Pro-Dex(PDEX) - 2021 Q4 - Annual Report

Financial Performance - Net sales for the fiscal year ended June 30, 2021, increased by $3.2 million, or 9%, to $38.0 million compared to $34.8 million in fiscal 2020[134] - Medical device sales accounted for 85% of total net sales in fiscal 2021, with a 21% increase from $26.6 million in fiscal 2020 to $32.1 million[135] - Sales to the second largest customer increased by $4.2 million to $10.1 million, primarily due to increased sales of the thoracic driver[136] - The company reported a gross profit of $13.6 million, representing 36% of net sales, down from 38% in the previous year[134] - Operating income decreased to $4.5 million, or 12% of net sales, from $7.1 million, or 20% of net sales, in the prior year[134] Research and Development - Research and development costs rose to $4.4 million, or 11% of net sales, compared to $2.3 million, or 7% of net sales, in fiscal 2020[134] - Research and development costs surged by $2.1 million, or 89%, from fiscal 2020 to 2021, totaling $4.38 million[144] - The company recognized an expected loss on product development services of $71,000 in fiscal 2021, compared to $370,000 in fiscal 2020[121] - The proportion of NRE and Prototype services revenue decreased by 61% from $834,000 in fiscal 2020 to $324,000 in fiscal 2021[135] Operating Expenses - Total operating expenses rose to $9.05 million in fiscal 2021, a 49% increase from $6.08 million in fiscal 2020[142] - Cost of sales increased by $2.8 million, or 13%, from fiscal 2020 to 2021, primarily due to a 9% increase in net sales[141] - Repair revenue decreased by approximately $1.4 million, or 22%, to $5.0 million due to reduced repairs of orthopedic handpieces[138] Cash Flow and Financing - Cash used in operating activities during fiscal 2021 was $2.08 million, with a net income of $4.5 million[155] - Cash provided by financing activities totaled $3.1 million in fiscal 2021, including $9.1 million in loans from Minnesota Bank and Trust[159] - The company repurchased 216,171 shares at a cost of $5.5 million during fiscal 2021, compared to 231,274 shares for $3.4 million in fiscal 2020[165] Assets and Liabilities - The company had a backlog of $9.7 million at June 30, 2021, up from $7.0 million at June 30, 2020[139] - As of June 30, 2021, working capital was $19.1 million, indicating sufficient funds for operations for at least the next 12 months[161] - Inventory and warranty charges increased by $372,000 in fiscal 2021 compared to fiscal 2020, reflecting higher volume sales and product development activity[141] - Adoption of ASU 2016-02 (Topic 842) resulted in an increase of approximately $3.3 million in long-term assets and total liabilities as of July 1, 2019[166] Tax and Investment - The effective tax rate decreased from 23% in fiscal 2020 to 21% in fiscal 2021 due to increased research and development credits[153] - The company generated $4.6 million from the sale of marketable equity securities in fiscal 2021, recording a gain of $1.3 million[151] - No new accounting pronouncements are expected to have a material impact on the consolidated financial statements during the fiscal year[167] - The company has established an Investment Committee responsible for implementing investment policies[167]