What changed in this filing

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Item 1. Financial Statements

2026-01-29 compared with 2025-10-30 · 418 added, 324 removed, 261 unchanged (74% of the section changed)

FINANCIAL STATEMENTS

PRO-DEX, INC.

4 unchanged sentences

Cash and cash equivalents

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

Accounts receivable, net of allowance for expected credit losses of $ 19 and $ 0 at December 31, 2025 and at June 30, 2025, respectively

Deferred costs

Income taxes receivable

Income tax receivable

Prepaid expenses and other current assets

4 unchanged sentences

Intangibles, net

Deferred income taxes

Deferred income taxes, net

LIABILITIES AND SHAREHOLDERS’ EQUITY

14 unchanged sentences

50,000,000 shares authorized;

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

3,209,732 and 3,261,043 shares issued and outstanding at December 31, 2025 and June 30, 2025, respectively

Retained earnings

7 unchanged sentences

(In thousands, except share and per share amounts)

Months Ended September 30,

Three Months Ended

Six Months Ended

Cost of sales

Operating expenses:

Selling expenses

General and administrative expenses

Selling, general and administrative expenses

Research and development costs

1 unchanged sentence

Operating income

Other income (expense):

Interest and dividend income

Unrealized gain on investments

Other income (expense), net

Interest expense

Total other income

Gain (loss) on marketable equity investments, net

Interest and other income

Total other income (expense)

Income before income taxes

11 unchanged sentences

(In thousands)

September 30,

Common stock:

2 unchanged sentences

Share repurchases

Shares withheld from common stock issued to employees to pay employee

payroll taxes

Shares withheld from common stock issued to employees to pay employee payroll taxes

ESPP shares issued

Reclassification of excess share repurchases (1)

Balance, end of period

1 unchanged sentence

Balance, beginning of period

Balance, at end of period

Shareholder distribution

Balance, end of period

Balance, beginning of period

Net income (loss)

Total shareholders’ equity

(1) During the three months ended December 31, 2025, our stock

repurchases exceeded the value of cumulative common stock, and the excess has been reflected as a shareholder distribution, reducing

our consolidated retained earnings.

The accompanying notes are an integral part

4 unchanged sentences

(In thousands)

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation and amortization

Share-based compensation

Unrealized gain on marketable equity investments

Gain on marketable equity investments

Non-cash lease recovery

Amortization of loan fees

Deferred income taxes

Amortization of loan fees, net

Credit loss expense

Changes in operating assets and liabilities:

Accounts receivable and other receivables

Accounts receivable

Deferred costs

2 unchanged sentences

Deferred revenue

Net cash provided by operating activities

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of investments

Purchases of equipment and improvements

Net cash used in investing activities

Net cash provided by (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

Net cash used in financing activities

Net increase in cash and cash equivalents

Proceeds from ESPP contributions

Payment of employee payroll taxes on net issuance of common stock

Proceeds from notes payable and revolving loan

Principal payments on notes payable and revolving loan

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

4 unchanged sentences

AND SUBSIDIARY

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS - CONTINUED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three Months Ended

September 30,

Supplemental disclosures of cash flow information:

Supplemental disclosures

of cash flow information:

Cash paid during the period for interest

Cash paid during the period for income taxes:

Cash paid during the period for income taxes by jurisdiction:

Federal income tax payments

California income tax payments

Indiana income tax payments

Florida 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.

PRO-DEX, INC.

AND SUBSIDIARY

5 unchanged sentences

the United States (“U.S.

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

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

of Regulation S-K.

Accordingly, they do not include all of the information and footnotes required by U.S.

GAAP for complete financial statements.

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 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.

GAAP for complete financial

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, 2025.

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, 2025.

Recently Adopted Accounting Standards

September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-07, Derivatives

and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606), which clarifies the application of derivative accounting

to certain contracts and updates the guidance for share-based noncash consideration received from a customer in exchange for goods and

Specifically, this ASU introduces a scope exception for contracts that are not exchange-traded and whose underlying is tied

to operations or activities specific to one of the parties to the contract.

It also clarifies the guidance for share-based consideration

from a customer.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within those annual reporting

periods, with early adoption permitted and the option to apply on a prospective or modified retrospective basis.

The Company early

adopted this ASU on a prospective basis as of July 1, 2025.

The Company expects this ASU to reduce the cost and complexity

associated with analyzing and applying the derivative guidance to contracts with underlyings based on operations or activities specific

to one of the parties of the contract, such as the contingent consideration received in exchange for the Company’s shares of common

stock in Monogram Technologies, Inc.

