What changed in this filing

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Item 9A. Controls and Procedures

2024-09-05 compared with 2023-10-13 · 113 added, 79 removed, 217 unchanged (47% of the section changed)

CONTROLS AND PROCEDURES

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, 2023, 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.

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 the 2013 Internal Control – Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission in May 2013.

Based on this evaluation, and as a result

of the material weakness described below, our management concluded that our internal control over financial reporting was not effective

as of June 30, 2023.

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

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of

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;

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.

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.

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 Weakness

material weakness is a deficiency, or 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 detected

or prevented on a timely basis.

In connection with preparing

our financial statements for the year ended June 30, 2023, and evaluating the fair value of one of our investments, we re-evaluated the

guidance in ASC Topic 815, Derivatives and Hedging and determined upon reassessment that the historical de minimis values we assigned

to the Monogram Warrant were incorrect.

We have determined that there is a deficiency in the design of the Company’s internal control

relating to the valuation and disclosure of level 3 financial instruments, including the valuation of warrant derivative instruments.

As a result, we have concluded that the Company’s internal control over financial reporting was not effective as of the end of each

of the periods covered by the restatement.

In connection with the restatement, the Company has identified a material weakness in internal

control over financial reporting related to its investment in the Monogram Warrant.

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 the 2013 Internal Control – Integrated Framework issued 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;

(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.

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.

Remediation Measures

Management is committed

to implementing changes to our internal control over financial reporting to ensure our material weakness is remediated.

To remediate this

material weakness, we are in the process of improving the design of our control related to to the valuation and disclosure of level 3

financial instruments.

Management believes the control will prevent the conditions that led to the material weakness described above.

While the foregoing measures

are intended to effectively remediate the material weakness described in Item 9A, and these procedures will be applied to any future warrant,

derivative or other level 3 instrument we receive, it is possible that additional remediation steps will be necessary.

As such, as we

continue to evaluate and implement our plan to remediate the material weakness, our management may decide to take additional measures

to address the material weakness.

The material weakness cannot be considered remediated until the applicable controls operate for a period

of time and management has concluded, through testing, that these controls are operating effectively.

We plan to continue to perform additional

analyses and other procedures to help ensure that our consolidated financial statements are prepared in accordance with GAAP.

Internal Control Over Financial Reporting

as discussed above, during the quarter ended June 30, 2023, 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.

To address the material

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

· Continue our robust cycle count

process which we implemented in the fourth quarter of fiscal 2024 for all of fiscal 2025

· Ensure adequate review and oversight

of cycle count procedures and results

· Providing training related to standard

operating procedures and internal controls to key stakeholders within the stockroom, material handling and operations teams.

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.

OTHER INFORMATION

Trading Arrangements and Policies

the quarter ended June 30, 2024, no director or officer of the Company adopted or terminated a “Rule

10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of

Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

88 unchanged sentences

in favor of Pro-Dex, Inc.

Warrant Exercise Side Letter Dated October 2, 2023 by and between Monogram Orthopaedics Inc.

and Pro-Dex, Inc.

Amendment No.

3 to Amended and Restated Credit Agreement dated December

29, 2023 by and between Pro-Dex, Inc.

and Minnesota Bank & Trust, a division of HTLF Bank

Consent of Independent Registered Public Accounting Firm

3 unchanged sentences

Section 1350 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Pro-Dex, Inc.

Compensation Recovery Policy adopted by the Compensation Committee of the Board of Directors on December 1, 2023.

Inline XBRL Instance Document

9 unchanged sentences

of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by

the undersigned, thereunto duly authorized, on October 13, 2023.

the undersigned, thereunto duly authorized, on September 5, 2024.

PRO-DEX, INC.

16 unchanged sentences

President, Chief Executive Officer, and Director (Principal Executive Officer)

October 13, 2023

September 5, 2024

/s/ Alisha K.

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

October 13, 2023

September 5, 2024

/s/ Nicholas J.

Chairman of the Board, Director

October 13, 2023

September 5, 2024

/s/ Raymond E.

October 13, 2023

September 5, 2024

/s/ Angelita R.

October 13, 2023

September 5, 2024

/s/ William J.

October 13, 2023

September 5, 2024

/s/ Katrina M.K.

October 13, 2023

September 5, 2024

INDEX TO EXHIBITS

65 unchanged sentences

to the Company’s Form 8-K filed January 5, 2023.

Warrant to Purchase Stock dated December 20, 2018 made by Monogram Orthopaedics

Warrant to Purchase Stock dated December 20, 2018 made by Monogram

Ortohpaedics Inc.

in favor of Pro-Dex, Inc.

Warrant Exercise Side Letter Dated October 2, 2023 by and between Monogram Orthopaedics Inc.

and Pro-Dex, Inc.

(incorporated herein by reference to Exhibit 10.31 to the Company’s Form 10-K filed

October 13, 2023).

Amendment No.

3 to Amended and Restated Credit Agreement dated December

29, 2023 by and between Pro-Dex, Inc.

and Minnesota Bank & Trust, a division of HTLF Bank (incorporated herein by reference to Exhibit

10.1 to the Company’s Form 8-K filed January 3, 2024).

Consent of Independent Registered Public Accounting Firm.

3 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Pro-Dex, Inc.

Compensation Recovery Policy adopted by the Compensation

Committee of the Board of Directors on December 1, 2023.

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures