10.        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 2025 and 2024 was $609,000 and $559,000, respectively.

Additionally, beginning in fiscal 2025 we began renting on a month-to-month basis some parking spaces at a neighboring location near our Franklin Property. In fiscal 2025, we incurred rent expense in the amount of $23,000 for parking.

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 of the month following 60 days of service. Participants are eligible to receive non-discretionary matching contributions by the Company equal to 50% of their contributions up to 5% of eligible compensation. For the fiscal years ended June 30, 2025 and 2024, we recognized compensation expense amounting to $259,000 and $188,000, respectively, in connection with the 401(k) Plan. During our fiscal years ended June 30, 2025 and 2024, we used approximately $23,000 and $63,000, respectively, of forfeited match contributions to reduce our match expense.

Legal Matters

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.