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Pro-Dex, Inc.
−Removed: (Company, Pro-Dex, we, our, us) specializes in the design, development and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic and maxocranial facial markets.
+Added: (Company, Pro-Dex, we, our, us) specializes 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.
We also manufacture and sell rotary air motors to a wide range of industries.
−Removed: Through May 2018, our Fineline Molds (Fineline) division, acquired in fiscal 2015, manufactured plastic injection molding for a variety of industries.
−Removed: We sold the assets and business operations of our Fineline division on May 23, 2018.
−Removed: Management reviewed ASU 2014-08 Reporting Discontinued Operations and Disposals of Components of an Entity and concluded that the sale of Fineline does not require treatment as a discontinued operation because it is was not a material part of our operations.
+Added: Our patented adaptive torque-limiting software has been very well received in the craniomaxillofacial (CMF) market and we have continued investment in this area with research and development focused on applying this technology to thoracic surgical applications.
+Added: We have invested significantly since fiscal 2018 on a thoracic driver utilizing adaptive torque-limiting software, and in early fiscal 2019 entered a development contract with an existing significant customer to private-label this driver for their unique specifications.
+Added: We made our first shipment of this new driver, batteries and accessories during the third quarter ended March 31, 2020.
Our principal headquarters are located at 2361 McGaw Avenue, Irvine, California 92614 and our phone number is 949-769-3200.
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Dental and component
+Added: Discounts & Other
Our medical device products utilize proprietary designs developed by us primarily under exclusive development and supply agreements and are manufactured in our Irvine, California facility, as are our rotary air motors.
Our medical device products are sold primarily to original equipment manufacturers and our air motors are sold primarily to a wide range of distributors and end users.
−Removed: In our San Dimas, California facility we manufactured plastic injection molds for a wide variety of industries through May 2018, upon which time we sold the division and terminated our obligations under the lease for the San Dimas facility.
−Removed: The proportion of total sales by facility is as follows:
−Removed: Years Ended June 30,
−Removed: (In thousands)
In fiscal 2020, our top 3 customers accounted for 92% of our sales compared to 84% in fiscal 2019.
−Removed: In fiscal 2019, we had one customer, included in medical device revenue above, that accounted for 63% of sales with our next largest customer accounting for 13% of sales.
−Removed: This compares to fiscal 2018, when we had one customer, included in medical device revenue above, that accounted for 56% of our revenue and the next largest customer accounted for 12% of our revenue.
+Added: In fiscal 2020, we had one customer, included in both medical device and repairs revenue above, that accounted for 65% of sales with our next largest customer accounting for 17% of sales.
+Added: This compares to fiscal 2019, when these same two customers accounted for 63% and 13%, respectively, of our total sales.
In many cases, including our largest customers, disclosure of customer names is prohibited by confidentiality agreements with such entities.
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Simultaneously, we are working to build top-line sales through active proposals of new medical device products with new and existing customers.
−Removed: Our patented adaptive torque-limiting software has been very well received in the craniomaxillofacial (CMF) market and we have continued investment in this area with research and development focused on applying this technology to thoracic surgical applications.
−Removed: We invested significantly during fiscal 2018 on a thoracic driver utilizing adaptive torque-limiting software, and in early fiscal 2019, we entered a development contract with a current significant customer to private-label this driver for their unique specifications.
−Removed: We anticipate sales to this existing customer will increase during fiscal 2020 as we add this product to their existing CMF driver and ancillary products that we currently supply.
+Added: As previously discussed, we invested significantly during fiscal 2018 on a thoracic driver utilizing adaptive torque-limiting software, and in early fiscal 2019, we entered a development contract with an existing significant customer to private-label this driver for their unique specifications.
+Added: Sales to this customer increased during fiscal 2020 by $2.4 million, compared to fiscal 2019.
+Added: Of the total fiscal 2020 sales to this customer of $5.9 million, $3.1 million relates to sales of this thoracic driver and related batteries and accessories.
In April 2017, we invested in Monogram Orthopaedics Inc.
−Removed: (Monogram), a medical device start-up specializing in precision, patient-specific orthopedic implants.
+Added: (Monogram), a medical device start-up specializing in precision, patient-specific orthopedic implants, through an $800,000 convertible note.
In conjunction with making the loan to Monogram, we were granted the exclusive right to develop, engineer, manufacture, and supply certain products on behalf of Monogram.
We impaired our entire $800,000 investment during the fourth quarter of fiscal 2018 due to indications that Monogram had exhausted its cash and had been unable to obtain additional financing to enable continued research to commercialize their technology.