(“Monogram”) described more fully in Note 4.

Recently Issued and Not Yet Adopted Accounting Pronouncements

November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses (“DISE”).

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.

December 2025, the FASB issued ASU 2025-11 Interim Reporting (Topic270):

Narrow-scope Improvements, which clarifies the guidance in Topic

270 to improve the consistency of interim financial reporting.

The ASU provides a comprehensive list of required interim disclosures

and introduces a disclosure requiring entities to disclose events since the end of the last annual reporting period that have a material

impact on the entity.

ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those

fiscal years, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2025-11.

other new accounting pronouncements issued or effective during the fiscal year have, or are expected to have, a material impact on our

condensed consolidated financial statements.

Segment Reporting

of December 31, 2025, we have identified one reportable segment, as our chief operating decision maker (“CODM”), the Company’s

Chief Executive Officer, allocates resources, assesses performance, and manages our business as one segment.

As our operations are managed

at the consolidated level, there are no differences between the measurement of the reportable segment’s profit or loss and our

condensed consolidated statement of operations.

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications

Company’s selling expenses have been reclassified and combined with its general and administrative expenses in its consolidated

statement of operations to conform to the current period presentation.

Historically the Company has had only one employee in its sales

Currently we have no employees in our sales department but in advance of the expanded disclosures required by DISE we are

combining selling, general and administrative expenses to avoid potential disclosure of confidential compensation of one employee.

DESCRIPTION OF BUSINESS

3 unchanged sentences

We have patented adaptive torque-limiting software and proprietary sealing

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

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

Additionally, we provide engineering, quality and regulatory

9 unchanged sentences

This subsidiary has no separate operations.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

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 six months ended December

31, 2025, we recorded $ 0 and $ 80,000 , respectively, of revenue that had been included in deferred revenue in the prior year.

three and six months ended December 31, 2024, we recorded $ 0 and $ 14,000 , respectively, of revenue that had been included in deferred

revenue in the prior year.

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

the normal course of business.

As of December 31, 2025 and 2024, we had deferred revenue of $ 163,000 and $ 0 , respectively.

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Schedule of contract assets and liability

Three Months Ended

September 30,

of and for the

Contract assets beginning balance

1 unchanged sentence

Amounts reclassified to cost of sales

Amounts allocated to discounts for standalone selling price

allocated to discounts for standalone selling price

Contract assets ending balance

Three Months Ended

September 30,

of and for the

Contract liabilities beginning balance

2 unchanged sentences

Contract liabilities ending balance

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUE MEASUREMENTS

25 unchanged sentences

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

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

At December 31, 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 September 30, 2025 or June

Level 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 December 31, 2025 or June 30, 2025.

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

following tables summarize the fair value measurements within the fair value hierarchy of our financial instruments (in thousands):

Schedule of fair value, assets and liabilities

Value Measurement at September 30, 2025

Value Measurement at December 31, 2025

Financial Assets:

2 unchanged sentences

Marketable equity securities – long-term

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Value Measurement at June 30, 2025

3 unchanged sentences

Marketable equity securities – long-term

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.

at December 31, 2025 and June 30, 2025 had an aggregate cost basis of $ 1.4 million and $ 3.5 million, respectively.

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 one year.

31, 2025, the investments included unrealized losses of $ 402,000 .

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 December 31, 2025 and June 30, 2025, $ 864,000 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.

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

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 7, 2025, Zimmer Biomet Holdings, Inc.

(“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

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 Messrs.

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.

Accordingly, in our second quarter of fiscal 2026, we recorded 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 to us if Monogram

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

The CVR payments, if earned,

will 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.

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMPOSITION OF CERTAIN FINANCIAL STATEMENT

will record an additional gain upon receipt of CVR payments, if made.

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.

Those rights were transferred in connection with Zimmer Biomet’s acquisition of Monogram 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.

We invest surplus cash from time to time through our

Investment Committee, which is comprised of one management director, Mr.

Van Kirk, and two non-management directors, Mr.

Swenson, who chairs the committee.

Cabillot and Swenson 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 Messrs.

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.

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

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

8 unchanged sentences

Patent-related costs

Less accumulated amortization

Intangible assets, net

accumulated amortization

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.

These patent-related costs are expected to be fully amortized during fiscal 2026.

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 intangible assets are expected to be fully expensed this fiscal year.

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

in accrued liabilities in the accompanying condensed consolidated balance sheets.

