PRO DEX INC

Our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer and principal accounting officer) have concluded, based on their evaluation as of June 30, 2024, that the design and operation of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) were not effective at a reasonable assurance level to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of our management, including our principal executive officer, principal financial officer, and principal accounting officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in the2013 Internal Control – Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission in May 2013. Based on this evaluation, and as a result of the material weaknesses described below, our management concluded that our internal control over financial reporting was not effective as of June 30, 2024.

Our internal control over financial reporting is supported by written policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of our Company are being made only in accordance with authorizations of our management and directors; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that apply to certain smaller reporting companies that permit us to provide only management’s attestation in this annual report.

Material Weaknesses

A material weakness is described as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be prevented or detected on a timely basis.

The Company did not maintain effective controls related to the existence of inventory. In connection with our year-end procedures, we performed a full physical inventory which contained errors. Although we successfully completed our physical inventory observation and recorded all errors identified, based on the material value of inventory we own, management determined that reliance on other compensating controls, including cycle counts and controls related to inventory receipts and issuances, was insufficient to ensure that there is not a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected in a timely basis.

These material weaknesses did not result in any material misstatement in our financial statements or disclosures. Management has concluded that our consolidated financial statements included in this report present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented, in conformity with U.S. GAAP.

Remediation Measures

To address the material weakness related to controls over the existence of inventory, the Company will reinforce the following:

Remediation Measures related to the Valuation and Disclosure of Investments

As previously disclosed, material weaknesses existed relating to the controls related to the valuation and disclosure of level 3 investments during fiscal 2023 and level 2 investments during the three months ended December 31, 2023. During fiscal 2024, we designed internal controls related to valuation and disclosure of level 3 financial instruments pursuant to the guidance in ASC Topic,*Derivatives and Hedging,*and determined that we did not hold any level 3 financial instruments as of June 30, 2024. These new internal controls will be applied to any future derivative or level 3 instrument that we receive. We also designed and implemented internal controls related to the review and approval of the valuation and disclosure of level 2 investments that were implemented during the fourth quarter of fiscal 2024.

Changes in Internal Control Over Financial Reporting

Except as discussed above, during the quarter ended June 30, 2024, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.