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<SEC-DOCUMENT>0001003297-05-000152.txt : 20050512
<SEC-HEADER>0001003297-05-000152.hdr.sgml : 20050512
<ACCEPTANCE-DATETIME>20050512161154
ACCESSION NUMBER:		0001003297-05-000152
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20050512
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20050512
DATE AS OF CHANGE:		20050512

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PRO DEX INC
		CENTRAL INDEX KEY:			0000788920
		STANDARD INDUSTRIAL CLASSIFICATION:	MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590]
		IRS NUMBER:				841261240
		STATE OF INCORPORATION:			CO
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-14942
		FILM NUMBER:		05824618

	BUSINESS ADDRESS:	
		STREET 1:		MICRO MOTORS, INC.
		STREET 2:		151 EAST COLUMBINE
		CITY:			SANTA ANA
		STATE:			CA
		ZIP:			92707
		BUSINESS PHONE:		714-241-4411

	MAIL ADDRESS:	
		STREET 1:		MICRO MOTORS INC.
		STREET 2:		151 EAST COLUMBINE
		CITY:			SANTA ANA
		STATE:			CA
		ZIP:			92707
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>pdex8k1.htm
<TEXT>
<html>

<head>


<title>Pro-Dex, Inc. 8-K by www.edgar2.com</title>



</head>

<body lang=EN-US link=blue vlink=purple>



<p><b>&nbsp;</b></p>

<p><b>&nbsp;</b></p>









<p align="center"><b>UNITED STATES<br>
SECURITIES AND EXCHANGE COMMISSION<br>
Washington</b><b>,
 D.C.</b><b>&nbsp; 20549</b></p>





<p align=center style='text-align:center'><b>FORM 8-K</b></p>

<p align="center"><b>CURRENT REPORT<br>
Pursuant to Section 13 OR 15(d) of the<br>
Securities Exchange Act of 1934</b></p>



<p align=center style='text-align:center'>Date of Report <br>
(Date of earliest event reported)<b> <br>
May 12, 2005</b></p>





<p align=center style='text-align:center'><b><font size="4">PRO-DEX, INC.<br>
</font></b>(Exact name of registrant as specified in its charter)</p>
<div align="center">
	<table border="0" width="740" id="table1">
		<tr>
			<td width="234">



<p align=center style='text-align:center'><b>COLORADO</b></p></td>
			<td width="268">
			<p align="center"><b>0-14942</b></td>
			<td>
			<p align="center"><b>84-1261240</b></td>
		</tr>
		<tr>
			<td width="234">

<p align="center">(State or other</p></td>
			<td width="268">
			<p align="center">(Commission File Number)<b> </b></td>
			<td>
			<p align="center">(IRS
Employer</td>
		</tr>
		<tr>
			<td width="234">

<p align="center">jurisdiction of</p></td>
			<td width="268">&nbsp;</td>
			<td>
			<p align="center">Identification Number)</td>
		</tr>
		<tr>
			<td width="234">

<p align="center">incorporation)</p>

			</td>
			<td width="268">&nbsp;</td>
			<td>&nbsp;</td>
		</tr>
	</table>
</div>

<p align=center style='text-align:center'><b>151 East Columbine Avenue<br>
Santa Ana</b><b>, California </b><b>92707<br>
</b>(Address of Principal Executive Offices)</p>

<p align=center style='text-align:center'><b>(714) 241-4411<br>
</b>(Registrant's Telephone Number, Including Area Code)</p>



<p style='text-autospace:none; margin-top:0; margin-bottom:0.001pt'>Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions ( <i>see </i>General
Instruction A.2. below): </p>

<p style='text-autospace:none; margin-top:0; margin-bottom:0.001pt'>&nbsp;&nbsp;&nbsp;&nbsp;<font size="2">[ ]
&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
</font> </p>

<p style='text-autospace:none; margin-top:0; margin-bottom:0.001pt'>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp; [ ]
&nbsp; Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
</font> </p>

<p style='text-autospace:none; margin-top:0; margin-bottom:0.001pt'>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp; [ ]
&nbsp; Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) </font> </p>

<p style='text-autospace:none; margin-top:0; margin-bottom:0.001pt'>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp; [ ]
&nbsp; Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) </font> </p>
<p style='text-autospace:none; margin-top:0; margin-bottom:0.001pt'>&nbsp;</p>
<p style='text-autospace:none; margin-top:0; margin-bottom:0.001pt'>&nbsp;</p>
<p style='text-autospace:none; margin-top:0; margin-bottom:0.001pt'>&nbsp;</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>





<b><br
clear=all style='page-break-before:always'>
&nbsp;</b><p>&nbsp;</p>













<p><b><u>Item 2.02</u></b><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Results of Operations and
Financial Condition. </u></b></p>

<p style='text-indent:36pt' align="justify">The information in this Form 8-K and the Exhibits attached hereto shall not be deemed &quot;filed&quot; for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the &quot;Exchange Act&quot;), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0pt;
margin-bottom:0pt;margin-left:0pt;margin-bottom:.0001pt;text-indent:36.0pt' align="justify">On May
12, 2005, Pro-Dex, Inc. issued a press release announcing its financial
performance for the three month and nine month periods ended March 31, 2005.&nbsp;
On that same date, Pro-Dex, Inc. conducted a conference call concerning its
performance for the three month and nine month periods ended March 31, 2005.&nbsp; A
copy of the news release is attached to this Form&nbsp;8-K as
Exhibit&nbsp;99.1.</p>





<p><b><u>Item 9.01</u></b><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Financial Statements and
Exhibits</u></b></p>

<p>&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibits.</p>
<p>&nbsp;</p>



<p style='margin-top:12.0pt;margin-right:0pt;
margin-bottom:0pt;margin-left:0pt;margin-bottom:.0001pt;text-indent:36.0pt'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
99.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Press release dated May 12, 2005 of Pro-Dex Inc.&nbsp; </p>
<p style='margin-top:12.0pt;margin-right:0pt;
margin-bottom:0pt;margin-left:0pt;margin-bottom:.0001pt;text-indent:36.0pt'>&nbsp;</p>
<p style='margin-top:12.0pt;margin-right:0pt;
margin-bottom:0pt;margin-left:0pt;margin-bottom:.0001pt;text-indent:36.0pt'>&nbsp;</p>
<p style='margin-top:12.0pt;margin-right:0pt;
margin-bottom:0pt;margin-left:0pt;margin-bottom:.0001pt;text-indent:36.0pt'>&nbsp;</p>
<p style='margin-top:12.0pt;margin-right:0pt;
margin-bottom:0pt;margin-left:0pt;margin-bottom:.0001pt;text-indent:36.0pt'>&nbsp;</p>
<p style='margin-top:12.0pt;margin-right:0pt;
margin-bottom:0pt;margin-left:0pt;margin-bottom:.0001pt;' align="center">2<br>
&nbsp;</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>



<br clear=all
style='page-break-before:always'>










<p align=center style='text-align:center'><b>SIGNATURES</b></p>





<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.</p>





<p>Date:&nbsp; May 12, 2005&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>PRO-DEX, Inc (Registrant).</b></p>





<p style='margin-left:3.5in'>By:
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/&nbsp; Patrick Johnson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Patrick Johnson<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief Executive Officer</p>

<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p align="center">&nbsp;3</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>



<br clear=all
style='page-break-before:always'>










<p align=center style='text-align:center'><b>INDEX TO EXHIBITS</b></p>

<p><b>&nbsp;</b></p>

<p>&nbsp;&nbsp;<b>  Exhibit<br>
<u>&nbsp; Number&nbsp; </u></b><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Description&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></b>
</p>



<p style='margin-left:72.0pt;text-indent:-54.0pt'>99.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Press
Release dated May 12, 2005.</p>
<p style='margin-left:72.0pt;text-indent:-54.0pt'>&nbsp;</p>
<p style='margin-left:72.0pt;text-indent:-54.0pt'>&nbsp;</p>
<p style='margin-left:72.0pt;text-indent:-54.0pt'>&nbsp;</p>
<p style='margin-left:72.0pt;text-indent:-54.0pt'>&nbsp;</p>
<p style='margin-left:72.0pt;text-indent:-54.0pt'>&nbsp;</p>
<p style='margin-left:72.0pt;text-indent:-54.0pt'>&nbsp;</p>
<p align="center">4</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>







</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>ex991.htm
<TEXT>
<html>

<head>


<title>Exhibit 99.1</title>



</head>

<body lang=EN-US link=blue vlink=purple>


<p>&nbsp;</p>












<p align=left style='text-align:left;line-height:normal'><img
width=175 height=77 src="image001.jpg">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