As of December 31, 2025 and June 30, 2025, the warranty

reserve amounted to $ 370,000 and $ 357,000 , respectively.

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

consolidated statements of operations.

consolidated statements of income.

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):

Information regarding

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

Schedule of accrual warranty costs

As of and for the

Three Months Ended

September 30,

As of and for the

Six Months Ended

Beginning balance

1 unchanged sentence

Changes in estimates of prior period warranty accruals

Warranty amortization/utilization

Warranty amortization

Ending balance

NET INCOME PER SHARE

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

We calculate basic net income

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

Diluted income

per share reflects the effects of potentially dilutive securities, which consist of outstanding stock options, restricted shares and performance

The following table presents

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

In the tables below, net

income amounts represent the numerator, and weighted average shares outstanding amounts represent the denominator (in thousands, except

per share amounts):

Schedule of net income per share

Months Ended September 30,

Weighted average shares outstanding

Basic earnings per share

Basic income per share

Weighted average shares outstanding

1 unchanged sentence

Weighted average shares used in calculation of diluted earnings per share

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.

Diluted income per share

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

management judgment is required in determining our provision for income taxes and the recoverability of our deferred tax assets.

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.

Our deferred tax asset is

net of a valuation allowance in the gross amount of $ 90,000 as of December 31, 2025 and June 30, 2025.

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.

The effective tax rate for the three months

ended December 31, 2025, and 2024 was 25 % and 21 % , respectively.

The effective tax rate for the six months ended December 31, 2025, and

2024 was 25 % and 24 % , respectively.

The effective tax rate in fiscal 2026 is slightly higher than the prior fiscal year due to a prior

year windfall related to vesting of employee performance awards that did not recur in fiscal 2026.

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.

federal income tax, as well as various state jurisdictions.

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, 2022 and later.

because of our prior net operating losses and research credit carryovers, our tax years from June 30, 2020 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.

Additionally, the

One Big Beautiful Bill Act of 2025, or the 2025 Act, enacted on July 4, 2025, makes changes to U.S.

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.

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

As of December 31, 2025, performance awards for 200,000 shares of common stock, non-qualified stock options for 372,000 shares

of common stock, and 33,500 restricted shares of common stock have been granted under the 2016 Equity Incentive Plan.

Performance Awards

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

In December 2020, the Compensation

Committee of our Board of Directors granted 310,000 non-qualified stock options to our directors and certain employees under the 2016

Equity Incentive Plan.

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.

both the three months ended December 31, 2025, and 2024, we recorded share-based compensation expense of $ 7,000 related to outstanding

performance awards.

During both the six months ended December 31, 2025, and 2024, we recorded share-based compensation expense of $ 14,000

related to outstanding performance awards.

On December 31, 2025, there was approximately $ 14,000 of unrecognized compensation cost related

to non-vested performance awards, which is expected to be expensed over a weighted-average period of six 6 months.

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.

Each 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.

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Non-Qualified Stock Options

December 2020, the Compensation Committee granted non-qualified stock options for 310,000 shares of common stock to our directors and

certain employees under the 2016 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

The weighted average fair value of the stock option awards granted in fiscal 2021 was $ 16.72 , calculated using a Monte Carlo

During both the three months ended December 31, 2025 and 2024, we recorded compensation expense of $ 104,000 related to these

During both the six months ended December 31, 2025 and 2024, we recorded compensation expense of $ 208,000 related to these options.

As of December 31, 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 $ 937,000 of unrecognized

compensation cost related to the non-vested stock options.

Restricted Shares

November 2024, the Compensation Committee awarded 18,000 restricted shares of common stock to our directors and certain employees under

the 2016 Equity Incentive Plan.

The shares vest ratably over five years from the date of grant.

The fair value of the restricted shares

on the date of grant was $ 857,000 , based upon the closing price of our common stock on the date of grant.

During the second quarter of

fiscal 2026, 3,600 shares were vested and 872 shares were forfeited by employees to pay their individual withholding taxes and therefore

we issued 2,728 shares of common stock and paid $ 27,000 of participant-related payroll tax liabilities.

In November 2025, the Compensation

3 unchanged sentences

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

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.

the three months ended December 31, 2025 and 2024, we recorded compensation expense of $ 53,000 and $ 19,000 , respectively, related to

these restricted shares.

During the six months ended December 31, 2025 and 2024, we recorded compensation expense of $ 96,000 and $ 19,000 ,

respectively, related to these restricted shares.

As of December 31, 2025, there was approximately $ 1.1 million 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”).

