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<SEC-DOCUMENT>0001003297-05-000367.txt : 20051114
<SEC-HEADER>0001003297-05-000367.hdr.sgml : 20051111
<ACCEPTANCE-DATETIME>20051114160648
ACCESSION NUMBER:		0001003297-05-000367
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20050930
FILED AS OF DATE:		20051114
DATE AS OF CHANGE:		20051114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PRO DEX INC
		CENTRAL INDEX KEY:			0000788920
		STANDARD INDUSTRIAL CLASSIFICATION:	SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
		IRS NUMBER:				841261240
		STATE OF INCORPORATION:			CO
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-14942
		FILM NUMBER:		051201574

	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>10QSB
<SEQUENCE>1
<FILENAME>pdex10q1.htm
<TEXT>
<html>

<head>


<title>Pro-Dex, Inc. Form 10-QSB</title>



</head>

<body lang=EN-US link=blue>















<p align="center">&nbsp;</p>
<p align="center"><b>UNITED STATES <br>
SECURITIES AND EXCHANGE COMMISSION</b></p>
<p align=center style='text-align:center'><b><font size="3">Washington, D.C. 20549</font></b></p>
<p align=center style='text-align:center'><b><font size="5">FORM
  10-QSB</font></b></p>
<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
<table border="0" width="100%" id="table1">
	<tr>
		<td><b>[X]</b></td>
		<td width="913">
		<p style="text-transform: uppercase"><b>Quarterly Report Pursuant to Section
  13 or 15(d) of the Securities Exchange Act of 1934.</b></p></td>
	</tr>
</table>
<p align=center style='text-align:center;text-autospace:none'><b>For
  the quarterly period ended September 30, 2005</b></p>
<p align=center style='text-align:center'><b>OR</b></p>
<table border="0" width="100%" id="table2">
	<tr>
		<td valign="top"><b>[&nbsp; ]</b></td>
		<td width="913" valign="top">
		<p style="text-transform: uppercase"><b>Transition Report Pursuant to Section
  13 or 15(d) of the Securities Exchange Act of 1934.&nbsp;&nbsp;
  For the transition period from&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>TO&nbsp;
  		<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .</u></b></p>
		</td>
	</tr>
</table>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=721
 style='width:740px;border-collapse:collapse'>
		<tr>
			<td width=720 colspan=2 valign=top style='width:540.0pt;padding:0pt 0pt 0pt 0pt'>&nbsp;
			</td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			</td>
		</tr>
		<tr>
			<td width=720 colspan=2 valign=top style='width:540.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>Commission
  File Number&nbsp;&nbsp;&nbsp; 0-14942 </b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
		</tr>
		<tr>
			<td width=720 colspan=2 valign=top style='width:540.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
		</tr>
		<tr>
			<td width=720 colspan=2 valign=top style='width:540.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>
			<font size="5">PRO-DEX, INC.&nbsp;&nbsp;&nbsp; </font>
			</b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
		</tr>
		<tr>
			<td width=720 colspan=2 valign=top style='width:540.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>(Exact
  name of small business issuer as specified in its
  charter)&nbsp;&nbsp;&nbsp;&nbsp; </b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
		</tr>
		<tr>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;&nbsp; </b></p></td>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;&nbsp;&nbsp;&nbsp; </b></p>
			</td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;</b></p></td>
		</tr>
		<tr>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b><u>Colorado
			</u></b></p></td>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b><u>84-1261240
  			</u></b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
		</tr>
		<tr>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>(State
  or Other Jurisdiction of&nbsp;&nbsp;&nbsp; </b></p></td>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>(IRS
  Employer Identification No.) </b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
		</tr>
		<tr>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>Incorporation
  or Organization)&nbsp;&nbsp;&nbsp; </b></p></td>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;&nbsp; </b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;</b></p></td>
		</tr>
		<tr>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;&nbsp; </b></p></td>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;&nbsp;&nbsp;&nbsp; </b></p>
			</td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;</b></p></td>
		</tr>
		<tr>
			<td width=720 colspan=2 valign=top style='width:540.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b><u>151 E. Columbine Avenue, Santa Ana, California 92707&nbsp;&nbsp;&nbsp;
  			</u></b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
		</tr>
		<tr>
			<td width=720 colspan=2 valign=top style='width:540.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>(Address
  of Principal Executive Offices)&nbsp;&nbsp;&nbsp;&nbsp; </b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
		</tr>
		<tr>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;&nbsp; </b></p></td>
			<td width=360 valign=top style='width:270.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;&nbsp; &nbsp; </b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p style='text-autospace:none'><b>&nbsp;</b></p></td>
		</tr>
		<tr>
			<td width=720 colspan=2 valign=top style='width:540.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>Issuer's
  telephone number: <u>714-241-4411&nbsp;&nbsp;&nbsp; </u></b></p></td>
			<td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
			<p align=center style='text-align:center;text-autospace:none'><b>&nbsp;</b></p>
			</td>
		</tr>
	</table></div>
<p style='text-align:justify;text-autospace:none'><font size="2">Indicate by check mark whether the Registrant (1) has
filed all reports required by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past ninety days.&nbsp;&nbsp;&nbsp; Yes [X] No [ ]
</font></p>
<p style='text-autospace:none'><font size="2">Indicate
the number by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).<br>
Yes
[&nbsp; ] No [X]</font></p>
<p style='text-autospace:none'><font size="2">Indicate
the number of shares outstanding of each of the Registrant's classes of Common
Stock outstanding as of the latest practicable date:&nbsp; 9,504,912 shares of
Common Stock, no par value, as of November 1, 2005. </font></p>
<p style='text-autospace:none'><font size="2">Transitional
Small Business Disclosure Format:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Yes [&nbsp; ] No [X]</font></p>
<p style='text-autospace:none' align="center"><font size="2">-1-</font></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><b>Item 1. &nbsp;&nbsp;&nbsp;&nbsp; Financial
Statements</b></p>
<div align="left">
	<table class=MsoNormalTable border=0 cellpadding=0 width=642
 style='width:740px;margin-left:4.4pt;border-collapse:collapse'>
		<tr style='height:15.75pt'>
			<td colspan=5 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p align=center style='text-align:center'><b>PRO-DEX, INC.
  and SUBSIDIARIES</b></p></td>
			<td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
		</tr>
		<tr style='height:15.75pt'>
			<td colspan=5 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p align=center style='text-align:center'><b>CONSOLIDATED
  BALANCE SHEETS</b></p></td>
			<td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
		</tr>
		<tr style='height:10.5pt'>
			<td valign=bottom style='height:10.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p align=center style='text-align:center'><b><font size="2">&nbsp;</font></b></p>
			</td>
			<td colspan=2 valign=bottom style='height:10.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
			<td colspan=2 valign=bottom style='height:10.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
			<td valign=bottom style='height:10.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
		</tr>
		<tr style='height:27.0pt'>
			<td valign=bottom style='height:27.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
			<td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; height:27.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p align=center style='text-align:center'><i><font size="2">September 30, 2005
  			<br>
			(unaudited)</font></i></p></td>
			<td colspan=2 valign=bottom style='border:1.0pt solid windowtext;
  height:27.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p align=center style='text-align:center'><i><font size="2">June 30,2005
  			<br>
			(audited)</font></i></p></td>
			<td valign=bottom style='height:27.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border:solid windowtext 1.0pt;
  border-bottom:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><b><font size="2">ASSETS</font></b></p></td>
			<td width=128 nowrap colspan=2 valign=bottom style='width:96.2pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			</td>
			<td width=125 nowrap colspan=2 valign=bottom style='width:93.7pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			</td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">Current assets:</font></p></td>
			<td width=128 nowrap colspan=2 valign=bottom style='width:96.2pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			</td>
			<td width=125 nowrap colspan=2 valign=bottom style='width:93.7pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			</td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents
			</font></p></td>
			<td nowrap valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">2,893,000&nbsp;
  </font></p></td>
			<td nowrap valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">2,584,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net of
  allowance for doubtful </font></p></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; accounts
  of $120,000 at September 30 and $100,000 at June 30</font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">2,892,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">3,521,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Inventories, net </font>
			</p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">3,317,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">3,145,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses </font>
			</p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">239,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">66,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Income tax receivable</font></p>
			</td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">-&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">96,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes</font></p>
			</td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">586,000&nbsp;
  </font></p></td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">519,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets
			</font></p></td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">9,927,000&nbsp;
  </font></p></td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">9,931,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'><font size="2">&nbsp; </font></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><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 nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,106,000&nbsp;
  </font></p></td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,156,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'><font size="2">&nbsp; </font></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">Other assets:</font></p></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Goodwill</font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,110,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,110,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes</font></p>
			</td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">541,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">541,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Other </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">20,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">18,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other assets
			</font></p></td>
			<td nowrap colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left: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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,671,000&nbsp;
  </font></p></td>
			<td nowrap colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left: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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,669,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'><font size="2">&nbsp; </font></td>
			<td nowrap colspan=2 valign=bottom 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>
			<td nowrap colspan=2 valign=bottom 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>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">Total assets</font></p></td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">12,704,000&nbsp;
  </font></p></td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">12,756,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'><font size="2">&nbsp; </font></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><b><font size="2">LIABILITIES AND SHAREHOLDERS' EQUITY</font></b></p>
			</td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">Current liabilities:</font></p></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable</font></p>
			</td>
			<td nowrap valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">826,000&nbsp;
  </font></p></td>
			<td nowrap valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,158,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses</font></p>
			</td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">397,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">472,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Income taxes payable
			</font></p></td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">100,000&nbsp;
  </font></p></td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">13,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities
			</font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,323,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,643,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'><font size="2">&nbsp; </font></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">Long-term liabilities</font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">-&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">-&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'><font size="2">&nbsp; </font></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">Total liabilities</font></p></td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,323,000&nbsp;
  </font></p></td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,643,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'><font size="2">&nbsp; </font></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">Commitments and contingencies </font></p></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">Shareholders' equity:</font></p></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Common shares; no par value; 50,000,000 shares
  authorized;</font></p></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,454,912 shares issued and outstanding September
  30, 2005,</font></p></td>
			<td nowrap 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 nowrap 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 width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,449,396 shares issued and outstanding June 30,
  2005,</font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">15,940,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">15,933,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit
			</font></p></td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='text-align:right'><font size="2">(4,559,000)</font></p>
			</td>
			<td nowrap colspan=2 valign=bottom 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 align=right style='text-align:right'><font size="2">(4,820,000)</font></p>
			</td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:9.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:9.75pt'><font size="2">&nbsp; </font></td>
			<td nowrap colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:9.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
			<td nowrap colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:9.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:9.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total shareholders' equity</font></p>
			</td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">11,381,000&nbsp;
  </font></p></td>
			<td nowrap 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'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">11,113,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
		<tr style='height:9.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:9.75pt'><font size="2">&nbsp;
			</font></td>
			<td nowrap colspan=2 valign=bottom style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:9.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
			<td nowrap colspan=2 valign=bottom style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:9.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:9.75pt'></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=370 nowrap valign=bottom style='width:277.8pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:double windowtext 2.25pt;
  border-right:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and shareholders' equity</font></p>
			</td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:2.25pt double windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">12,704,000&nbsp;
  </font></p></td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">12,756,000&nbsp;
  </font></p></td>
			<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		</tr>
	</table></div>
<p align=center style='text-align:center'><b>&nbsp;</b></p>
<p align=center style='text-align:center'><i>See notes to consolidated financial statements.</i></p>
<p align=center style='text-align:center'>&nbsp;</p>
<p align=center style='text-align:center'><font size="2">-2-</font></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'>&nbsp;</p>
<div align="left">
	<table class=MsoNormalTable border=0 cellpadding=0
 style='width:740px;margin-left:4.4pt;border-collapse:collapse'>
		<tr style='height:15.75pt'>
			<td colspan=5 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p align=center style='text-align:center'><b>PRO-DEX, INC.