<div align="left">
	<table border="0" width="740" id="table1" cellpadding="0" cellspacing="0">
		<tr>
			<td>&nbsp;</td>
			<td width="441">
			<p align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
			Contact: </td>
			<td width="281">

<p align=left style='text-align:left;line-height:
normal'>Patrick
Johnson, President &amp; CEO</p>

			</td>
		</tr>
		<tr>
			<td height="26">&nbsp;</td>
			<td height="26" width="441">&nbsp;</td>
			<td height="26" width="281">

<p style='text-align:justify'>(714)
241-4411</p>

			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="441">&nbsp;</td>
			<td width="281">

<p style='text-align:justify'>Matthew
Hayden, Investor Relations</p>

			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="441">&nbsp;</td>
			<td width="281">

<p style='text-align:justify'>Hayden
Communications, Inc.</p>

			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="441">&nbsp;</td>
			<td width="281">

<p style='text-align:justify'>(858)
456 - 4533</p>

			</td>
		</tr>
	</table>
</div>

<p style='text-align:justify'><b><i><font size="4">For
Immediate Release</font></i></b><font size="4">&nbsp;&nbsp;<br>
&nbsp;</font></p>

<h3 align="center">PRO-DEX, INC. ANNOUNCES THIRD FISCAL QUARTER AND
NINE-MONTH RESULTS</h3>

<p align=center><i>Year-to-date earnings increase 35% as Company's order
backlog reaches record level of $8.3 million; </i></p>

<p align=center><i>Management reiterates guidance of $0.18 to $0.22 per share
for the 2005 fiscal year</i></p>

<p style='text-align:justify;text-indent:36.0pt'><b>SANTA ANA, CA,</b> May 12,
2005 - PRO-DEX, INC. (NASDAQ: PDEX), a provider of <em>embedded motion control and
miniature rotary drive systems, serving the medical, dental, factory automation,
and scientific research markets,</em> today
announced financial results for the third quarter and nine-month period ending March
31, 2005. </p>



<p style='text-align:justify;text-indent:36.0pt'>Consolidated
net sales for the third quarter were $3.2 million compared to $3.3 million for
the three months ended March 31, 2005. Gross
profit for the third quarter was $1.6 million, up slightly compared to the $1.6
million reported for the third quarter of last year. Gross
profit as a percentage of sales increased to 50.7 percent for the quarter
compared to 48.5 percent for the third fiscal quarter of last year and 55.9
percent for the first fiscal half of this year. The gross profit percentage for
the third quarter was impacted by multiple new product launches which impacted
manufacturing efficiency and a revenue mix which had a lower proportion of factory
automation sales. Operating expenses increased by
$98,000 to $1.3 million compared to the third quarter last year, driven by
one-time severance expenses. Net income for the quarter was $275,000, or
$0.03 per diluted share, as compared to a net income of $261,000 or $0.03 per diluted
share, for the three months ended March 31, 2004. Backlog at the end of the third
quarter was $8.3 million, up 77 percent from $4.7 million at the end of the
second quarter of this year and up 152 percent from $3.3 million at the end the
third quarter of last year. </p>



<p style='text-align:justify;text-indent:36.0pt'>Commenting on the Company's financial performance,
Pro-Dex's President and Chief Executive Officer, Patrick Johnson said, &quot;We're
pleased with the accelerated rate of new order bookings seen during the third
quarter of the year. The new orders came from every segment of our business,
but were dominated by orders from existing and new medical device customers. We
believe that the increase in order backlog is further evidence that our focused
model of rapidly developing and launching innovative products is both
successful and represents meaningful evidence of positive business momentum. We
transitioned a number of projects from development into production during the
third quarter, enabling growth in our current quarter and serving to increase
sales and visibility in the coming quarters.&quot; </p>
<p style='text-align:justify;text-indent:36.0pt'>&nbsp;</p>





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<br clear=all
style='page-break-before:always'>










<p style='text-align:justify;text-indent:36.0pt'>Pro-Dex previously announced the signing of a new
Development Agreement at the end of the second quarter this fiscal year. During
the third quarter, the design services related to that Development Agreement
were successfully completed. As a result of completing this project, the
Company booked orders for a new product from a new medical device customer
totaling $1.2 million with shipments scheduled to begin in the fourth quarter
of this fiscal year. </p>



