Business Context and Reporting Period
Company: PRO DEX INC (PDEX)
Filing Type: Form 8-K (Current Report)
Date of Report: February 9, 2026
Principal Event: Completion of the acquisition of Advanced Precision Machining LLC ("APM") and entry into amended credit agreements to fund the transaction.
Key Financial Metrics and Transaction Details
Acquisition of Advanced Precision Machining (APM)
- Total Purchase Price: Approximately $8,650,000.
- Cash Consideration: $6,650,000 paid at closing.
- Debt Consideration: $2,000,000 via a 63-month subordinated promissory note to the seller.
- Note Terms: 8% simple interest per annum; 21 equal quarterly payments of $117,569.54 (principal and interest).
- Insurance: Company to obtain $2,000,000 representations and warranties insurance policy.
Debt and Liquidity (UMB Bank Agreements)
- New Financing (Term Note D): $6,650,000 principal issued to fund the cash portion of the acquisition.
- Term Note D Terms: Matures February 1, 2031; Interest rate is the greater of 4.5% or SOFR + 2.5%.
- Revolving Credit Facility: $11,000,000 capacity; maturity extended from December 29, 2026, to December 29, 2027. No amounts currently drawn.
- Existing Term Notes:
- Term Note A: $7,525,000 (Matures Nov 1, 2027; 3.84% fixed).
- Term Note B: $1,000,000 (Matures Nov 1, 2027; 3.84% fixed).
- Term Note C: $5,000,000 (Matures Aug 1, 2029; Greater of 5% or SOFR + 2.5%).
- Transaction Fees: $16,625 origination fee for Term Note D and $15,000 maturity extension fee for Revolving Note paid at closing.
Material Changes Versus Prior Period
This filing reports a material change in the Company's capital structure and asset base effective February 9, 2026:
- Asset Acquisition: APM is now a wholly-owned subsidiary, adding manufacturing capabilities for medical device and aerospace components.
- Debt Increase: Total term debt obligations increased by $6,650,000 (Term Note D) and $2,000,000 (Seller Note).
- Covenant Changes: The Revolving Credit Note maturity was extended by one year.
Guidance, Outlook, Risks, and Contingencies
- Management Commentary: The acquisition is intended to integrate APM's manufacturing of machined components, including sub-assemblies for Pro-Dex.
- Consulting Arrangement: Sean McCaig (Seller owner) engaged as a consultant through the end of calendar 2026.
- Risks and Contingencies:
- Default Provisions: Late payments incur a 5% fee. Events of default trigger a 3% interest rate increase and potential acceleration of all notes.
- Subordination: The Seller Promissory Note is subordinate to borrowings from UMB Bank.
- Legal Disclaimer: Representations and warranties in the agreements are not for investor benefit and may differ from public disclosures.
Important Facts for Investor Verification
- Verify the integration timeline and expected synergies of the APM acquisition in future earnings reports.
- Monitor the Company's ability to service the new debt load, specifically the $117,569.54 quarterly payments on the Seller Note and interest on Term Note D.
- Review the full text of the Amended Credit Agreement (Exhibit 10.2) for specific financial covenants that could restrict future operations.
- Confirm the status of the $2,000,000 representations and warranties insurance policy.