  and SUBSIDIARIES</b></p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td colspan=5 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p align=center style='text-align:center'><b>CONSOLIDATED
  STATEMENTS OF OPERATIONS</b></p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td colspan=5 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p align=center style='text-align:center'><b>Three months
  ended September 30 (unaudited)</b></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			</td>
			<td colspan=4 valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p 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='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			</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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p align=center style='text-align:center'><i><font size="2">2005</font></i></p></td>
			<td colspan=2 valign=top style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
			<p 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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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;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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">3,763,000&nbsp;
  			</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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">3,332,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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; 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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Cost of sales </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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">2,072,000&nbsp;
			</font>
			</p></td>
			<td colspan=2 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,472,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Gross profit </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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,691,000&nbsp;
			</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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,860,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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; 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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Operating expenses: </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; 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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Selling </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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">255,000&nbsp;
			</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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">200,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; General and administrative expenses
			</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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">586,000&nbsp;
			</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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">544,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Research and development costs
			</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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">442,000&nbsp;
			</font>
			</p></td>
			<td colspan=2 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">418,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Total operating expenses </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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,283,000&nbsp;
			</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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">1,162,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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;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-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; 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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Income from operations </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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">408,000&nbsp;
			</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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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; 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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Other income (expense): </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; 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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Royalty 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">11,000&nbsp;
			</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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p 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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Other income (expense)</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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p 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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">39,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Interest income (expense)</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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">22,000&nbsp;
			</font>
			</p></td>
			<td colspan=2 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='text-align:right'><font size="2">(7,000)</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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Total</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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">27,000&nbsp;
			</font>
			</p></td>
			<td colspan=2 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">72,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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; 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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Income before provision for income taxes</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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">435,000&nbsp;
			</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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">770,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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; 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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
		</tr>
		<tr style='height:13.5pt'>
			<td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:
  1.0pt solid windowtext;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Provision for income taxes</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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">173,000&nbsp;
			</font>
			</p></td>
			<td colspan=2 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">308,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Net income</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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">262,000&nbsp;
  			</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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">462,000&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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; 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:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Net Income per share:</font></p></td>
			<td colspan=2 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; 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;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Basic</font></p></td>
			<td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</font></p></td>
			<td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">0.05&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Diluted</font></p></td>
			<td valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;$</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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">0.05&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></td>
			<td colspan=2 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; 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;
  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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Weighted average shares outstanding - basic</font></p></td>
			<td colspan=2 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">9,452,780&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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">8,863,902&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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">Weighted average shares outstanding - diluted</font></p></td>
			<td colspan=2 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">10,046,745&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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">9,470,127&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
			<td colspan=2 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
			<td colspan=2 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><i><font size="2">&nbsp;</font></i></p></td>
			<td colspan=2 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
			<td colspan=2 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</td>
		</tr>
	</table></div>
<p align=center style='text-align:center'><i>&nbsp;</i></p>
<p align=center style='text-align:center'><i>See notes to consolidated financial statements.</i></p>
<p align=center style='text-align:center'><font size="2">-3-</font></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'>
<div align="left">
	<table class=MsoNormalTable border=0 cellpadding=0 width=629
 style='width:740px;margin-left:4.4pt;border-collapse:collapse'>
		<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' align="center">
			<p align=center style='text-align:center'><b><font size="2">PRO-DEX, INC.
  and SUBSIDIARIES</font></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' align="center">
			<p align=center style='text-align:center'><b><font size="2">CONSOLIDATED
  STATEMENTS OF CASH FLOWS</font></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' align="center">
			<p align=center style='text-align:center'><b><font size="2">Three months
  ended September 30 (unaudited)</font></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' align="center"></td>
			<td colspan=2 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
			<td colspan=2 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></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' align="center"></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' align="center">
			<p 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' align="center">
			<p 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-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><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 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><font size="2">Net Income</font></p></td>
			<td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">262,000&nbsp;
  			</font>
  			</p></td>
			<td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">462,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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 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><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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">105,000&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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">84,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bad debt expense</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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">20,000&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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">5,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">71,000&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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">29,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">6,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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 align=right style='text-align:right'><font size="2">(67,000)</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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">-&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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 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><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">609,000&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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">278,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) 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 align=right style='text-align:right'><font size="2">(242,000)</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 align=right style='text-align:right'><font size="2">(372,000)</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><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 align=right style='text-align:right'><font size="2">(173,000)</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 align=right style='text-align:right'><font size="2">(190,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) 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 align=right style='text-align:right'><font size="2">(2,000)</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 align=right style='text-align:right'><font size="2">(30,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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 align=right style='text-align:right'><font size="2">(408,000)</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 align=right style='text-align:right'><font size="2">(232,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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
  receivable/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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">183,000&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 align=right style='text-align:right'><font size="2">(22,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">358,000&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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">18,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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 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><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 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><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 align=right style='text-align:right'><font size="2">(55,000)</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 align=right style='text-align:right'><font size="2">(47,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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 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><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 align=right style='text-align:right'><font size="2">(55,000)</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 align=right style='text-align:right'><font size="2">(47,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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 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><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 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><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 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 align=right style='text-align:right'><font size="2">(17,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from option 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">6,000&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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">73,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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 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><font size="2">Net Cash provided by 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">6,000&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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">56,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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 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><font size="2">Net Increase 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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">309,000&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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">27,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">2,584,000&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 align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">2,070,000&nbsp;
  			</font>
  			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<font size="2">&nbsp;</font></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 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><font size="2">Cash and Cash Equivalents, end of period </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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">2,893,000&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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p align=right style='margin-right:.7pt;text-align:right'>
			<font size="2">2,097,000&nbsp;
  			</font>
  			</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=2 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='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			</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 align=center style='text-align:center'><i><font size="2">Supplemental Information</font></i></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td valign=bottom style='height:12.75pt; border-bottom-style:none; border-bottom-width:medium; 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>
			<td valign=top style='border-top:1px solid;
  border-left:1px solid windowtext;border-bottom:1px solid;border-right:1px solid windowtext;
  height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<font size="2">Cash payments for interest</font></td>
			<td valign=top style='border-style:solid; border-width:1px; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<font size="2">$</font></td>
			<td valign=top style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<p align="right">-&nbsp;</td>
			<td valign=top style='border-style:solid; border-width:1px; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<font size="2">$</font></td>
			<td valign=top style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<p align="right"><font size="2">7,000&nbsp;</font></td>
		</tr>
		<tr>
			<td valign=top style='border-top:1px solid;
  border-left:1px solid windowtext;border-bottom:1px solid;border-right:1px solid windowtext;
  height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			&nbsp;</td>
			<td valign=top style='border-style:solid; border-width:1px; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			&nbsp;</td>
			<td valign=top style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			&nbsp;</td>
			<td valign=top style='border-style:solid; border-width:1px; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			&nbsp;</td>
			<td valign=top style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			&nbsp;</td>
		</tr>
		<tr>
			<td valign=top style='border-top:1px solid;
  border-left:1px solid windowtext;border-bottom:1px solid;border-right:1px solid windowtext;
  height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<font size="2">Cash payments for income taxes </font></td>
			<td valign=top style='border-style:solid; border-width:1px; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<font size="2">$</font></td>
			<td valign=top style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<p align="right"><font size="2">55,000&nbsp;</font></td>
			<td valign=top style='border-style:solid; border-width:1px; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<font size="2">$</font></td>
			<td valign=top style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; height:12.75pt; padding-left:4px; padding-right:4px; padding-top:1px; padding-bottom:1px' bordercolor="#000000">
			<p align="right"><font size="2">331,000&nbsp;</font></td>
		</tr>
		<tr style='height:12.75pt'>
			<td valign=bottom style='height:12.75pt; border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p><i><font size="2">&nbsp;</font></i></p></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=428 nowrap valign=bottom style='width:321.15pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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>
	</table></div>
<p align=center style='text-align:center'><i>See notes to consolidated financial statements.</i></p>
<p align=center style='text-align:center'><font size="2">-4-</font></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;text-autospace:none'><b>PRO-DEX,
INC. AND SUBSIDIARIES <br>
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS </b></p>
<p style="text-transform: uppercase"><b>Basis of Presentation</b></p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>The accompanying unaudited consolidated financial statements of Pro-Dex,
Inc. (&quot;We&quot;, &quot;us&quot;, &quot;our&quot;, &quot;Pro-Dex&quot; or the &quot;Company&quot;) have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in conjunction
with the audited financial statements presented in our Annual Report for the
fiscal year ended June 30, 2005.&nbsp; In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. The results of
operations for such interim periods are not necessarily indicative of the
results that may be expected for the full year. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended June 30, 2005. </p>
<p style="text-transform: uppercase"><b>Inventories</b></p>
<p style='text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories are stated at the lower of cost (the first-in, first-out method) or
market and consist of the following: </p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0
 style='width:634px;margin-left:54.4pt;border-collapse:collapse'>
	<tr style='height:12.75pt'>
		<td width=331 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'></td>
		<td colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">September 30, 2005</font></p></td>
		<td colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">June 30, 2005</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=331 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		</td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">(unaudited)</font></p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=330 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Raw Materials</font></p></td>
		<td width=32 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=118 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1,299,000&nbsp;
		</font>
		</p></td>
		<td width=52 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=88 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1,421,000&nbsp;
		</font>
		</p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=330 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Work in process</font></p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">621,000&nbsp;
		</font>
		</p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">409,000&nbsp;
		</font>
		</p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=330 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Development costs under
  contract</font></p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">179,000&nbsp;
		</font>
		</p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">132,000&nbsp;
		</font>
		</p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=330 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Finished goods</font></p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1,579,000&nbsp;
		</font>
		</p></td>
		<td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1,473,000&nbsp;
		</font>
		</p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=330 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;&nbsp;&nbsp; Total</font></p></td>
		<td width=32 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=118 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">3,678,000&nbsp;
		</font>
		</p></td>
		<td width=52 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=88 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">3,435,000&nbsp;
		</font>
		</p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=330 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Reserve for slow moving
  items</font></p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='text-align:right'><font size="2">(361,000)</font></p></td>
		<td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='text-align:right'><font size="2">(290,000)</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=330 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;&nbsp;&nbsp; Total inventories, net</font></p></td>
		<td width=32 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=118 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">3,317,000&nbsp;
		</font>
		</p></td>
		<td width=52 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=88 valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">3,145,000&nbsp;
		</font>
		</p></td>
	</tr>
</table>
</div>
<p style='text-autospace:none'><b>GOODWILL</b></p>
<p style='text-align:justify;text-indent:36.0pt'>On July 1,
2002 we adopted SFAS No. 142 &quot;Goodwill and Other Intangible Assets.&quot;&nbsp; SFAS No.