<p style='text-align:justify;text-indent:36.0pt'>For the nine months ended March 31, 2005, consolidated net
sales were $9.5 million compared to $10.5 million for the same period in the
prior year. The decrease is partially related to the Company's
previously announced shift to a royalty agreement with its HealOzone product. Gross
profit was $5.1 million compared to $4.9 million for the same period in the
prior year. For the nine months, gross profit as a percent of sales increased
to 54.2 percent compared to 46.0 percent in the same period in the prior year.
Operating expense increased $56,000 to $3.8 million compared to the same nine
months in the prior year. Despite the decrease in revenue, the Company reported
net income for the nine months ended March 31, 2005 of $921,000 or $0.10 per
diluted share, as compared to a net income of $683,000 or $0.07 per diluted
share, for the nine months ended March 31, 2004. This represents an increase of
$238,000 or 35 percent over the previous year.</p>



<p style='text-align:justify;text-indent:36.0pt'>&quot;In addition to booking orders for recently developed
products, we received several large follow-on orders for products developed during
the last two years,&quot; commented Mr. Johnson, &quot;Our new product development
projects remain at a record level with 11 total projects, seven of those
projects being funded by our customers and representing a potential first year
revenue of $7.6 million. We closed the third quarter with the signing of
another Development Agreement with an existing customer. This development
project will take us between nine and 12 months to complete and if successful could
result in an estimated first-year revenue of $2.2 to $4.5 million. Also during
the third quarter, we moved several current development projects toward
completion and provided a number of Development Services Proposals to new and
existing customers, activities that should drive order bookings and shipped sales
through fiscal 2006 and beyond.&quot;</p>



<p style='text-align:justify;text-indent:36.0pt'>Highlights from the fiscal third quarter included:</p>



<ul style='margin-top:0pt' type=disc>
 <li class=MsoNormal style='text-align:justify'>During the third quarter, the
     Company launched three new products for customers in the dental market. These
     products were originally scheduled for launch during the Company's fiscal
     second quarter. Gross margin percentages were unfavorably impacted during
     the quarter given manufacturing inefficiencies related to initial launch
     of these new products. With the ramp up complete, margins are now
     consistent with the overall blended Company margins.</li>
</ul>



<ul style='margin-top:0pt' type=disc>
 <li class=MsoNormal style='text-align:justify'>The Company's new product
     development portfolio includes 11 total projects, seven of which are being
     funded by customers, and totaling $7.6 million in potential first year
     revenue.</li>
</ul>



<ul style='margin-top:0pt' type=disc>
 <li class=MsoNormal style='text-align:justify'>The Company's order backlog
     increased to $8.3 million at the end of the third quarter, compared to
     $4.7 million at the end of the second quarter this year and $3.3 million
     at the end of the third quarter last year.</li>
</ul>



<ul style='margin-top:0pt' type=disc>
 <li class=MsoNormal style='text-align:justify'>Year to date, gross margin as a
     percentage of sales has increased to 54.2 percent, up from 46.0 percent in
     the same period last year. As a result, gross margin dollars have
     increased $271,000 for the first nine months of the year, despite a $1.0
     million decrease in sales.</li>
</ul>







<p>&nbsp;</p>







<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>



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style='page-break-before:always'>










<p style='text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &quot;We view our third quarter results as the inflection
point to take Pro-Dex to the next level,&quot; Mr. Johnson continued. &quot;We have established
a solid core business with high profile customers who are succeeding
commercially with the products we have developed and manufactured for them.
Based on that success, we are earning the opportunity to bid on new projects
that are larger in size, and in some cases, outside our traditional vertical markets.
This increase in bidding activities has increased our portfolio of new
development projects to record levels and the ongoing completion of these projects
has dramatically increased our order backlog. Given the combined effect of all
of these activities, we exited the third quarter with the anticipation of
reporting a record fourth quarter. Based on our current and projected revenue,
including orders already booked, we expect to report sales of $14.5 to $15
million for the fiscal year, within our previous range of guidance, and we
expect to achieve our earnings guidance as well. This represents a projected increase
in manufacturing utilization of more than 50 percent quarter over quarter and
shows the inherent leverage and scale in our business model.&quot; </p>



