COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

8. COMMITMENTS AND CONTINGENCIES

Leases

We lease our office, production, and warehouse facility in Irvine, California (our “corporate office”) under an agreement that expires in September 2027. Our corporate office lease requires us to pay insurance, taxes, and other expenses related to the leased space.

Rent expense in fiscal 2021 and 2020 was $558,000 and $561,000, respectively.

Compensation Arrangements

Retirement Savings 401(k) Plan

The Pro-Dex, Inc. Retirement Savings 401(k) Plan (the “401(k) Plan”) is a defined contribution plan we administer that covers substantially all our employees and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. Employees are eligible to participate in the 401(k) Plan when they have attained 19 years of age and then can enter into the 401(k) Plan on the first day of each calendar quarter. Participants are eligible to receive non-discretionary matching contributions by the Company equal to 25% of their contributions up to 5% of eligible compensation. For the fiscal years ended June 30, 2021 and 2020, we recognized compensation expense amounting to $81,000 and $67,000, respectively, in connection with the 401(k) Plan. During our fiscal years ended June 30, 2021 and 2020, we used approximately $17,000 and $7,000, respectively, of forfeited match contributions to reduce our match expense.

Legal Matters

On August 24, 2021, one of our customers, through its counsel, sent notice that it is seeking indemnification from Pro-Dex regarding a pending complaint filed by a third-party claiming patent infringement on one of the products which we manufacture for this customer. As of the date of this filing, we have not accrued any losses relating to this matter nor have we completed our assessment of the claims made against our customer.

In addition to the above matter, we may be involved 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.