142 requires that goodwill and intangible assets with indefinite useful lives
no longer be amortized, but instead tested for impairment at least annually in
accordance with the provisions of SFAS No. 142.&nbsp; </p>
<p style='text-align:justify;text-indent:36.0pt'>In accordance
with the requirements of SFAS No. 142, we performed impairment tests and
recorded no impairment charges in fiscal years ended June 30, 2004 or 2005.&nbsp; We
prepare our annual impairment testing on April 1 of each year.&nbsp; During the
quarter ended September 30, 2005, management determined that there were no
events or circumstances which have occurred that would indicate an impairment
of the goodwill had occurred.&nbsp; </p>
<p style='text-align:justify;text-indent:36.0pt'>&nbsp;</p>
<p align=center style='text-align:center'><font size="2">-5-</font></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 style='text-autospace:none'><b>&nbsp;</b></p>
<p style="text-transform: uppercase"><b>Net INCOME per share </b>
</p>
<p style='margin-top:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
following table reconciles the weighted average shares outstanding for basic
and diluted net income per share for the periods indicated (unaudited).</p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0 width=613
 style='width:700px;margin-left:4.4pt;border-collapse:collapse'>
	<tr style='height:12.75pt'>
		<td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
		<td colspan=4 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:1.0pt solid black;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
		<p align=center style='text-align:center'><font size="2">Three Months Ended September 30,</font></p>
		</td>
		<td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
		</td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
		<p align=center style='text-align:center'><font size="2">2005</font></p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center">
		<p align=center style='text-align:center'><font size="2">2004</font></p></td>
		<td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="center"></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Net income</font></p></td>
		<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">262,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">462,000&nbsp;
		</font>
		</p></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Basic net income per
  common share:</font></p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		</td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right"></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;&nbsp; Weighted average number
  of common shares outstanding</font></p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">9,452,780&nbsp;
		</font>
		</p></td>
		<td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">8,863,902&nbsp;
		</font>
		</p></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Basic net income per
  common share </font> </p></td>
		<td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.03&nbsp; </font> </p>
		</td>
		<td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.05&nbsp; </font> </p>
		</td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		</td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		</td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right"></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		</td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		</td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right"></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Diluted net income per
  share:</font></p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		</td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right"></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;&nbsp; Weighted average of
  common shares outstanding</font></p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">9,452,780&nbsp;
		</font>
		</p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">8,863,902&nbsp;
		</font>
		</p></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of
  potentially dilutive securities (options)</font></p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">548,916&nbsp;
		</font>
		</p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">456,033&nbsp;
		</font>
		</p></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of
  potentially dilutive securities (warrants)</font></p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">45,049&nbsp;
		</font>
		</p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">72,064&nbsp;
		</font>
		</p></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of
  potentially dilutive securities </font> </p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		</td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:width; padding-right:.85pt; padding-top:0pt; padding-bottom:0&lt;td' align="right">
	<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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (convertible
  Preferred Shares)</font></p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">-&nbsp; </font> </p>
		</td>
		<td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">78,129&nbsp;
		</font>
		</p></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Weighted average number of
  common and shares - </font> </p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		</td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right"></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Diluted&nbsp; </font> </p></td>
		<td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">10,046,745&nbsp;
		</font>
		</p></td>
		<td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">9,470,128&nbsp;
		</font>
		</p></td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Diluted net income per
  common share</font></p></td>
		<td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.03&nbsp; </font> </p>
		</td>
		<td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.05&nbsp; </font> </p>
		</td>
		<td width=19 nowrap valign=bottom style='width:14.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
	</tr>
</table>
</div>
<p style='text-autospace:none'><b>CREDIT FACILITY</b></p>
<p style='text-align:justify;text-indent:36.0pt'>In October
2003, our then existing credit facility with Wells Fargo Business Credit Inc.
was refinanced with a more favorable facility by Wells Fargo Bank, N.A. (Wells
Fargo) for borrowings up to the lesser of $2,000,000 or the total of our
eligible accounts receivable.&nbsp; The credit facility expired in October
2004.&nbsp; Its terms required monthly interest payments at the prime rate or LIBOR
(one month to three months) plus 2.75% based on outstanding borrowings, with no
minimum interest charge.&nbsp; The outstanding borrowings under the credit
facility were secured by all assets of, and guaranteed by the Company. </p>
<p style='text-align:justify;text-indent:36.0pt'>In October
2004, the credit facility with Wells Fargo was renewed again with a more
favorable facility for borrowings up to $2,000,000.&nbsp; The credit facility
expired in October 2005 and its terms required monthly interest payments at the
prime rate of interest (6.75% at September 30, 2005); or LIBOR plus 2.50% (6.36%
(one month) to 6.57% (three months) at September 30, 2005), based on
outstanding borrowings with no minimum interest charge.&nbsp; The outstanding
borrowings are secured by all assets of and guaranteed by the Company.&nbsp; There
was no outstanding balance under the terms of this credit facility as of
September 30, 2005.&nbsp; The total eligible borrowing capacity at September
30, 2005 was $2,000,000.</p>
<p style='text-align:justify;text-indent:36.0pt'>There are certain financial and
non-financial covenants that we must meet to be in compliance with the terms of
the October 2004 Wells Fargo credit facility.&nbsp; At September 30, 2005, we
were in compliance with all such covenants.</p>
<p style="text-transform: uppercase"><b>Income Taxes</b></p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Deferred income taxes are provided on a liability method whereby deferred
tax assets and liabilities are recognized for temporary differences.&nbsp; Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases.&nbsp; Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.&nbsp; We have tax credit carry forwards
totaling $176,000 for State tax purposes that do not expire and can be carried
forward indefinitely until fully utilized.&nbsp; </p>
<p align=center style='text-align:center'><font size="2">-6-</font></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 style='text-autospace:none'><b>&nbsp;</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Significant
management judgment is required in determining our provision for income taxes
and the recoverability of our deferred tax asset.&nbsp; It is based on our estimates
of future taxable income by jurisdiction in which we operate and the period
over which our deferred tax assets will be recoverable.&nbsp; In the event that
actual results differ from these estimates or we adjust these estimates in
future periods, we may need to establish a valuation allowance which could
result in a tax provision up to the carrying value of our deferred tax assets.</p>
<p style='text-autospace:none'><b>STOCK OPTIONS</b></p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>During the quarter ended September 30, 2005, the Company granted 45,000
Common Stock Options under the Director's Plan exercisable at an average per
share price of $3.16 (fair market value $1.18 per option) and 120,000 Common
Stock Options under the Employee's Plan exercisable at an average per share
price of $2.85 (fair market value $1.22 per option).&nbsp; </p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>The fair market value of each grant is estimated at the grant date using
the Black-Scholes option-pricing model with the following weighted-average
assumptions: no dividend rate for all years; price volatility of 35% to 42%,
risk-free interest rate of approximately 3.7% to 4.2%; and expected lives of
five years.</p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0 width=577
 style='width:700px;margin-left:4.4pt;border-collapse:collapse'>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		<td width=219 nowrap colspan=4 valign=bottom style='width:164.0pt;border-top:
  solid windowtext 1.0pt;border-left:solid windowtext 1.0pt;border-bottom:none;
  border-right:solid black 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">Three Months Ended September 30,
		</font>
		</p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-left:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">2005</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border-top:
  none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">2004</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border:solid windowtext 1.0pt;
  border-bottom:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Net income as reported:</font></p></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;border:none;border-top:
  solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">262,000&nbsp;&nbsp;&nbsp;</font></p></td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">462,000&nbsp;&nbsp;&nbsp;</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Add stock-based employee</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">compensation expense
  included</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">in reported net income, net
  of</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">related tax effects</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">(Deduct) total stock-based</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">employee and director</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">compensation expense&nbsp;&nbsp; </font> </p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">determined under fair
  value</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">based method for all
  awards,</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">net of related tax effects</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border-top:
  none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='text-align:right'><font size="2">(8,000)</font></p></td>
		<td width=109 nowrap colspan=2 valign=bottom style='width:82.0pt;border-top:
  none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='text-align:right'><font size="2">(15,000)</font></p></td>
	</tr>
	<tr style='height:15.0pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.0pt'>
		<p><font size="2">Pro-forma net income:</font></p></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:15.0pt'>
		</td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;border:none;border-bottom:
  double windowtext 1.5pt;padding:0pt .85pt 0pt .85pt;height:15.0pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:double windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">254,000&nbsp;&nbsp;&nbsp;</font></p></td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;border:none;border-bottom:
  double windowtext 1.5pt;padding:0pt .85pt 0pt .85pt;height:15.0pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border-top:none;border-left:
  none;border-bottom:double windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.0pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">447,000&nbsp;&nbsp;&nbsp;</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border:solid windowtext 1.0pt;
  border-bottom:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Basic earnings per share</font></p></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">As reported</font></p></td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;border:none;padding:
  0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.03&nbsp;&nbsp;&nbsp;</font></p>
		</td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;border:none;padding:
  0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.05&nbsp;&nbsp;&nbsp;</font></p>