<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Mr. Johnson concluded, &quot;As we completed the last
fiscal year, we estimated that our existing infrastructure could support $20 to
$22 million in annual sales. But with shifts in our sales product mix, increased
efficiencies in manufacturing operations, under utilized space in our Beaverton operations and the opportunity to out-source non-critical component
manufacturing, we now believe we can support sales well above this level. We've
also been actively 'upgrading' our physical and human capital to get the most
out of our existing operational expenses. Beyond our existing infrastructure,
we believe that the scalability of our business will allow for growth without a
corresponding increase in operating expenses. Bidding on, winning and
completing product development projects with larger potential resulting revenue
should continue to provide us with earnings leverage and a greater return on our
product development efforts, facilitating growth in fiscal 2006 and beyond.&quot;</p>



<p style='text-align:justify;text-autospace:none'><b><u>Guidance:</u></b></p>



<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Management is reaffirming revenue guidance and
expects to report full-year revenues in the range of $14.5 million to $15
million with earnings between $0.18 to $0.22 per share.</p>



<p style='text-align:justify;text-indent:36.0pt'>Investors and
all others are invited to listen to a conference call discussing the third
quarter and fiscal 2005 outlook, today at 4:30 p.m. Eastern Time. The call will
be broadcast over the Internet at <u><font color="#0000FF">www.pro-dex.com</font></u>.
An online replay will be available for 30 days. Additionally, a telephone
replay will be available two hours after the call for 48-hours by dialing (800)
475-6701 for domestic callers and (320) 365-3844 for international callers;
conference ID# 781132.</p>



<p style='text-align:justify;text-indent:36.0pt'>Pro-Dex Inc.,
with operations in Santa Ana, California and Beaverton, Oregon, specializes in
bringing speed to market&nbsp;in the&nbsp;development and manufacture
of&nbsp;technology-based solutions that incorporate embedded motion control and
miniature rotary drive systems, serving the medical, dental, factory automation,
and scientific research markets. Pro-Dex's products are found in hospitals,
dental offices, medical engineering labs, scientific research facilities and
high tech manufacturing operations&nbsp;around the world.</p>



<p style='text-align:justify;text-indent:36.0pt'>For more information, visit the
Company's website at <u><font color="#0000FF">www.pro-dex.com</font></u>. </p>



<p><font size="2">Statements
herein concerning the Company's plans, growth and strategies may include
'forward-looking statements' within the context of the federal securities laws.
Statements regarding the Company's future events, developments and future
performance, as well as management's expectations, beliefs, plans, estimates or
projections relating to the future, are forward-looking statements within the
meaning of these laws. The Company's actual results may differ materially from
those suggested as a result of various factors. Interested parties should refer
to the disclosure concerning the operational and business concerns of the
Company set forth in the Company's filings with the Securities and Exchange
Commission.</font></p>



<p align="center">(Tables Follow) </p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>

<div class=MsoNormal align=center style='text-align:center'>







<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade color=navy align=center>

