NOTE 9. MAJOR CUSTOMERS

Information with respect to two customers who accounted for sales in excess of 10% of our total sales in any of the three or nine month periods ended March 31, 2013 or 2012 is as follows:

	As of and for the Three Months Ended March 31,
	2013										2012
	Sales		Percent of Total			Accounts Receivable		Percent of Total			Sales		Percent of Total			Accounts Receivable		Percent of Total
Customer 1	$	82,000		3	%	$	—		—	%	$	1,811,000		40	%	$	630,000		40	%
Customer 2	$	1,759,000		58	%	$	946,000		59	%	$	1,467,000		32	%	$	531,000		34	%

	As of and for the Nine Months Ended March 31,
	2013										2012
	Sales		Percent of Total			Accounts Receivable		Percent of Total			Sales		Percent of Total			Accounts Receivable		Percent of Total
Customer 1	$	572,000		6	%	$	—		—	%	$	6,106,000		45	%	$	630,000		40	%
Customer 2	$	4,830,000		51	%	$	946,000		59	%	$	4,008,000		29	%	$	531,000		34	%

In December 2009, Customer 1 (the “Customer”), our then-largest customer, informed us that it was in the process of developing, and planned to eventually manufacture, its own surgical devices that were functionally comparable to the products the Company provided to the Customer at that time. Pro-Dex had been the exclusive manufacturer of these products since they were developed. Through May 2012, we provided the Customer with two products (“Product A” and “Product B”) and we continue to provide repair services for both products. Sales for each of these categories for the three and nine months ended March 31, 2013 and 2012 were as follows:

	Three Months Ended March 31,
	2013		2012
Product A	$	—	$	470,000
Product B		—		744,000
Repairs		82,000		597,000
Total	$	82,000	$	1,811,000

	Nine Months Ended March 31,
		2013		2012
Product A	$	—	$	1,420,000
Product B		—		3,276,000
Repairs		572,000		1,410,000
Total	$	572,000	$	6,106,000

In June 2011, the Customer informed us that its product development had progressed to the point at which it did not plan to place any new orders with us for these products beyond those orders already placed with delivery dates through May 2012, and we have received no such new orders.

In addition, the Customer indicated that it planned to limit repair requests from us to those Products A and B that are covered by our product warranty. Although we continue to receive out-of-warranty repair orders from the Customer, such repair revenue would decline to zero or a negligible amount should the Customer decide at any time in the future to cease placing new repair orders with us.

We continue to implement the steps of a strategic plan in response the loss of the Customer, the objectives of which are to identify and capture additional revenue opportunities and concurrently reduce operating costs not critical to revenue growth. There can be no assurance, however, as to either the timing or success of achieving these objectives, which, during any period not achieved, could cause us to experience a prolonged material and adverse impact on our business.