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Pro-forma</font></p></td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.03&nbsp;&nbsp;&nbsp;</font></p>
		</td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.05&nbsp;&nbsp;&nbsp;</font></p>
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border-top:none;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Diluted earnings per
  share:</font></p></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">As reported </font> </p></td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.03&nbsp;&nbsp;&nbsp;</font></p>
		</td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.05&nbsp;&nbsp;&nbsp;</font></p>
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=163 nowrap valign=bottom style='width:122.1pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'></td>
		<td width=196 nowrap valign=bottom style='width:147.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Pro-forma</font></p></td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.03&nbsp;&nbsp;&nbsp;</font></p>
		</td>
		<td width=22 nowrap valign=bottom style='width:16.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p><font size="2">&nbsp;$</font></p></td>
		<td width=87 valign=bottom style='width:65.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt' align="right">
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.05&nbsp;&nbsp;&nbsp;</font></p>
		</td>
	</tr>
</table>
</div>
<p style='text-autospace:none'><b>PREFERRED STOCK</b></p>
<p style='text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
January 2005, 78,129 Preferred Stock shares representing 100% of all Preferred
stock shares outstanding were converted to 78,129 shares of Common Stock,
leaving no Preferred Stock shares outstanding.&nbsp; We received no cash proceeds
from the conversion.</p>
<p style='text-autospace:none'><b>SUBSEQUENT EVENTS</b></p>
<p style='text-align:justify;text-indent:36.0pt'>&nbsp;On
October 31, 2005, the credit facility with Wells Fargo was renewed again for
borrowings up to $2,000,000.&nbsp; The credit facility expires in October 2006
and its terms require monthly interest payments at the prime rate of interest (6.75%
at September 30, 2005); or LIBOR plus 2.50% (6.36% (one month) to 6.57% (three
months) at September 30, 2005), based on outstanding borrowings with no minimum
interest charge.&nbsp; The outstanding borrowings are secured by all assets of
and guaranteed by the Company.&nbsp; The total eligible borrowing capacity at
November 14, 2005 was $2,000,000.</p>
<p style='text-align:center;'><font size="2">-7-</font></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 style='text-align:justify;text-indent:36.0pt'>There are
certain financial and non-financial covenants that we must meet to be in
compliance with the terms of the credit facility.&nbsp; At November 14, 2005, we
were in compliance with all such covenants.</p>
<p style='text-align:justify;text-indent:36.0pt'>&nbsp;On
October 31, 2005, we entered into an Asset Purchase Agreement (the &quot;Purchase
Agreement&quot;) with IntraVantage, Inc., a Delaware corporation (&quot;IntraVantage&quot;),
whereby the Company purchased from IntraVantage certain of IntraVantage's
assets related to IntraVantage's dental products business, including all of
IntraVantage's intellectual property rights (the &quot;Intellectual Property&quot; and,
collectively with the other purchased assets, the &quot;Assets&quot;).&nbsp; The purchase
price for the Assets comprised of the following consideration:</p>
<ul>
	<li>
	<p style='margin-left:36.0pt;text-align:justify;text-indent:
36.0pt'>$226,087 in cash paid to IntraVantage on October 31, 2005;</p></li>
	<li>
	<p style='margin-top:12.0pt;margin-right:0pt;margin-bottom:
0pt;margin-left:36.0pt;margin-bottom:.0001pt;text-align:justify;text-indent:
36.0pt'>$893,271 in cash paid to IntraVantage's bank on October 31, 2005
as full payoff and release of all of IntraVantage's credit obligations with
such bank; and</p></li>
	<li>
	<p style='margin-top:12.0pt;margin-right:0pt;margin-bottom:
0pt;margin-left:36.0pt;margin-bottom:.0001pt;text-align:justify;text-indent:
36.0pt'>$400,000 to IntraVantage in annual installments of $100,000 in
cash payable on each of October 31, 2006, 2007, 2008 and 2009.</p></li>
</ul>
<p style='margin-top:12.0pt;text-align:justify;text-indent:
36.0pt'>As further inducement for IntraVantage to enter into the Purchase
Agreement, Pro-Dex also entered into an Exclusive License Agreement and a
Royalty Agreement with IntraVantage in conjunction with the October 31, 2005
closing of the Purchase Agreement.&nbsp; The Exclusive License Agreement grants to
IntraVantage an exclusive, worldwide, irrevocable, royalty-free and perpetual
license to use the acquired Intellectual Property in any non-dental related
field of use.&nbsp; The Royalty Agreement requires that the Company pay to
IntraVantage certain royalty payments on revenues generated from future sales
of products by the Company which fall within the scope of, incorporate, are a
modification of or are substantially derived from one or more of the patents
included in the Intellectual Property.</p>
<p style='margin-left:0pt;text-align:justify;
text-indent:36.0pt'>Also in conjunction with the
closing of the Purchase Agreement, the Company agreed to terminate a supply
agreement between the Company and IntraVantage, along with all amendments
thereto. Pursuant to this termination, IntraVantage shall return to the Company
certain products previously delivered to IntraVantage under the supply
agreement in exchange for the Company issuing to IntraVantage a credit memo
equal to the full value of outstanding IntraVantage invoices related to the
supply agreement.</p>
<p style='margin-left:0pt;text-align:justify;
text-indent:36.0pt'>Pro-Dex will be reversing
approximately $300,000 in previously recorded sales to IntraVantage during the
second fiscal quarter of 2006, sales that relate to product which was returned
to Pro-Dex at the close of the transaction. Pro-Dex will also reduce its open
order backlog by approximately $900,000 to eliminate all orders currently in
place from IntraVantage. Additionally, this adjustment is not expected to
unfavorably impact bottom-line earnings during the second quarter and the
remainder of the year as the impact on profit was previously addressed through
increased reserves for accounts receivable during the fourth quarter of fiscal
2005 and the first quarter of fiscal year 2006.</p>
<p style='text-autospace:none'><b>Item 2. Management's
Discussion and Analysis or Plan of Operations</b></p>
<p><b>COMPANY OVERVIEW</b></p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>The following discussion and analysis provides information that the
Company's management believes is relevant to an assessment and understanding of
our results of operations and financial condition for each of the three month
periods ended September 30, 2004 and 2005, respectively.&nbsp; This discussion
should be read in conjunction with the Consolidated Financial Statements and
the Notes thereto included elsewhere in this Report. This Report contains
certain forward-looking statements and information. The cautionary statements
included herein should be read as being applicable to all related
forward-looking statements wherever they may appear.&nbsp; Our actual future results
could differ materially from those discussed herein.&nbsp; Our critical accounting
policies relate to inventory valuation for slow moving items, impairment of
goodwill, and recoverability of deferred income taxes.</p>
<p style='text-align:center;text-autospace:
none'><font size="2">-8-</font></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 style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Except for the historical information contained herein, the matters
discussed in this Quarterly Report on Form 10-QSB, including discussions of our
product development plans, business strategies and market factors influencing
our results, are forward-looking statements that involve certain risks and
uncertainties. Actual results may differ from those anticipated by us as a
result of various factors, both foreseen and unforeseen, including, but not
limited to, our ability to continue to develop new products and increase
systems sales in markets characterized by rapid technological evolution,
consolidation within our target marketplace and among our competitors, and
competition from larger, better capitalized competitors.&nbsp; Many other economic, competitive,
governmental and technological factors could impact our ability to achieve our
goals.&nbsp; Interested persons are urged to review the risks described herein, as
well as in our other public disclosures and filings with the Securities and
Exchange Commission.</p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Pro-Dex, Inc. is a Colorado corporation that was chartered in 1978, and 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.&nbsp; We
design and manufacture products serving the medical, dental, factory automation
and scientific research markets.&nbsp; Our strategic value proposition is to get
customers to market faster, at a lower total cost and with a higher quality
product.&nbsp; Products that we have developed and manufactured are used in
hospitals, dental offices, medical engineering labs, scientific research
facilities and high tech manufacturing operations&nbsp;around the world.&nbsp; Until
June 30, 2004, Pro-Dex had a &quot;holding company&quot; legal structure.&nbsp; In the fiscal
year ended June 30, 2004, we eliminated the Company's holding company structure
and terminated the separate legal status of our then operating subsidiaries,
Micro Motors, Inc. (&quot;Micro Motors&quot;) headquartered in Santa Ana, California
and Oregon Micro Systems, Inc. (&quot;OMS&quot;) headquartered in Beaverton,
Oregon, through the merger of each such subsidiary into the Company.&nbsp; As a
result, we no longer operate as a holding company but as one integrated
business operating in two locations providing a broad range of systems
solutions to our customers.&nbsp; The company names of Micro Motors&reg; and Oregon
Micro Systems&reg; continue to be used for marketing purposes as brand names.&nbsp;
</p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Pro-Dex's principal headquarters are located at 151 E. Columbine Avenue, Santa Ana,   California 92707 and our phone number is 714-241-4411.&nbsp; Our Internet address
is <u><font color="#0000FF">www.pro-dex.com</font></u>.&nbsp; Our annual reports
on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K,
amendments to those reports and other Securities and Exchange Commission
(&quot;SEC&quot;) filings, are available free of charge through our website as soon as
reasonably practicable after such reports are electronically filed with, or
furnished to, the SEC.&nbsp; In addition, our Code of Ethics and other corporate
governance documents may be found on our website at the Internet address set
forth above.&nbsp; Our filings with the SEC may also be read
and copied at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.&nbsp; You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.&nbsp; The SEC maintains an
Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC at
<font color="#0000FF">www.sec.gov</font>. </p>
<p><b>Description of Business</b></p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>The majority of our revenue is derived from designing, developing and
manufacturing electric, air, and battery powered rotary drive systems for the
medical device and dental industries, and motion control software and hardware
for industrial and scientific applications.&nbsp; The Company also distributes its
own line of pneumatic and electric dental hand pieces sold under the Micro
Motors name utilizing a network of independent sales representatives across North America.&nbsp; A large part of the revenue growth of the Company has been driven by
developing and selling numerous private label rotary drive systems for use in
dental, cranial, spinal, arthroscopic and orthopedic surgery.&nbsp; Other revenue
sources include designing and manufacturing miniature pneumatic motors and
motion control systems for industrial applications in the automotive,
aerospace, apparel and entertainment industries.</p>
<p style='text-align:center;text-autospace:
none'><font size="2">-9-</font></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 style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>All years relating to financial data herein shall refer to fiscal years
ending June 30, unless indicated otherwise.</p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Company-funded research and development supports the development of
generic rotary drive and motion control platforms.&nbsp; We then seek
customer-funded projects to customize these platforms to specific customer
requirements.&nbsp; Company-funded research and development projects are generally
expected to convert to customer-funded projects within six to eighteen months.&nbsp;
Company funded project costs are expensed as incurred.&nbsp; In the three months
ended September 30, 2005, $442,000 was expensed; an increase of $24,000 from
the $418,000 expensed in the three months ended September 30, 2004.&nbsp; </p>
<p align="justify" style="text-indent: 36pt">For customer-funded development projects, costs are
capitalized and recognized as a cost of sales when specific deliverables within
the development contracts are produced, matching the costs to the revenue. In
the three months ended September 30, 2005, $4,000 was recognized as cost of
sales, compared to $37,000 recognized as cost of sales in the three months
ended September 30, 2004, reflecting a decrease in development fees billable
during the quarter.</p>
<p align="justify" style="text-indent: 36pt">Customer-funded research and development provided
$19,000 in revenue in the three months ended September 30, 2005, and $149,000
in revenue in the three months ended September 30, 2004, reflecting a decrease