+Added: During the fourth quarter of fiscal 2020, the Monogram note was repaid with interest and we collected a total of $952,000 during fiscal 2020 recorded in other income in our statement of operations contained elsewhere in this report.
+Added: During fiscal 2021, we expect to finalize a development agreement with Monogram to develop a custom, orthopedic shaver.
The majority of the raw materials and components used to manufacture our products are purchased and are available from several sources, including through our own in-house machining capabilities.
−Removed: Portescap, K-V Engineering, and Fischer Connectors are examples of key suppliers.
+Added: Portescap, Fischer Connectors, and Tadiran Batteries are examples of key suppliers.
We have no exclusive arrangements with any of our suppliers, but in several instances only one supplier is used for certain high-value components.
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Our backlog represents firm purchase orders received and acknowledged from our customers and does not include all revenue expected to be generated from existing customer contracts.
−Removed: Our entire backlog at June 30, 2019 is expected to be delivered during fiscal 2020.
+Added: Our entire backlog at June 30, 2020, as well as purchase orders received and yet to be received subsequent to June 30, 2020, is expected to be delivered during fiscal 2021.
We have experienced, and may continue to experience, variability in our new order bookings due to, among other reasons, the launch of new products, the timing of customer orders based on end-user demand, and customer inventory levels.
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In certain instances, we may share research and development costs with our customers by billing for non-recurring engineering services.
−Removed: Revenue recognized for non-recurring engineering services represented 1% of our revenue in both fiscal 2019 and 2018.
+Added: Revenue recognized for non-recurring engineering services represented 2% of our revenue in fiscal 2020 and 1% of our revenue in fiscal 2019.
During recent years, we have entered into certain development and supply contracts, the development portions of which provide for billable non-recurring engineering service fees.
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The revenue earned during fiscal 2020 relating to non-recurring engineering services was not material.
−Removed: During both fiscal years ended June 30, 2019 and 2018, we incurred research and development expenses amounting to $1.9 million, which costs exclude labor and related expenses of approximately $277,000 and $46,000 in fiscal 2019 and 2018, respectively, that were reimbursed by our customers through billings for non-recurring engineering services.
−Removed: At June 30, 2019, we had 97 employees as well as 2 temporary employees all working at our corporate office in Irvine, California.
−Removed: At June 30, 2018, we had 80 employees as well as 1 temporary employee all working at our corporate office in Irvine, California.
+Added: During fiscal years ended June 30, 2020 and 2019, we incurred research and development expenses amounting to $2.3 million and $1.9 million, respectively, which costs exclude labor and related expenses of approximately $315,000 and $277,000 in fiscal 2020 and 2019, respectively, that were reimbursed by our customers through billings for non-recurring engineering services.
+Added: At June 30, 2020, we had 117 employees as well as 3 temporary employees all working at our corporate office in Irvine, California and 2 employees working remotely out of state.
+Added: At June 30, 2019, we had 96 employees as well as 2 temporary employees all working at our corporate office in Irvine, California and one employee working remotely out of state.
None of our employees are a party to any collective bargaining agreements with us.
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Government Regulations
−Removed: The manufacture and distribution of medical and dental devices are subject to state and federal requirements set forth by various agencies, including the FDA, and state medical and dental boards.
+Added: The manufacture and distribution of medical devices are subject to state and federal requirements set forth by various agencies, including the FDA, and state medical boards.
The statutes, regulations, administrative orders, and advisories that affect our businesses are complex and subject to diverse, often conflicting, interpretations.
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The total cost of providing health care services has been and will continue to be subject to review by governmental agencies and legislative bodies in the major world markets, including the United States, which are faced with significant pressure to lower health care costs.
−Removed: The Patient Protection and Affordable Care Act signed into law in March 2010 (the Affordable Care Act) imposes a 2.3% excise tax, currently suspended until December 31, 2019, on sales of certain medical devices, some of which we produce, that we may be unable to recover through price increases to our customers.
+Added: By way of example, the Patient Protection and Affordable Care Act signed into law in March 2010 (the Affordable Care Act) imposed a 2.3% excise tax on the sales of medical devices, which tax was repealed, following a 4-year moratorium, in December 2019.
We believe that our business is conducted in a manner consistent with the Environmental Protection Agency (EPA) and other agency regulations governing disposition of industrial waste materials.
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Patents, Trademarks, and Licensing Agreements
−Removed: We hold patents relating to miniature rotary drive products and torque-limiting screwdrivers.
+Added: We hold US and foreign patents relating to our handheld medical devices and torque-limiting screwdrivers.
Our patents have varying expiration dates.
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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.