tax benefits when applicable.

September 30, 2025 and 2024, we recognized accrued interest of $ 4,000 and $ 6,000 , respectively, related to unrecognized tax benefits.

Our effective tax rate for the three months ended September 30, 2025 and 2024, is 25 % and 26 % , respectively, and is slightly less

than our combined expected federal and applicable state corporate income tax rates due primarily to federal and state research credits.

Additionally, during the first quarter of fiscal 2026, we have added Florida and Indiana to our income tax nexus and both of these states

have a lower income tax rate than California, where the majority of our state income tax has been paid historically.

We are currently

evaluating the impact of these changes to our deferred tax assets, and plan to record any adjustment in the second quarter of this fiscal

year, but we do not expect a material change as a result.

are subject to U.S.

federal income tax, as well as income tax of California, Colorado, Florida and Indiana as well as Massachusetts through

fiscal year ended June 30, 2024.

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

the years ended June 30, 2022, and later.

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

years from June 30, 2020, are open to audit.

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

within the next 12 months.

Additionally, the One Big Beautiful Bill Act of 2025, or the 2025 Act, enacted on July 4, 2025, makes changes

corporate income taxes including reinstating the option to claim 100% accelerated depreciation deductions on qualified property,

with retroactive application beginning January 20, 2025, and immediate expensing of research and development costs, with retroactive

application for tax years starting after December 31, 2025.

We are continuing our evaluation of the impact the adoption of the 2025 Act

will have on our financial statements for the fiscal year ended June 30, 2026.

SHARE-BASED COMPENSATION

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.

As of September 30, 2025, performance awards for 200,000 shares of common stock, non-qualified stock options for 372,000 shares of common

stock and 18,000 restricted shares of common stock have been granted under the 2016 Equity Incentive Plan.

Performance Awards

On March 31, 2025, there was approximately $ 34,000 of unrecognized compensation cost related to non-vested performance

awards expected to be expensed over the weighted-average period of 1.27 years.

On July 1, 2024, it was

determined by the Compensation Committee that the vesting of performance awards for 40,000 shares of common stock had been achieved.

participant elected a net issuance to cover their individual withholding taxes and, therefore, we issued participants 25,134 shares of

common stock and paid $ 273,000 of participant-related payroll tax liabilities.

We have recorded share-based

compensation expense of $ 7,000 for the three months ended September 30, 2025 and 2024, related to our outstanding unvested performance

On September 30, 2025, there was approximately $ 21,000 of unrecognized compensation cost related to these non-vested performance

awards, which is expected to be expensed over the weighted-average period of nine 9 months.

On July 1, 2024, it was determined

by the Compensation Committee of our Board of Directors that the vesting of performance awards for 40,000 shares of common stock had been

Each participant elected a net issuance to cover their individual withholding taxes and therefore we issued 25,134 shares and

paid $ 273,000 of participant-related payroll tax liabilities.

Non-Qualified Stock Options

2 unchanged sentences

Equity Incentive Plan.

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 the three months ended March 31, 2025 and

2024, we recorded compensation expense of $ 104,000 and $ 168,000 , respectively, related to these stock options.

During the nine months

ended March 31, 2025 and 2024, we recorded compensation expense of $ 312,000 and $ 503,000 , respectively, related to these stock options.

As of March 31, 2025, 26,250 of these stock options have vested and there was approximately $ 1.2 million of unrecognized compensation

cost related to the non-vested non-qualified stock options.

The vesting of these stock options was tied to the completion of service periods that ranged from 18 months to

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

We recorded compensation expense

of $ 104,000 for both the three months ended September 30, 2025 and 2024, 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, 2025, 26,250 of these stock

options have vested, 126,250 have been forfeited either due to termination or our stock price not attaining the pre-determined price,

and 157,500 remain outstanding and unvested and there was approximately $ 1.0 million of unrecognized compensation cost related to the

non-vested stock options.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Shares

4 unchanged sentences

based upon the closing price of our common stock on the date of grant.

During the three and nine months ended March 31, 2025, we recorded

$ 43,000 and $ 62,000 , respectively, of compensation expense related to these restricted shares.

As of March 31, 2025, there was approximately

$ 795,000 of unrecognized compensation cost related to these restricted shares.

During the three months ended September 30, 2025, we recorded $ 43,000

of compensation expense related to these restricted shares.

As of September 30, 2025, there was approximately $ 710,000 of unrecognized

compensation cost related to these restricted shares.

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.

During the three months

ended March 31, 2025 and 2024, we recorded ESPP share-based compensation expense in the amount of $ 5,000 and $ 3,000 , respectively.

the three months ended March 31, 2025 and 2024, 653 and 983 shares were purchased, respectively, and allocated to employees based upon

their contributions at prices of $ 41.11 and $ 18.32 , respectively, per share.