in development fees billable during the quarter.&nbsp; The results of
customer-funded development work are intended to provide long-term exclusive
manufacturing agreements and provide the customer with the retention of the
intellectual property developed.&nbsp; The identity of the customer is generally
protected by a non-disclosure agreement.</p>
<p style='text-autospace:ideograph-numeric ideograph-other; text-indent:36pt'>The
Company's revenue is derived from four main customer types.&nbsp; The proportion of
Pro-Dex total sales to each customer type is noted in the table below:</p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0 width=509
 style='width:625px;margin-left:54.4pt;border-collapse:collapse'>
	<tr style='height:12.75pt'>
		<td width=192 nowrap valign=bottom style='width:143.75pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border:solid windowtext 1.0pt;
  border-bottom:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">Q1 FY</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">Q1 FY</font></p></td>
		<td width=67 nowrap valign=bottom style='width:50.0pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">FY</font></p></td>
		<td width=56 nowrap valign=bottom style='width:42.0pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">FY</font></p></td>
		<td width=64 nowrap valign=bottom style='width:48.0pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">FY</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=192 nowrap valign=bottom style='width:143.75pt;padding:0pt .85pt 0pt .85pt;
  height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">% of Total Sales</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">2006</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">2005</font></p></td>
		<td width=67 nowrap valign=bottom style='width:50.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">2005</font></p></td>
		<td width=56 nowrap valign=bottom style='width:42.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">2004</font></p></td>
		<td width=64 nowrap valign=bottom style='width:48.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">2003</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=192 nowrap valign=bottom style='width:143.75pt;border:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Dental</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">29%</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">23%</font></p></td>
		<td width=67 nowrap valign=bottom style='width:50.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">24%</font></p></td>
		<td width=56 nowrap valign=bottom style='width:42.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">32%</font></p></td>
		<td width=64 nowrap valign=bottom style='width:48.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">43%</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=192 nowrap valign=bottom style='width:143.75pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Medical </font> </p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">43%</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">33%</font></p></td>
		<td width=67 nowrap valign=bottom style='width:50.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">42%</font></p></td>
		<td width=56 nowrap valign=bottom style='width:42.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">41%</font></p></td>
		<td width=64 nowrap valign=bottom style='width:48.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">28%</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=192 nowrap valign=bottom style='width:143.75pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Industrial</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">19%</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">31%</font></p></td>
		<td width=67 nowrap valign=bottom style='width:50.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">26%</font></p></td>
		<td width=56 nowrap valign=bottom style='width:42.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">18%</font></p></td>
		<td width=64 nowrap valign=bottom style='width:48.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">19%</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td width=192 nowrap valign=bottom style='width:143.75pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p><font size="2">Government research and
  other</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">9%</font></p></td>
		<td width=65 nowrap valign=bottom style='width:49.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">12%</font></p></td>
		<td width=67 nowrap valign=bottom style='width:50.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">8%</font></p></td>
		<td width=56 nowrap valign=bottom style='width:42.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">9%</font></p></td>
		<td width=64 nowrap valign=bottom style='width:48.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">10%</font></p></td>
	</tr>
</table>
</div>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Medical product sales represent the manufacture of products which utilize
proprietary designs developed by the Company under exclusive design and supply
agreements.&nbsp; Our dental products are sold to original equipment manufacturers
and dental product distributors.&nbsp; An independent dealer network was engaged in
2003 to market our own branded line of dental products in a more effective
manner.&nbsp; We also design and manufacture embedded multi-axis motion controllers
used to regulate the motion of servo and stepper motors, predominantly for the
factory automation and medical analysis equipment industries.&nbsp; The controllers
support the platforms for PCI, VME, ISA, and cPCI busses as well as stand-alone
requirements.&nbsp; In addition, we make and sell pneumatic motors for industrial
applications that are marketed directly to end-users and through industrial
supply distributors.&nbsp; The increase in the percentage of sales of medical
products is a direct result of the shift in the focus of our research and
development efforts away from dental products and toward our capabilities in
the medical product market. </p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Our commitment to quality manufacturing is demonstrated by our many
independently verified certifications for maintaining quality processes and
products.&nbsp; We hold the following certifications: ISO 9001:2000, ISO 13485
revised 1998, and Medical Device Directive 93\42\EEC Annex II company.</p>
<p style='text-align:center;text-autospace:
none'><font size="2">-10-</font></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 style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>At the present time, we are generally able to fill orders within sixty
(60) days.&nbsp; At September 30, 2005, we had a backlog, including orders for
delivery beyond 60 days, of $7.6 million compared with a backlog of $4.3
million at September 30, 2004 and $7.9 million at June 30, 2005.&nbsp; We expect to
ship most of our backlog in 2006 and the remainder in 2007.&nbsp; The increased
backlog compared to September 30, 2004 is due to an increase in new purchase
orders in the last year from new and existing customers.&nbsp; We do not typically
experience seasonal fluctuations in our new order bookings, but may experience
variability in our new order bookings due to the timing of major new product
launches.&nbsp; Similarly, we do not typically experience seasonal fluctuations in
our shipments and revenues.&nbsp; </p>
<p style='text-align:justify;text-indent:36.0pt'>We sell our
products using several methods; selling directly to the customer, selling
directly to original equipment manufacturers and selling through a network of
high technology and dental product distributors within North America.&nbsp;
Internationally, the Company has sales agreements with foreign distributors or
sells through the domestic subsidiaries of foreign customers.</p>
<p><b>CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS</b></p>
<p style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States (GAAP).&nbsp; The
preparation of our financial statements requires management to make estimates
and judgments that affect the reported amounts of assets, liabilities,
revenues, expenses and related disclosures.&nbsp; We base our estimates on
historical experience and various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources.&nbsp; Actual results may differ from
these estimates.&nbsp; The significant accounting policies that are believed to
be the most critical to fully understanding and evaluating the reported
financial results include inventory valuations for slow moving items,
impairment of goodwill, and the recovery of deferred income tax assets.</p>
<p style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We determine our
inventory value at the lower of cost (first-in, first-out method) or market
value and calculate a reserve for slow moving items to reflect a reduced
marketability for the item.&nbsp; The reserve is calculated by comparing the quantity
of the item on hand with our prior 12-month sales history.&nbsp; If inventory on
hand for a specific part exceeds an estimated 24 months of usage, between 20%
and 100% of its value may be included in the inventory reserve.&nbsp; The actual
percentage reserved depends on the total quantity on hand, its sales history,
and expected near term sales prospects.</p>
<p style='text-indent:36.0pt'>On July 1, 2002 the Company
adopted SFAS No. 142 &quot;Goodwill and Other Intangible Assets.&quot;&nbsp; SFAS No. 142
requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually in
accordance with the provisions of SFAS No. 142.&nbsp; In accordance with the
requirements of SFAS No. 142, we have recorded no impairment charge in 2004 or 2005.&nbsp;
We prepare our annual impairment testing on April 1 of each year.&nbsp; </p>
<p style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of the process of preparing our consolidated financial statements, we
are required to estimate our income taxes in each of the jurisdictions in which
we operate.&nbsp; This process involves estimating the actual current tax
liabilities together with assessing temporary differences resulting from
differing treatment of items for tax and accounting purposes.&nbsp; These
differences result in deferred tax assets and liabilities, which are included
within the consolidated balance sheet.&nbsp; The most significant tax assets
are future deductions from the amortization of intangibles over the next ten
years.&nbsp; Tax assets also result from net operating losses and research and
development tax credits.&nbsp; We must then assess the likelihood that the
deferred tax assets will be recovered from future taxable income and, to the
extent we believe that recovery is not likely, a valuation allowance must be
established.&nbsp; To the extent we establish a valuation allowance or increase
or decrease this allowance in a period, the impact will be included in the tax
provision in the statement of operations.</p>
<p style='text-align:center'><font size="2">-11-</font></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 style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Significant management judgment is required to determine our provision for
income taxes and the recoverability of the deferred tax asset.&nbsp; It is
based on estimates of future taxable income by jurisdiction in which the
Company operates and the period over which the deferred tax assets will be
recoverable.&nbsp; In the event that actual results differ from these estimates
or we adjust these estimates in future periods, a valuation allowance may need
to be established which could result in a tax provision equal to the carrying
value of the deferred tax assets. </p>
<p style='text-align:justify'>&nbsp;</p>
<p style='text-align:justify'>&nbsp;</p>
<p style='text-align:justify'>&nbsp;</p>
<p style='text-align:justify'>&nbsp;</p>
<p style='text-align:justify'>&nbsp;</p>
<p style='text-align:justify'>&nbsp;</p>
<p style='text-align:center'><font size="2">-12-</font></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 style="text-transform: uppercase"><b>Results of Operations </b>
</p>
<p style='text-autospace:none'><b>For the Three-Month periods
ended September 30, 2005 and 2004</b></p>
<p><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b>The following table sets forth for the
periods indicated the percentage of net revenues represented by each item in
our Consolidated Statements of Income. </p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0 width=571
 style='width:625px;margin-left:4.4pt;border-collapse:collapse'>
	<tr style='height:12.75pt'>
		<td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">(In Thousands)</font></p></td>
		<td colspan=6 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:1.0pt solid black;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">Three Months Ended September 30,
		</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='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 align=center style='text-align:center'><font size="2">2005</font></p></td>
		<td colspan=3 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:1.0pt solid black;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">2004</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom 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'>
		<p><font size="2">Net sales:</font></p></td>
		<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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">3,763&nbsp;
		</font>
		</p></td>
		<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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">100.0&nbsp;%</font></p>
		</td>
		<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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">3,332&nbsp;
		</font>
		</p></td>
		<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">100.0&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><font size="2">Cost of sales</font></p></td>