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 periods ended September 30,

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

September 2014, our Board approved the establishment of an Employee Stock Purchase Plan (the “ESPP”) and reserved 704,715

shares of our common stock for issuance pursuant to 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 the end of the purchase period, whichever is lower.

The ESPP was approved by our shareholders at our

2014 Annual Meeting.

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.

the three months ended December 31, 2025 and 2024, we did not record any share-based compensation expense relating to the ESPP, due to

the fact that no six-month offering period ended during either quarter.

During the six months ended December 31, 2025 and 2024, 961 and

940 shares of our common stock were purchased under the ESPP, respectively, and allocated to employees based upon their contributions

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

On a cumulative basis, since the inception of the ESPP, employees have purchased

a total of 38,056 shares of our common stock.

During the six months ended December 31, 2025 and 2024, we recorded share-based compensation

expense in the amount of $ 7,000 and $ 3,000 , respectively, relating to the ESPP.

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MAJOR CUSTOMERS AND SUPPLIERS

Information with respect to customers that accounted for sales in excess

of 10% of our total sales in either of the three-month or the six-month periods ended December 31, 2025 and 2024, is as follows (in thousands,

except percentages):

Schedule of sales by major customers

Months Ended September 30,

Months Ended December 31,

Customer concentration:

Months Ended December 31,

Customer concentration:

Information with respect to

accounts receivable from those customers that comprised more than 10% of our gross accounts receivable at either December 31, 2025 or

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

Schedule of gross accounts receivable

Total gross accounts receivable

Customer concentration:

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three and six months

ended December 31, 2025 and 2024, we had three suppliers that accounted for 10% or more of total inventory purchases.

with respect to suppliers that accounted for in

excess of 10% of our inventory purchases in either of the three-month

or the six-month periods ended December 31, 2025 and 2024, is as follows (in thousands, except percentages):

Schedule of inventory purchases

Months Ended December 31,

Percent of Total

Total revenue

Customer concentration:

Total Inventory purchases

Supplier concentration:

Months Ended December 31,

Percent of Total

Total inventory purchases

Supplier concentration:

Information with respect

to accounts payable due to those suppliers that comprised more than 10% of our inventory purchases at either December 31, 2025 or June

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

Schedule of accounts payable

December 31, 2025

June 30, 2025

Total accounts payable

Supplier concentration:

PRO-DEX, INC.

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

Total gross accounts receivable

Customer concentration:

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.

NOTES PAYABLE AND

FINANCING TRANSACTIONS

UMB BANK, N.A.

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.

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.

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, 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 .

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):

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 UMB in connection with the Sixth Amendment.

The balance on

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

Schedule of unamortized loan

4 unchanged sentences

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.

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) the 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

4 unchanged sentences

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,

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

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

1 unchanged sentence

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”).

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

1 unchanged sentence

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

We believe that we are in compliance with all of our debt covenants as of December

31, 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 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”).

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.

PRO-DEX, INC.

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

Share Repurchase Program

In 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 “Plan”).

During both the three and six

months ended December 31, 2025, we repurchased 55,000 shares at an aggregate cost, inclusive of fees under the Plan, of $ 2.2 million.

During the three and six months ended December 31, 2024, we repurchased 38,172 and 130,148 shares, respectively, at an aggregate cost,

inclusive of fees under the Plan, of $ 1.2 million and $ 3.5 million, respectively.

On a cumulative basis, since implementation of the share

repurchase program in 2013, we have repurchased a total of 1,566,497 shares under the share repurchase program at an aggregate cost, inclusive

of fees, of $ 26.4 million.

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

As of December 31, 2025, our

cumulative stock repurchases have exceeded our recorded value of common stock, and the excess has been reflected as a shareholder distribution,

reducing our consolidated retained earnings.

Our operating lease right-of-use

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

The current portion of our operating

lease liability as of December 31, 2025, in the amount of $ 520,000 , is presented within accrued liabilities on the condensed consolidated

balance sheets.

As of December 31, 2025, our

operating lease has a remaining lease term of one year and nine months and an imputed interest rate of 5.53 % .

Cash paid for base rent

amounts included in the lease liability for the three and six months ended December 31, 2025 totaled $ 139,000 and $ 273,000 , respectively,

and for the three and six months ended December 31, 2024 totaled $ 135,000 and $ 265,000 , respectively.

As of December 31, 2025, the

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

Operating Lease

1 unchanged sentence

Less imputed interest:

PRO-DEX, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

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.

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.

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

SUBSEQUENT EVENTS

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.

We have evaluated subsequent

events through the date of this report.

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