</div>



<br clear=all
style='page-break-before:always'>










</div>












<div align="left">












<table class=MsoNormalTable border=0 cellpadding=0
 style='width:700px;margin-left:5pt;border-collapse:collapse' id="table6">
 <tr style='height:1.0pt'>
  <td colspan=5 valign=bottom style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
  <p class=MsoNormal align=center style='text-align:center'><b>PRO-DEX, INC.
  and SUBSIDIARIES</b></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td colspan=5 valign=bottom style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
  <p class=MsoNormal align=center style='text-align:center'><b>CONSOLIDATED
  BALANCE SHEETS</b></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=bottom style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">&nbsp;</font></b></p>
  </td>
  <td colspan=2 valign=bottom style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">March 31, 2005
  <br>
	(unaudited)</font></i></p>
  </td>
  <td colspan=2 valign=top style='border:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">June 30,2004
  <br>
	(audited)</font></i></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:medium none; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><b><font size="2">ASSETS</font></b></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Current assets:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal>
  <font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents </font>
  </p>
  </td>
  <td valign=top style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p align="right"><font size="2">2,259,000&nbsp;</font></td>
  <td valign=top style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p align="right"><font size="2">2,070,000&nbsp;</font></td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net of
  allowance for doubtful </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; accounts
  of $45,000 at March 31 and $40,000 at June 30</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,565,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,370,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Inventories, net
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,952,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,542,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">170,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">76,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">793,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">793,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8,739,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">7,851,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Equipment and leasehold improvements, net&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  </font>
  </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,010,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,030,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Other assets:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Goodwill</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,110,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,110,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">788,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">788,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Other </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">48,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">16,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other assets
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  1.0pt solid windowtext;border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,946,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  1.0pt solid windowtext;border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,914,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Total assets</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">11,695,000&nbsp;</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">10,795,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><b><font size="2">LIABILITIES AND SHAREHOLDERS' EQUITY</font></b></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Current liabilities:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable</font></p>
  </td>
  <td valign=top style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">625,000&nbsp;</font></p>
  </td>
  <td valign=top style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">397,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Current portion of long term debt to shareholder</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">70,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">432,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">780,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Income taxes payable
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">655,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">809,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,712,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,056,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Long-term debt to a shareholder, net of current portion</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">75,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Total liabilities</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,712,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,131,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Commitments and contingencies </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Shareholders' equity:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Series A convertible preferred shares; no par value;
  liquidation</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; preference of $3.60 per share; 10,000,000 shares
  authorized;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0 shares issued and outstanding.</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">283,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Common shares; no par value; 50,000,000 shares
  authorized;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,039,217 shares issued and outstanding,</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">15,737,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">15,075,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(5,748,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(6,669,000)</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,989,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8,689,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  &nbsp;
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  &nbsp;</td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Receivable for stock purchase </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(6,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(25,000)</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total shareholders' equity</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,983,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8,664,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:2.25pt double windowtext;
  border-right:medium none;height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and shareholders' equity</font></p>
  </td>
  <td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:2.25pt double windowtext;
  border-right:medium none;height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">11,695,000&nbsp;</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">10,795,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=bottom style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 </table>





</div>





&nbsp;<p>&nbsp;</p><hr size=2 width="100%" noshade color=navy align=center>



<font size="2">



<br clear=all
style='page-break-before:always'>














</font>














<div align="left">














<table class=MsoNormalTable border=0 cellpadding=0
 style='margin-left:5pt;border-collapse:collapse' width="700" id="table7">
 <tr style='height:15.75pt'>
  <td colspan=10 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>PRO-DEX, INC.
  and SUBSIDIARIES</b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td colspan=10 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>CONSOLIDATED
  STATEMENTS OF OPERATIONS</b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td colspan=10 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Three months
  ended March 31 (unaudited)</b></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=9 valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2005</font></i></p>
  </td>
  <td colspan=5 valign=top style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2004</font></i></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net sales </font> </p>
  </td>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td colspan=3 valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,241,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td colspan=3 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,302,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Cost of sales </font> </p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,598,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,698,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Gross profit </font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,643,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,604,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Operating expenses: </font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Selling </font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">249,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">231,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; General and administrative expenses
	</font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">586,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">501,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Research and development costs
	</font> </p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">467,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">472,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Total operating expenses </font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,302,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,204,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Income from operations </font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">341,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">400,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Other income (expense): </font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Royalty income
	</font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">40,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Other income, net
	</font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">12,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Interest expense
	</font> </p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(9,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Total</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">18,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">35,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Income before provision for income taxes</font></p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">359,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">435,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Provision for income taxes</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">84,000&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">174,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net income</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td colspan=2 valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">275,000&nbsp;</font></p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">261,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
	</font> </p>
  </td>
  <td colspan=4 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net Income per share:</font></p>
  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Basic</font></p>
  </td>
  <td colspan=3 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Diluted</font></p>
  </td>
  <td colspan=3 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp;</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;

  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Weighted average shares outstanding - basic</font></p>
  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,163,900&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8,797,325&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Weighted average shares outstanding - diluted</font></p>
  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,615,127&nbsp;</font></p>
  </td>
  <td colspan=5 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,398,688&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=5 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 </table>







</div>







<p>&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<hr size=2 width="100%" noshade color=navy align=center>