		<td colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">2,072&nbsp;
		</font>
		</p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">55.1&nbsp;%</font></p>
		</td>
		<td colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1,472&nbsp;
		</font>
		</p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">44.2&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><font size="2">Gross Profit</font></p></td>
		<td colspan=2 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1,691&nbsp;
		</font>
		</p></td>
		<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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">44.9&nbsp;%</font></p>
		</td>
		<td colspan=2 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1,860&nbsp;
		</font>
		</p></td>
		<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">55.8&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'>
		</td>
		<td colspan=2 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'>
		</td>
		<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'></td>
		<td colspan=2 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'>
		</td>
		<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: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><font size="2">Selling, general and
  administrative expenses</font></p></td>
		<td colspan=2 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">841&nbsp; </font> </p>
		</td>
		<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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">22.3&nbsp;%</font></p>
		</td>
		<td colspan=2 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">744&nbsp; </font> </p>
		</td>
		<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">22.3&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><font size="2">Research and development
  costs</font></p></td>
		<td colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">442&nbsp; </font> </p>
		</td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">11.7&nbsp;%</font></p>
		</td>
		<td colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">418&nbsp; </font> </p>
		</td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">12.5&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><font size="2">Income from Operations</font></p></td>
		<td colspan=2 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">408&nbsp; </font> </p>
		</td>
		<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">10.8&nbsp;%</font></p>
		</td>
		<td colspan=2 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">698&nbsp; </font> </p>
		</td>
		<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">20.9&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'>
		</td>
		<td colspan=2 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'>
		</td>
		<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: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 valign=bottom 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><font size="2">Net interest and other
  (income)</font></p></td>
		<td colspan=2 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 align=right style='text-align:right'><font size="2">(27)</font></p></td>
		<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">(0.7&nbsp;</font></p>
		</td>
		<td colspan=2 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='text-align:right'><font size="2">(72)</font></p></td>
		<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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">(2.2&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'>
		</td>
		<td colspan=2 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'>
		</td>
		<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: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 valign=bottom 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><font size="2">Provision for Income Taxes</font></p></td>
		<td colspan=2 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:1px solid #000000; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">173&nbsp; </font> </p>
		</td>
		<td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1px solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">4.6&nbsp;%</font></p>
		</td>
		<td colspan=2 valign=bottom style='border-bottom:1px solid #000000; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">308&nbsp; </font> </p>
		</td>
		<td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1px solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">9.2&nbsp;%</font></p>
		</td>
	</tr>
	<tr style='height:13.5pt'>
		<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:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Net Income</font></p></td>
		<td valign=bottom style='border-left:1.0pt solid windowtext;border-bottom:2.25pt double windowtext;
  border-right:medium none;height:13.5pt; border-top-color:windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:13.5pt; border-top-color:windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">262&nbsp; </font> </p>
		</td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:2.25pt double windowtext; height:13.5pt; border-top-color:inherit; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">7.0&nbsp;%</font></p>
		</td>
		<td valign=bottom style='border-left:1.0pt solid windowtext;border-bottom:2.25pt double windowtext;
  border-right:medium none;height:13.5pt; border-top-color:windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:13.5pt; border-top-color:inherit; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">462&nbsp; </font> </p>
		</td>
		<td valign=bottom style='border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:13.5pt; border-top-color:inherit; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">13.9&nbsp;%</font></p>
		</td>
	</tr>
	<tr style='height:13.5pt'>
		<td valign=bottom style='height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'></td>
		<td colspan=2 valign=bottom style='height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'></td>
		<td valign=bottom style='height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'></td>
		<td colspan=2 valign=bottom style='height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'></td>
		<td valign=bottom style='height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'></td>
	</tr>
</table>
</div>
<p style='text-align:justify;text-indent:36.0pt'><b>Net Sales.</b>&nbsp;
Consolidated sales increased from $3,332,000 to $3,763,000 ($431,000 or 13%)
for the quarter ended September 30, 2005, compared to the quarter ended
September 30, 2004.&nbsp; Medical products continued to increase as a
percyear.&nbsp;
Shipments to dental customers increased to 29% of total sales compared to 23%
for the same quarter in the prior year as new customers expanded their order
volume.&nbsp; Sales to factory automation and industrial customers decreased to
19% from 31% for the same quarter in the prior year as shipments of legacy
motion control devices were reduced.&nbsp; Although selective price increases and
decreases were implemented in response to market conditions, the majority of
the sales growth and declines for each product line is due primarily to changes
in sales volume, not the effect of price changes.&nbsp; </p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b>Gross Profit and Gross Profit Percentage of Sales</b>.&nbsp; Our
consolidated gross profit for the quarter ended September 30, 2005 decreased 9%
over the same quarter in the previous year despite an increase in sales as higher
margin industrial sales were replaced by a mix of lower margin dental products.&nbsp;
Gross profit as a percentage of sales decreased to 44.9% for the quarter ended
September 30, 2005 compared to 55.8% for the quarter ended September 30, 2004, reflecting
the sales product mix changes as well as new product launch manufacturing inefficiencies
that offset cost improvements from prior quarters.&nbsp; Gross profit and gross
profit percentage were as follows: </p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0 width=453
 style='width:600px;margin-left:54.4pt;border-collapse:collapse' id="table3">
	<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='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'>
		<p align=center style='text-align:center'><font size="2">Three Months Ended September 30,</font></p>
		</td>
		<td valign=bottom 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'></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=2 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 align=center style='text-align:center'><font size="2">2005</font></p></td>
		<td colspan=2 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">2004</font></p></td>
		<td valign=bottom 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 align=center style='text-align:center'><font size="2">(Decrease)</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<font size="2">Gross Profit</font></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;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'>
		<font size="2">&nbsp;$</font></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1,691,000&nbsp;</font></p>
		</td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;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'>
		<font size="2">&nbsp;$</font></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1,860,000&nbsp;</font></p>
		</td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">-9.1&nbsp;%</font></p>
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom 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'>
		<font size="2">Gross Profit Percentage</font></td>
		<td colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">44.9&nbsp;%</font></p>
		</td>
		<td colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">55.8&nbsp;%</font></p>
		</td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">-19.5&nbsp;%</font></p>
		</td>
	</tr>
	<tr height=0>
		<td style='border:none'></td>
		<td style='border:none'></td>
		<td style='border:none'></td>
		<td style='border:none'></td>
		<td style='border:none'></td>
		<td style='border:none'></td>
	</tr>
</table>
</div>
<p align=center style='text-align:center'><font size="2">-13-</font></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 style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b>Selling, General and Administrative Costs (S, G&amp;A)</b>.&nbsp; S, G
&amp; A expenses increased to $841,000 for the quarter ended September 30, 2005
from $744,000 for the quarter ended September 30, 2004.&nbsp; The increase is due to
increased expenses related to print advertising and promotional materials of
$30,000, increased bad debt expense of $20,000 and increased corporate business
development expenses.&nbsp; S, G &amp; A costs were as follows: </p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0 width=469
 style='width:600px;margin-left:54.4pt;border-collapse:collapse'>
	<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='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:1.0pt solid black;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">Three Months Ended September 30,</font></p>
		</td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left: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 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='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 align=center style='text-align:center'><font size="2">2005</font></p></td>
		<td colspan=2 valign=bottom 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 align=center style='text-align:center'><font size="2">2004</font></p></td>
		<td valign=bottom 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 align=center style='text-align:center'><font size="2">Increase</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Selling</font></p></td>
		<td valign=bottom 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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">255,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom 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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">200,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">28&nbsp;%</font></p>
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">General and administrative</font></p></td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">586,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom 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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">544,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">8&nbsp;%</font></p>
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Total S, G&amp;A</font></p></td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">841,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom 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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">744,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">13&nbsp;%</font></p>
		</td>
	</tr>
</table>
</div>
<p style='text-align:justify;text-indent:36.0pt'><b>Research
and Development Costs</b>.&nbsp; Company-funded research and development
expenses increased to $442,000 for the quarter ended September 30, 2005 from $418,000
for the quarter ended September 30, 2004.&nbsp; The increase in Company-funded
research and development costs is due to higher investments in labor and travel
associated with new product development.&nbsp; Company-funded research and
development costs were as follows:</p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0 width=521
 style='width:600px;margin-left:54.4pt;border-collapse:collapse'>
	<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='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:1.0pt solid black;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">Three Months Ended September 30,</font></p>
		</td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left: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 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='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 align=center style='text-align:center'><font size="2">2005</font></p></td>