During the nine months ended March 31, 2025 and 2024, we

recorded ESPP share-based compensation expense in the amount of $ 7,000 and $ 9,000 , respectively.

On a cumulative basis, since the inception

of the ESPP, employees have purchased a total of 37,095 shares of our common stock under the ESPP.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MAJOR CUSTOMERS AND SUPPLIERS

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 either the beginning or end of the purchase period, whichever is lower.

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.

In July 2025, the Compensation

Committee of our Board of Directors amended the specific provisions of the ESPP to provide for a more favorable discount calculation for

employees participating in the ESPP, as described above.

During the three months ended

September 30, 2025 and 2024, 961 and 940 shares were purchased, respectively, under the ESPP and allocated to employees based upon their

contributions at discount prices of $ 42.34 and $ 16.22 , respectively, per share.

As of September 30, 2025, on a cumulative basis, since

the inception of the ESPP, employees have purchased a total of 38,056 shares.

During the three months ended September 30, 2025 and 2024,

we recorded stock compensation expense in the amount of $ 7,000 and $ 3,000 , 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, 2025 and 2024, is as follows (in thousands, except percentages):

either of the three-month periods ended September 30,

2025 and 2024 is as follows (in thousands, except percentages):

Schedule of sales by major customers

Three Months Ended March 31,

Percent of Total

Customer concentration:

Nine Months Ended March 31,

Months Ended September 30,

Percent of Total

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, 2025 or June

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

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

with respect to accounts receivable from those customers that comprised more than 10% of our gross accounts receivable at either

September 30, 2025 and June 30, 2025 is as follows (in thousands, except percentages):

Schedule of accounts receivable

1 unchanged sentence

Customer concentration:

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

three and nine months ended March 31, 2025 and 2024, we had three suppliers accounting for 10% or more of total inventory purchases.

owed to these three suppliers at March 31, 2025 or June 30, 2024, is as follows (in thousands, except percentages).

Schedule of suppliers accounting

Total accounts payable

Supplier concentration:

PAYABLE AND FINANCING TRANSACTIONS

Minnesota Bank & Trust

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

our Amended and Restated Credit Agreement with MBT (as subsequently amended, the “Amended Credit Agreement”).

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

4 to the Amended Credit Agreement (the “Fourth

Amendment”) which, (i) provided for a new term loan, Term Loan C, in the amount of $ 5.0 million, (ii) used 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) terminated 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 three months ended September 30, 2025 and 2024, we had two suppliers, respectively, that each accounted for more than 10% of total

inventory purchases.

Amounts owed to the fiscal 2026 significant suppliers at September 30, 2025 totaled $ 439,000 , and $ 497,000 , respectively,

and at June 30, 2025 totaled $ 299,000 and $ 1.0 million, respectively.

NOTES PAYABLE AND FINANCING TRANSACTIONS

UMB Bank (“UMB”)

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

UMB (formerly Minnesota Bank & Trust or MBT).

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”) which amended the Company’s

Amended and Restated Credit Agreement with UMB.

The Fourth Amendment (i) provided for a new term loan, Term Loan C, in the amount of

$ 5.0 million, (ii) used 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) terminated our Supplemental Loan, under which no amounts had been drawn.

Loan origination

fees in the amount of $ 10,000 were paid to UMB in conjunction with Term Loan C.

On December 23, 2024, we entered into Amendment No.

5 to the Amended Credit Agreement (the

“Fifth Amendment”), which extended the maturity date of the Amended Revolving Loan from December 29, 2025, to December 29,

to the Amended Credit Agreement (the “Fifth Amendment”), which extended the maturity date of the Amended Revolving Loan from

December 29, 2025, to December 29, 2026.

On April 8, 2025, we entered into Amendment No.

6 to the Amended Credit Agreement (the “Sixth Amendment”), which among

other things, increased the revolving line of credit under the Amended Revolving Loan from $7,000,000 to $ 11,000,000 .

origination fees in the amount of $ 8,000 were paid to MBT in connection with the Sixth Amendment.

The balance on our

outstanding loans at March 31, 2025 and June 30, 2024 (in thousands) is as follows (exclusive of unamortized loan fees):

6 to the Amended Credit Agreement (the “Sixth

Amendment”), which among other things, increased the revolving line of credit under the Amended Revolving Loan from $7,000,000

to $ 11,000,000 .

