EX-99.1 2 ex99-1.htm EXHIBIT 99.1

Exhibit 99.1
 
(PRO-DEX LOGO)
 
Contact:  Richard L. Van Kirk,  
Chief Executive Officer  
(949) 769-3200  
       
For Immediate Release
 
PRO-DEX, INC. ANNOUNCES FISCAL 2015 THIRD QUARTER
AND NINE-MONTH RESULTS
 
IRVINE, CA, May 14, 2015 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2015 third quarter ended March 31, 2015. The Company also filed its Quarterly Report on Form 10-Q for the third quarter of fiscal year 2015 with the Securities and Exchange Commission today.
 
Quarter Ended March 31, 2015
 
Net sales for the three months ended March 31, 2015 increased $1.5 million, or 63%, to $3.9 million from $2.4 million for the three months ended March 31, 2014, due primarily to increases in medical device revenues. Gross profit for the three months ended March 31, 2015 increased $505,000, or 94%, to $1 million from $540,000 for the same period in 2014.  Contributing to this increase were the increase in sales volume, described above, as well as over-absorbed fixed manufacturing costs due to higher manufacturing capacity in the current year versus the prior year.
 
Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended March 31, 2015 increased 47% to $1.4 million from $978,000 million in the prior year’s corresponding quarter, reflecting primarily our investment in our newly launched engineering services division, higher legal and professional fees related to our business acquisitions and investments, employee matters and compliance costs as well as increased research and development costs as we prepare to launch our in-house battery production.
 
Loss from continuing operations for the quarter ended March 31, 2015 decreased by $266,000 to $92,000, compared to a loss from continuing operations of $358,000 in the corresponding quarter in 2014.  Net loss for the quarter ended March 31, 2015 was $76,000, or $0.02 per share, compared to a net loss of $392,000, or $0.12 per share, for the corresponding quarter in 2014.
 
Nine Months Ended March 31, 2015
 
Net sales for the nine months ended March 31, 2015 increased $1.7 million, or 23%, to $9.3 million from $7.6 million for the nine months ended March 31, 2014, due primarily to increases in medical device revenues.
 
Gross profit for the nine months ended March 31, 2015 increased $534,000, or 26%, to $2.6 million compared to $2.0 million for the same period in 2014.
 
Operating expenses (which include selling, general and administrative, and research and development expenses) for the nine months ended March 31, 2015 increased 25% to $3.5 million from $2.8 million in the prior year’s corresponding period, reflecting primarily the effects of the Company’s investment in our newly launched engineering services division as well as research and development costs incurred to launch in-house battery manufacturing and increases in legal expenses associated with acquisitions and other non-routine transactions.
 
 
 

 

 
Loss from continuing operations for the nine months ended March 31, 2015 was $475,000, compared to a loss from continuing operations of $679,000 for the corresponding period in 2014.  Net loss for the nine months ended March 31, 2015 was $438,000, or $0.10 per share, compared to a net loss of $314,000, or $0.15 per share, for the corresponding period in 2014.
 
Recent Developments
 
On May 8, 2015 we received a production order from our largest customer for additional products scheduled to ship in fiscal 2016 in the amount of approximately $0.5 million and on May 11, 2015 we executed a development agreement with another customer to design and develop a powered surgical device valued at approximately $0.5 million.
 
About Pro-Dex, Inc.:
 
Pro-Dex, Inc., with operations in California, Michigan and Oregon, specializes in the design, development and manufacture of powered rotary drive surgical and dental instruments used primarily in the orthopedic, spine, maxocranial facial and dental markets.  Its OMS division designs and manufactures embedded motion control systems serving the medical, factory automation, semi-conductor and scientific research markets. Its Fineline Molds division manufactures plastic injection molding for a variety of industries. Pro-Dex’s products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech manufacturing operations around the world.
 
Pro-Dex also provides quality and regulatory consulting services, as well as engineering consulting and placement services through its Engineering Services Division.  For more information, visit the Company’s website at www.pro-dex.com.
 
Statements herein concerning the Company’s plans, growth and strategies may include ‘forward-looking statements’ within the context of the federal securities laws. Statements regarding the Company’s future events, developments and future performance, as well as management’s expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. The Company’s actual results may differ materially from those suggested as a result of various factors. Interested parties should refer to the disclosure concerning the operational and business concerns of the Company set forth in the Company’s filings with the Securities and Exchange Commission.
 
 (tables follow)
 
 
 

 

 
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
                 
   
March 31,
2015
    
June 30,
2014
  
ASSETS
            
Current Assets:
            
Cash and cash equivalents
   $ 1,475     $ 3,188  
Accounts receivable, net of allowance for doubtful accounts of $30 and $29, respectively
     2,099       1,776  
Unbilled receivables
     1,398       1,073  
Other current receivables
     20       31  
Inventory
     3,444       2,600  
Prepaid expenses
     184       110  
Notes receivable
     1,236       —  
Deferred income taxes
     139       115  
Total current assets
     9,995       8,893  
Investments
     —       1,058  
Equipment and leasehold improvements, net
     1,604       1,575  
    Goodwill
     353       —  
Intangibles
     577       105  
Other assets
     86       77  
Total assets
   $ 12,615     $ 11,708  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current Liabilities:
                