		<td colspan=2 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">2004</font></p></td>
		<td valign=bottom 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 align=center style='text-align:center'><font size="2">Increase</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Research and Development
  costs</font></p></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">442,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">418,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">6&nbsp;%</font></p>
		</td>
	</tr>
	<tr height=0>
		<td style='border:none'></td>
		<td style='border:none'></td>
		<td style='border:none'></td>
		<td style='border:none'></td>
		<td style='border:none'></td>
		<td style='border:none'></td>
	</tr>
</table>
</div>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Company-funded research and development supports the development of
generic rotary drive and motion control platforms.&nbsp; We then seek
customer-funded projects to customize these platforms to specific customer
requirements.&nbsp; Company-funded research and development projects are generally
expected to convert to customer-funded projects within six to eighteen months.&nbsp;
Company funded project costs are expensed as incurred.&nbsp; In the three months
ended September 30, 2005, $442,000 was expensed; an increase of $24,000 from
the $418,000 expensed in the three months ended September 30, 2004.&nbsp; </p>
<p align="justify" style="text-indent: 36pt">For customer-funded development projects, costs are
capitalized and recognized as a cost of sales when specific deliverables within
the development contracts are produced, matching the costs to the revenue. In
the three months ended September 30, 2005, $4,000 was recognized as cost of
sales, compared to $37,000 recognized as cost of sales in the three months
ended September 30, 2004, reflecting the completion of new product launches
this quarter.</p>
<p align="justify" style="text-indent: 36pt">Customer-funded research and development provided
$19,000 in revenue in the three months ended September 30, 2005, and $149,000
in revenue in the three months ended September 30, 2004.&nbsp; The results of
customer-funded development work are intended to provide long-term exclusive
manufacturing agreements and provide the customer with the retention of the
intellectual property developed.&nbsp; The identity of the customer is generally
protected by a non-disclosure agreement. </p>
<p style='text-align:justify;text-indent:36.0pt'><b>Operating
Profit and Operating Profit Percentage of Sales</b>.&nbsp; Our
consolidated operating profit for the quarter ended September 30, 2005
decreased to $408,000 compared to operating profit of $698,000 for the same
quarter in the previous year.&nbsp; The decrease was due to the less profitable
product sales mix given the decreased industrial product sales levels and increased
operating expenses.&nbsp; Consequently, operating profit as a percentage of sales
decreased to 10.8% for the quarter ended September 30, 2005 compared to 20.9%
for the quarter ended September 30,.&nbsp; Operating profit and margin were as
follows: </p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0 width=468
 style='width:600px;margin-left:54.4pt;border-collapse:collapse'>
	<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=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:1.0pt solid black;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">Three Months Ended September 30,
		</font>
		</p></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left: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 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'></td>
		<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 align=center style='text-align:center'><font size="2">2005</font></p></td>
		<td valign=bottom styl555e='width:81.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:12.75pt'>
		<p align=center style='text-align:center'><font size="2">2004</font></p></td>
		<td 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'>
		<p align=center style='text-align:center'><font size="2">Decrease</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Operating Profit</font></p></td>
		<td valign=bottom 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 align=right style='text-align:right'><font size="2">$408,000</font></p></td>
		<td valign=bottom 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 align=right style='text-align:right'><font size="2">$698,000</font></p></td>
		<td valign=bottom 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 align=center style='text-align:center'><font size="2">-42%</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom 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><font size="2">Operating Profit
  Percentage</font></p></td>
		<td valign=bottom 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 align=right style='text-align:right'><font size="2">10.8%</font></p></td>
		<td valign=bottom 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 align=right style='text-align:right'><font size="2">20.9%</font></p></td>
		<td valign=bottom 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 align=center style='text-align:center'><font size="2">-48%</font></p></td>
	</tr>
</table>
</div>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b>Royalties and Other Income. </b>&nbsp;The Company recognized $11,000 in
royalty income in the three months ended September 30, 2005, compared to $40,000
in the prior year's quarter. </p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b>Interest. </b>&nbsp;Interest income was $22,000 in the quarter ended
September 30, 2005, compared to a $7,000 expense in the prior year's quarter
due to the size of Company's cash balances and current debt-free status. </p>
<p align=center style='text-align:center'><font size="2">-14-</font></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 style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b>Provision for Taxes</b>. Our estimated effective combined federal and
state tax rate on income from operations for the quarter ended September 30,
2005 was 40% and was 40% for the quarter ended September 30, 2004. </p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b>Net Income.</b>&nbsp; Our net income for the three months ended September
30, 2005 was $262,000 or $0.03 per share on a basic and diluted basis, as
compared to a net income of $462,000 or $0.05 per share on a basic and diluted
basis for the three months ended September 30, 2004.</p>
<p style='text-autospace:none'><b>Liquidity and Capital
Resources</b></p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>The following table presents selected financial information for the
comparative period last year and the year ended June 30, 2005:</p>
<div align="left">
<table class=MsoNormalTable border=0 cellpadding=0 width=579
 style='width:600px;margin-left:54.4pt;border-collapse:collapse'>
	<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='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:1.0pt solid black;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">As of September 30,
		</font> </p></td>
		<td colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left: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 align=center style='text-align:center'><font size="2">Year Ending</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; border-bottom-style:none; border-bottom-width:medium'></td>
		<td colspan=2 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 align=center style='text-align:center'><font size="2">2005</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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">2004</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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">June 30, 2005</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border:1px solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' bordercolor="#000000">
		<p><font size="2">Cash and cash equivalents</font></p></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">2,893,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">2,097,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">2,584,000&nbsp;
		</font>
		</p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border-left:1px solid windowtext; border-right:1px solid windowtext; border-bottom:1px solid windowtext; border-top:1px solid; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' bordercolor="#000000">
		<p><font size="2">Working Capital&#185;</font></p></td>
		<td valign=bottom 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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">8,604,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">6,267,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom 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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">8,288,000&nbsp;
		</font>
		</p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style="5&#039;width:200.5pt;border:1px solid; " bordercolor="#000000">
		<p><font size="2">Credit Line outstanding
  balance</font></p></td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0&nbsp; </font> </p>
		</td>
		<td valign=bottom 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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0&nbsp; </font> </p>
		</td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0&nbsp; </font> </p>
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border-top:1px solid;
  border-left:1px solid windowtext;border-bottom:1px solid;border-right:1px solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' bordercolor="#000000">
		<p><font size="2">Tangible book value/common
  share&#178;</font></p></td>
		<td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt; border-left-style:none; border-left-width:medium'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1.09&nbsp; </font> </p>
		</td>
		<td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td 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'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">0.91&nbsp; </font> </p>
		</td>
		<td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td 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'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">1.10&nbsp; </font> </p>
		</td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border-left:1px solid windowtext; border-right:1px solid windowtext; border-bottom:1px solid windowtext; border-top:1px solid; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' bordercolor="#000000">
		<p><font size="2">Number of days of sales
  outstanding (DSO) in<br>
		accounts receivable at end
  of quarter&#179;</font></p></td>
		<td colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">70&nbsp;</font></p>
		</td>
		<td colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">57&nbsp;</font></p>
		</td>
		<td colspan=2 valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">75&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'>
		</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>
		<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 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'>
		</td>
		<td colspan=4 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:1.0pt solid black;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">Three Months Ended September 30,
		</font>
		</p></td>
		<td colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left: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 align=center style='text-align:center'><font size="2">Year Ending</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'>
		</td>
		<td colspan=2 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 align=center style='text-align:center'><font size="2">2005</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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">2004</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:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=center style='text-align:center'><font size="2">June 30, 2005</font></p></td>
	</tr>
	<tr style='height:12.75pt'>
		<td valign=bottom style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">Net cash provided by
  operations</font></p></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">358,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;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><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">18,000&nbsp;
		</font>
		</p></td>
		<td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
		<p><font size="2">&nbsp;$</font></p></td>
		<td valign=bottom 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 align=right style='margin-right:.7pt;text-align:right'>
		<font size="2">557,000&nbsp;
		</font>
		</p></td>
	</tr>
</table>
</div>
<p style='margin-left:36.0pt;text-align:justify;text-autospace:
none'><sup>1</sup> Working Capital is calculated as follows:&nbsp; ending current
assets balance less ending current liabilities balance.</p>
<p style='margin-left:36.0pt;text-align:justify;text-autospace:
none'><sup>2</sup> Tangible book value/common share<sup> </sup>is calculated as
follows: (Total shareholders' equity less Goodwill) divided by (basic weighted
average outstanding shares for the most recent quarter).</p>
<p style='margin-left:36.0pt;text-align:justify;text-autospace:
none'><sup>3</sup> DSO is calculated as follows: Ending Net Accounts Receivable
balance divided by (Previous Quarter Sales divided by 91 days).</p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>Our working capital at September 30, 2005 increased to $8.6 million
compared to $6.3 million at September 30, 2004 and $8.3 million at June 30,
2005.&nbsp; Sustained profitability contributed to the provision of cash and increased
working capital for the quarter.&nbsp;</p>
<p style='text-align:justify;text-indent:36.0pt'>In October
2003, our then existing credit facility with Wells Fargo Business Credit Inc.