Loan origination fees in the amount of $ 8,000 were paid to UMB in connection with the Sixth Amendment.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Schedule of unamortized loan

3 unchanged sentences

Total notes payable

Term 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 Term Note C bears interest at an annual rate equal to the greater

of (a) 5 % , or (b) the SOFR one-month rate plus 2.5 % (the “Adjusted Term SOFR Rate”).

The Amended Revolving Loan bears interest

at an annual rate equal to the greater of (a) 4%, or (b) the Adjusted Term SOFR Rate.

Term Loan A and Term Loan 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 in the principal amount of $ 3.1 million is due (plus any accrued and unpaid interest), and the Amended

Revolving Loan matures on December 29, 2026 .

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Any 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.

Upon the occurrence and during the continuance of an event of default under any of the Loans, the

interest rate of all Loans will be increased by 3 % and MBT may, at its option, declare all of the Loans immediately due and payable in

The Loans are secured by substantially all of the Company’s assets pursuant to a Security Agreement entered into between the

Company and MBT.

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 and by an assignment of Leases and Rents by PDEX Franklin in favor of MBT (collectively,

the “Property Loan Security Agreements”).

The Amended Credit Agreement, Security Agreement, Property Loan Security

Agreements, Term Loan A, Term Loan B, Term Loan C, Property Loan, and Amended Revolving Loan 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 March 31, 2025, but there can be no assurance that we will remain in compliance for the duration

of the term of the Loans.

Loan A and Term Loan 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 Term Loan C bears 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”).

Amended Revolving Loan bears interest at an annual rate equal to the greater of (a) 4 % , or (b) t he Adjusted Term SOFR Rate.

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

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, 2026 .

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.

Upon the occurrence

and during the continuance of an event of default, the interest rate of all Loans will be increased by 3 % and MBT may, at its option,

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

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 UMB.

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

UMB and by an assignment of Leases and Rents by PDEX Franklin in favor of UMB (collectively, the “Property Loan Security Agreements”).

Amended Credit Agreement, Amended Security Agreement, Property Loan 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, 2025, but there can be no assurance that we will remain in compliance for the duration of the term of the 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,

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 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 “Plan”).

During the three

months ended March 31, 2025, we did no t repurchase any shares.

During the nine months ended March 31, 2025, we repurchased 130,148 shares

at an aggregate cost, inclusive of fees under the Plan of $ 3.5 million.

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

90,605 and 96,890 shares, respectively, at an aggregate cost, inclusive of fees under the Plan, of $ 1,723,000 and $ 1,830,000 , respectively.

On a cumulative basis, since implementation of the share repurchase program in 2013, we have repurchased a total of 1,511,497 shares

under the share repurchase program at an aggregate cost of $ 24.2 million.

All repurchases under the 10b5-1 Plans were administered through

an independent broker.

Our operating lease right-of-use

asset and long-term liability are presented separately on our condensed consolidated balance sheet.

The current portion of our operating

lease liability as of March 31, 2025, in the amount of $ 487,000 , is presented within accrued expenses on the condensed consolidated balance

As of March 31, 2025, the

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

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”).

three months ended September 30, 2025, we did no t repurchase any shares.

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.

On a cumulative basis since 2013, we have repurchased

a total of 1,511,497 shares under the share repurchase programs at an aggregate cost, inclusive of fees, of $ 24.2 million.

All repurchases

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

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

operating lease right-of-use asset and long-term liability are presented separately on our condensed consolidated balance sheet.

current portion of our operating lease liability as of September 30, 2025, in the amount of $ 509,000 , is presented within accrued expenses

on the condensed consolidated balance sheet.

of September 30, 2025, our operating lease has a remaining lease term of two years and an imputed interest rate of 5.53 % .

Cash paid for

amounts included in the lease liability was $ 135,000 and $ 130,000 for the three months ended September 30, 2025 and 2024, respectively,

excluding $ 15,000 and $ 41,000 , respectively, paid for common area maintenance charges.

of September 30, 2025, the maturity of our lease liability is as follows (in thousands):

Schedule of maturities of lease liabilities

2 unchanged sentences

Less imputed interest

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2025, the

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

rate of 5.53 % .

Cash paid for our operating lease for the three and nine months ended March 31, 2025, was $ 149,000 and $ 442,000 , respectively.

Cash paid for our operating lease for the three and nine months ended March 31, 2024, was $ 143,000 and $ 425,000 , respectively.

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.

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.

Other than the amendment to the Amended Credit Agreement discussed further in Note 11, there were

no subsequent events that require disclosure.

have evaluated subsequent events through the date of this filing.

Other than the acquisition of Monogram by Zimmer Biomet on October

7, 2025, discussed in Note 4, there were no additional subsequent events that require recognition or 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