<font size="2">



<br clear=all
style='page-break-before:always'>












</font>












<div align="left">












<table class=MsoNormalTable border=0 cellpadding=0 width=543
 style='width:700px;margin-left:5pt;border-collapse:collapse' id="table8">
 <tr style='height:15.75pt'>
  <td colspan=8 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>PRO-DEX, INC.
  and SUBSIDIARIES</b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td colspan=8 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>CONSOLIDATED
  STATEMENTS OF OPERATIONS</b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td colspan=8 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Nine months
  ended March 31 (unaudited)</b></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=7 valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=3 valign=top style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2005</font></i></p>
  </td>
  <td colspan=4 valign=top style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2004</font></i></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net sales </font> </p>
  </td>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td colspan=2 valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,466,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">10,534,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:1.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Cost of sales </font> </p>
  </td>
  <td colspan=3 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,344,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5,683,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Gross profit </font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5,122,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,851,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Operating expenses: </font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Selling </font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">726,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">629,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; General and administrative expenses
	</font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,711,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,796,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Research and development costs
	</font> </p>
  </td>
  <td colspan=3 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,343,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,299,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Total operating expenses </font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,780,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,724,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=3 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Income from operations </font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,342,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,127,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Other income (expense): </font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Royalty income
	</font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">47,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">40,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Other income, net
	</font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">56,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">16,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Interest expense
	</font> </p>
  </td>
  <td colspan=3 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(9,000)</font></p>
  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(44,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Total</font></p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">94,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">12,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=3 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Income before provision for income taxes</font></p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,436,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,139,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Provision for income taxes</font></p>
  </td>
  <td colspan=3 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">515,000&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">456,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net income</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">921,000&nbsp;</font></p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">683,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
	</font> </p>
  </td>
  <td colspan=3 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net Income per share:</font></p>
  </td>
  <td colspan=3 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Basic</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp;</font></p>
  </td>
  <td colspan=3 valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.08&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Diluted</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp;</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td colspan=3 valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.07&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=3 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Weighted average shares outstanding - basic</font></p>
  </td>
  <td colspan=3 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,006,073&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8,779,913&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Weighted average shares outstanding - diluted</font></p>
  </td>
  <td colspan=3 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,434,431&nbsp;</font></p>
  </td>
  <td colspan=4 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,288,056&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=3 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=3 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 </table>







</div>







<p>&nbsp;</p>
<p>&nbsp;</p>
<hr size=2 width="100%" noshade color=navy align=center>



<font size="2">



<br clear=all
style='page-break-before:always'>












</font>












<div align="left">












<table class=MsoNormalTable border=0 cellpadding=0
 style='width:709px;margin-left:5pt;border-collapse:collapse' id="table9">
 <tr style='height:12.75pt'>
  <td colspan=5 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>PRO-DEX, INC.
  and SUBSIDIARIES</b></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td colspan=5 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>CONSOLIDATED
  STATEMENTS OF CASH FLOWS</b></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td colspan=5 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Nine months
  ended March 31 (unaudited)</b></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=503 valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=502 valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2005</font></i></p>
  </td>
  <td colspan=2 valign=top style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2004</font></i></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Cash Flows from Operating Activities: </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net Income</font></p>
  </td>
  <td width=16 valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">921,000&nbsp;</font></p>
  </td>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">683,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash used
  in operating activities:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">176,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">273,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for doubtful accounts</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">10,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Recovery) reserve for obsolete inventory</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">37,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(116,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">19,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">19,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred taxes</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">20,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) in accounts receivable</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(200,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(278,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) decrease in inventories</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(447,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">350,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) in prepaid expenses</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(94,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(29,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) decrease in other assets</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(32,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Decrease) in accounts payable and
  accrued expenses</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(120,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(237,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in income taxes
  payable</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(154,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">456,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net Cash provided by Operating Activities
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">111,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,160,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Cash Flows From Investing Activities: </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Purchases of equipment and leasehold improvements</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(156,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(233,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net Cash (used in) Investing Activities
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(156,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(233,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Cash Flows from Financing Activities:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Principal payments on long-term
  shareholder borrowings </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(145,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(54,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Net payments on line of credit
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(432,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from option and warrant
  exercise </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">379,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">70,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net Cash provided by (used in) Financing Activities</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">234,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(416,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net Increase (decrease) in Cash and Cash Equivalents
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">189,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">511,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=501 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Cash and Cash Equivalents, beginning of period
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,070,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">795,000&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width=501 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2"><br>
	Cash and Cash Equivalents, end of period
	</font> </p>
  </td>
  <td width=16 valign=bottom style='border-bottom:3px double #000000; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:3px double #000000; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p align="right"><font size="2">2,259,000&nbsp;</font></td>
  <td valign=bottom style='border-bottom:3px double #000000; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:3px double #000000; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p align="right"><font size="2">1,306,000&nbsp;</font></td>
 </tr>
 </table>







</div>

<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>







</body>

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-----END PRIVACY-ENHANCED MESSAGE-----
