Full Press Release Details
| Contact: | Mark Murphy, Chief Executive Officer |
| (949) 769-3200 |
PRO-DEX, INC. ANNOUNCES RESULTS OF ANNUAL
SHAREHOLDER MEETING, AN UPDATE REGARDING MAJOR CUSTOMER'S PRODUCT DEVELOPMENT
PLANS, AND RECEIPT OF $1.5 MILLION AND $3.0 MILLION PURCHASE
PRO-DEX, INC. (NasdaqCM: PDEX)
results of its 2009 Annual Shareholders Meeting held on December 4, 2009.
At the Meeting, the Company's shareholders (i) elected George Isaac,
Michael Berthelot, William Healey, David Holder and Mark Murphy as directors;
(ii) approved the authority for the Board of Directors to effect a reverse stock
split if it should elect to do so at any time between January 1, 2010 and
December 31, 2010; and (iii) ratified the appointment of Moss Adams, LLP as the
Company's independent auditors for the fiscal year ending June 30,
Company also announced today that one of its largest customers (the "Customer")
is in the process of developing, and plans to eventually manufacture its own
surgical hand pieces which are functionally comparable to the two products
currently provided by the Company. Aggregate sales of these two
products to this Customer during the 12-month period ending November 30, 2009
were $7.5 million, representing 35% of the Company's revenues during the same
period. Pro-Dex has been the exclusive manufacturer of these products
since they were developed. The Customer's 5-year commitment to
exclusivity with the Company will conclude on January 6, 2010.
Customer has not provided firm transition dates or volumes due to the inherent
uncertainty in the design, testing, and qualification process. The
Customer advised that it expects to maintain its current level of purchases at
least through August of 2010 for one product (which represents 45% of its total
purchases from the Company during the 12-month period ended November 30, 2009),
and at least through December of 2010 for the second product (which represents
43% of its total purchases from the Company during the 12-month period ended
December 4, 2009, the Customer placed a $1.5 million purchase order with the
Company for delivery of the second product at historical monthly quantities
through September, 2010. The Customer also stated that it expects to
continue to buy some volume of these products from the Company beyond those
dates as its initial success is not assured, certain markets may not adopt the
Customer's design, and regulatory registration in
a lengthy process. Further,
the Customer indicated that it will continue to rely on the Company for the
repair of Company manufactured units in the field. Such repairs
represented 12% (approximately
its total purchases for the 12-month period ended November 30,
design and production of these products is quite technologically challenging, as
such devices are exposed to extremely harsh surgical and sterilization
conditions. A different large
customer of the Company pursued a similar course of action several years ago and
ultimately canceled its in-sourcing project,
its purchases from Pro-Dex. The
pursuing this course has indicated a high
commitment to proceeding cautiously. Accordingly, the actual
occurrence of, and certainly the specific timing of any transition is very
difficult to estimate.
Company intends to find additional business and reduce its operating costs as
necessary to minimize the impact of a potential revenue reduction. In
the event that the Customer's future purchases are reduced beyond the additional
business won and the cost savings realized, the Company is likely to experience
a material and adverse impact on its business.
Company has no commitment from the Customer that it will update the Company with
the status of its product development efforts and the Customer has no obligation
to do so. Accordingly, the Company is unable to know or predict the
status of the Customer's initiative on an ongoing basis. The name of
the Customer is protected by a confidentiality agreement.
the Company reported that, on December 10, 2009, it received a $3.0 million
purchase order from a different existing customer for a single product that the
Company released last quarter. The order is for product to be
delivered between May of 2010 (when existing open orders are fulfilled) and
September of 2011. The previously-mentioned $1.5 million order and
this purchase order together increase the Company's backlog to $12.7 million as
of December 10, 2009.
******************************
operations in Irvine, California, Beaverton, Oregon and Carson City, Nevada,
specializes in bringing speed to market in the development and
manufacture of technology-based solutions that incorporate miniature rotary
drive systems, embedded motion control and fractional horsepower DC motors,
serving the medical, dental, semi-conductor, scientific research and aerospace
markets. Pro-Dex's products are found in hospitals, dental offices, medical
engineering labs, commercial and military aircraft, scientific research
facilities and high tech manufacturing operations around the
information, visit the Company's website at www.pro-dex.com.
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