Accounts payable
   $ 1,534     $ 744  
Accrued expenses
     1,686       1,090  
Deferred revenue
     530       232  
Income taxes payable
     —       53  
Note payable
     24       —  
Capital lease obligations
     9       8  
Total current liabilities
     3,783       2,127  
Deferred income taxes
     144       115  
Deferred rent
     210       243  
Note payable, net of current portion
     76       —  
Capital lease obligations, net of current portion
     —       7  
Total non-current liabilities
     430       365  
Total liabilities
     4,213       2,492  
                 
Shareholders’ equity:
                
Common shares; no par value; 50,000,000 shares authorized; 4,139,579 and 4,211,019 shares issued and outstanding at March 31, 2015 and June 30, 2014, respectively
     18,408       18,582  
Accumulated other comprehensive income
     —       202  
Accumulated deficit
     (10,006 )     (9,568 )
Total shareholders’ equity
     8,402       9,216  
Total liabilities and shareholders’ equity
   $ 12,615     $ 11,708  
 
 
 

 


PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per share amounts)
                                 
   
Three Months Ended
March 31,
    
Nine Months Ended
March 31,
  
   
2015
    
2014
    
2015
    
2014
  
                         
Net sales
   $ 3,922     $ 2,404     $ 9,310     $ 7,599  
Cost of sales
     2,877       1,864       6,741       5,564  
Gross profit
     1,045       540       2,569       2,035  
                                 
Operating expenses:
Selling expenses
     363       177       691       408  
General and administrative expenses
     592       420       1,542       1,304  
Research and development costs
     480       381       1,309       1,121  
Total operating expenses
     1,435       978       3,542       2,833  
                                 
Operating loss
     (390 )     (438 )     (973 )     (798 )
Interest expense
     (1 )     (2 )     (4 )     (7 )
Interest income
     1       1       6       11  
Gain from disposal of equipment
     1       —       1       —  
Realized gain on sale of investments
     395       27       455       27  
                                 
Income (loss) from continuing operations before income taxes
     6       (412 )     (515 )     (767 )
Income tax (expense) benefit
     (98 )     54       40       88  
                                 
Loss from continuing operations
     (92 )     (358 )     (475 )     (679 )
Income (loss) from discontinued operations, net of income taxes
     16       (27 )     37       167  
Net loss
   $ (76 )   $ (385 )   $ (438 )   $ (512 )
Other comprehensive income, net of tax:                                 
Unrealized gain from marketable equity investments
     —       20       —       225  
Less: Reclassification of realized gains included in net loss
     —       (27 )     —       (27 )
Comprehensive loss
   $ (76 )   $ (392 )   $ (438 )   $ (314 )
                                 
Basic and diluted net loss per share:
                                
Loss from continuing operations
   $ (0.02 )   $ (0.11 )   $ (0.11 )   $ (0.20 )
Income (loss) from discontinued operations
     —       (0.01 )     0.01       0.05  
Net loss
   $ (0.02 )   $ (0.12 )   $ (0.10 )   $ (0.15 )
                                 
Weighted average common shares outstanding:
                                
Basic
     4,158       3,342       4,179       3,344  
Diluted
     4,158       3,342       4,179       3,344  
Common shares outstanding
     4,140       3,344       4,140       3,344  
 
 
 

 

 
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
                 
   
Nine Months Ended
March 31,
  
   
2015
    
2014
  
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net loss
   $ (438 )   $ (512 )
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation and amortization
     398       398  
Gain on sale of investments
     (455 )     (27 )
Gain on sale of real estate held for sale
     —       (167 )
Loss (gain) on retirement of equipment
     (1 )     6  
Share-based compensation
     14       42  
Deferred income tax benefit
     5       —  
Allowance for doubtful accounts receivable
     1       18  
Changes in operating assets and liabilities:
                
Accounts receivable and other current receivables
     (313 )     189  
Unbilled receivables
     (324 )     (754 )
Inventory
     (839 )     650  
Prepaid expenses and other assets
     (83 )     (46 )
Accounts payable, accrued expenses and deferred rent
     1,352       (272 )
Deferred revenue
     298       136  
Income taxes payable
     (53 )     (4 )
Net cash used in operating activities
     (438 )     (343 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of investments
     (12 )     (327 )
Purchases of equipment and leasehold improvements
     (242 )     (25 )
Business acquisitions
     (865 )     —  
Purchase of notes receivable
     (1,236 )     —  
Proceeds from sale of real estate held for sale
     —       900  
Proceeds from sale of equipment
     1       4  
Proceeds from sale of investments
     1,324       88  
Increase in intangibles
     (50 )     (53 )
Net cash provided by (used in) investing activities
     (1,080 )     587  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Purchase of common stock
     (154 )     —  
Proceeds from exercise of stock options
     —       6  
Repurchase of stock options
     (32 )     —  
Payments made for common stock rights offering
     (3 )     —  
Principal payments on capital lease
     (6 )     (4 )
Net cash provided by (used in) financing activities
     (195 )     2  
                 
Net increase (decrease) in cash and cash equivalents
     (1,713 )     246  
Cash and cash equivalents, beginning of period
     3,188       1,680  
Cash and cash equivalents, end of period
   $ 1,475     $ 1,926