was refinanced with a more favorable facility by Wells Fargo Bank, N.A. (Wells
Fargo) for borrowings up to the lesser of $2,000,000 or the total of our
eligible accounts receivable.&nbsp; The credit facility expired in October
2004.&nbsp; Its terms required monthly interest payments at the prime rate or LIBOR
(one month to three months) plus 2.75% based on outstanding borrowings, with no
minimum interest charge.&nbsp; The outstanding borrowings under the credit
facility were secured by all assets of, and guaranteed by the Company. </p>
<p style='text-align:justify;text-indent:36.0pt'>In October
2004, the credit facility with Wells Fargo was renewed again with a more
favorable facility for borrowings up to $2,000,000.&nbsp; The credit facility
expired in October 2005 and its terms required monthly interest payments at the
prime rate of interest (5.75% at September 30, 2005); or LIBOR plus 2.50%
(6.36% (one month) to 6.57% (three months) at September 30, 2005), based on
outstanding borrowings with no minimum interest charge.&nbsp; The outstanding
borrowings are secured by all assets of, and guaranteed by the Company.&nbsp; There
was no outstanding balance under the terms of this credit facility as of
September 30, 2005.&nbsp; The total eligible borrowing capacity at September
30, 2005 was $2,000,000. </p>
<p style='text-align:center;'><font size="2">-15-</font></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 style='text-autospace:ideograph-numeric ideograph-other; text-indent:36pt' align="justify">There
are certain financial and non-financial covenants that we must meet to be in
compliance with the terms of the October 2004 Wells Fargo credit facility.&nbsp; At
September 30, 2005, we were in compliance with all such covenants.&nbsp; </p>
<p style='text-align:justify;text-indent:36.0pt'>In September
2002, our Board of Directors authorized the repurchase on the open market of up
to 500,000 shares at a share price no greater than $1.25 of our outstanding
Common Stock, subject to compliance with applicable laws and regulations.&nbsp;
There is no requirement that we repurchase all or any portion of such shares.&nbsp;
The maximum total value of the repurchase is not to exceed $500,000.&nbsp; This
repurchase is to be financed with cash generated by operations.&nbsp; From the
inception of the repurchase authorization through the year-end date of June 30,
2003, we repurchased 75,700 shares of Common Stock for $43,741, at an average
price of $0.58 per share.&nbsp; No additional shares were repurchased in fiscal year
2004, 2005, or to date during fiscal year 2006.</p>
<p style='text-align:justify;text-indent:36.0pt'>At September
30, 2005, we had cash and cash equivalents of $2,893,000.&nbsp; We believe that
our cash and cash equivalents on hand, together with cash flows from
operations, if any, and amounts available under the credit facility will be
sufficient to meet our working capital and capital expenditure requirements for
the next twelve months. </p>
<p style='text-autospace:none'><b>SUBSEQUENT EVENTS</b></p>
<p style='text-align:justify;text-indent:36.0pt'>&nbsp;&nbsp;On
October 31, 2005, the credit facility with Wells Fargo was renewed again for
borrowings up to $2,000,000.&nbsp; The credit facility expires in October 2006
and its terms require monthly interest payments at the prime rate of interest (6.75%
at September 30, 2005); or LIBOR plus 2.50% (6.36% (one month) to 6.57% (three
months) at September 30, 2005), based on outstanding borrowings with no minimum
interest charge.&nbsp; The outstanding borrowings are secured by all assets of
and guaranteed by the Company.&nbsp; The total eligible borrowing capacity at
November 14, 2005 was $2,000,000.</p>
<p style='text-align:justify;text-indent:36.0pt'>There are
certain financial and non-financial covenants that we must meet to be in
compliance with the terms of the credit facility.&nbsp; At November 14, 2005, we
were in compliance with all such covenants.</p>
<p style='text-align:justify;text-indent:36.0pt'>&nbsp;On
October 31, 2005, we entered into an Asset Purchase Agreement (the &quot;Purchase Agreement&quot;)
with IntraVantage, Inc., a Delaware corporation (&quot;IntraVantage&quot;), whereby the
Company purchased from IntraVantage certain of IntraVantage's assets related to
IntraVantage's dental products business, including all of IntraVantage's
intellectual property rights (the &quot;Intellectual Property&quot; and, collectively
with the other purchased assets, the &quot;Assets&quot;).&nbsp; The purchase price for the
Assets comprised of the following consideration:</p>
<ul>
	<li>
	<p style='margin-left:36.0pt;text-align:justify;text-indent:
36.0pt'>$226,087 in cash paid to IntraVantage on October 31, 2005;</p></li>
	<li>
	<p style='margin-top:12.0pt;margin-right:0pt;margin-bottom:
0pt;margin-left:36.0pt;margin-bottom:.0001pt;text-align:justify;text-indent:
36.0pt'>$893,271 in cash paid to IntraVantage's bank on October 31, 2005
as full payoff and release of all of IntraVantage's credit obligations with
such bank; and</p></li>
	<li>
	<p style='margin-top:12.0pt;margin-right:0pt;margin-bottom:
0pt;margin-left:36.0pt;margin-bottom:.0001pt;text-align:justify;text-indent:
36.0pt'>$400,000 to IntraVantage in annual installments of $100,000 in
cash payable on each of October 31, 2006, 2007, 2008 and 2009.</p></li>
</ul>
<p style='margin-top:12.0pt;text-align:justify;text-indent:
36.0pt'>As further inducement for IntraVantage to enter into the Purchase
Agreement, Pro-Dex also entered into an Exclusive License Agreement and a
Royalty Agreement with IntraVantage in conjunction with the October 31, 2005
closing of the Purchase Agreement.&nbsp; The Exclusive License Agreement grants to
IntraVantage an exclusive, worldwide, irrevocable, royalty-free and perpetual
license to use the acquired Intellectual Property in any non-dental related
field of use.&nbsp; The Royalty Agreement requires that the Company pay to
IntraVantage certain royalty payments on revenues generated from future sales
of products by the Company which fall within the scope of, incorporate, are a
modification of or are substantially derived from one or more of the patents included
in the Intellectual Property.</p>
<p style='margin-top:12.0pt;text-align:center;'><font size="2">-16-</font></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 style='margin-left:0pt;text-align:justify;
text-indent:36.0pt'>Also in conjunction with the
closing of the Purchase Agreement, the Company agreed to terminate a supply
agreement between the Company and IntraVantage, along with all amendments
thereto. Pursuant to this termination, IntraVantage shall return to the Company
certain products previously delivered to IntraVantage under the supply
agreement in exchange for the Company issuing to IntraVantage a credit memo
equal to the full value of outstanding IntraVantage invoices related to the
supply agreement.</p>
<p style='margin-left:0pt;text-align:justify;
text-indent:36.0pt'>Pro-Dex will be reversing
approximately $300,000 in previously recorded sales to IntraVantage during the
second fiscal quarter of 2006, sales that relate to product which was returned
to Pro-Dex at the close of the transaction. Pro-Dex will also reduce its open
order backlog by approximately $900,000 to eliminate all orders currently in
place from IntraVantage. Additionally, this adjustment is not expected to
unfavorably impact bottom-line earnings during the second quarter and the
remainder of the year as the impact on profit was previously addressed through
increased reserves for accounts receivable during the fourth quarter of fiscal
2005 and the first quarter of fiscal year 2006.</p>
<p style="text-transform: uppercase"><b>Risk Factors</b></p>
<p style='text-align:justify;line-height:normal'><b>Competition&nbsp;
</b></p>
<p style='text-align:justify;line-height:normal'><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</i>The
markets for healthcare and factory automation industries are intensely
competitive, and we face significant competition from a number of different
sources.&nbsp; Several of our competitors have significantly greater name
recognition as well as substantially greater financial, technical, product
development and marketing resources than us.</p>
<p style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We compete in all of
our markets with other major healthcare and factory automation related
companies. Competitive pressures and other factors, such as new product or new
technology introductions by us or our competitors, may result in price or
market share erosion that could have a material adverse effect on the our
business, results of operations and financial condition. Also, there can be no
assurance that our products and services will achieve broad market acceptance
or will successfully compete with other products.&nbsp; </p>
<p style='margin-bottom:6.0pt;text-align:justify'><b>Fluctuation
in Quarterly Operating Results</b>&nbsp; </p>
<p style='margin-bottom:6.0pt;text-align:justify'><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</i>Our
revenues have fluctuated in the past, and may fluctuate in the future from
quarter to quarter and period to period, as a result of a number of factors
including, without limitation: the size and timing of orders from customers;
the length of new product development cycles; market acceptance of new
technologies; changes in pricing policies or price reductions by us or our competitors;
the timing of new product announcements and product introductions by us or our
competitors; the financial stability of major customers; our success in
expanding our sales and marketing programs; deferrals of customer orders and
deliveries; changes in our strategy; personnel changes; and general
market/economic factors. </p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Because
a significant percentage of our expenses are relatively fixed, a variation in
the timing of sales can cause significant variations in operating results from
quarter to quarter. As a result, we believe that interim period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance. Further, our
historical operating results are not necessarily indicative of future
performance for any particular period.&nbsp; </p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Due
to all of the foregoing factors, it is possible that in some future quarter(s)
our operating results may be below the expectations of public market analysts
and investors. In such event, the price of our Common Stock would likely be
materially adversely affected.</p>
<p style='margin-bottom:6.0pt;text-align:center'><font size="2">-17-</font></p>
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<p style='margin-bottom:6.0pt;text-align:justify'><b>Dependence
on Principal Products and New Product Development</b></p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
currently derive a substantial part of our net revenues from sales of our core
healthcare and factory automation products and services. We believe that a
primary factor in the market acceptance of our product and services is the
value that is created for our customers by those products and services. Our
future financial performance will depend in large part on our ability to
continue to meet the increasingly sophisticated needs of our customers through
the timely development, successful introduction and implementation of new and
enhanced products and services. We have historically expended a significant
percentage of our net revenues on product development and believe that
significant continued product development efforts will be required to sustain
our growth. Continued investment in our sales and marketing efforts will also
be required to support future growth.</p>
<p style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There can be no
assurance that we will be successful in our product development efforts, that
the market will continue to accept our existing products, or that new products
or product enhancements will be developed and implemented in a timely manner,
meet the requirements of our customers, achieve market acceptance, or operate
without failure or product recall due to design or manufacturing errors. If new
products or product enhancements do not achieve market acceptance, our
business, results of operations and financial condition could be materially
adversely affected.</p>
<p style='margin-bottom:6.0pt;text-align:justify'><b>Technological
Change</b></p>
<p style='margin-bottom:6.0pt;text-align:justify'><b><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</i></b>The
healthcare and factory automation markets are generally characterized by rapid
technological change, changing customer needs, frequent new product
introductions, and evolving industry standards. The introduction of products
incorporating new technologies and the emergence of new industry standards
could render the Company's existing products obsolete and unmarketable. There
can be no assurance that we will be successful in developing and marketing new
products that respond to technological changes or evolving industry standards.</p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; New
product development requires significant research and development expenditures
that are ultimately funded by sales growth.&nbsp; Any significant decrease in
revenues or research funding could impair our ability to respond to
technological advances in the marketplace and to remain competitive. If we are
unable, for technological or other reasons, to develop and introduce new
products in a timely manner in response to changing market conditions or
customer requirements, our business, results of operations and financial
condition may be materially adversely affected.</p>
<p style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In response to
increasing market demand, we are currently developing new products. There can
be no assurance that we will successfully develop these new products or that
these products will operate successfully, or that any such development, even if
successful, will be completed concurrently with or prior to the introduction of
competing products.&nbsp; Any such failure or delay could adversely affect our
competitive position or could make our current products obsolete.</p>
<p style='margin-bottom:6.0pt;text-align:justify'><b>Litigation</b></p>
<p style='margin-bottom:6.0pt;text-align:justify'><i>&nbsp;</i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
continually face the possibility of litigation as either a plaintiff or a
defendant.&nbsp; It is not reasonably possible to estimate the expenses, awards or
damages, or the range of expenses, awards or damages, if any, that we might
incur in connection with such litigation. The uncertainty associated with
potential litigation may have an adverse impact on our business. In particular,
such litigation could impair our relationships with existing customers and our
ability to obtain new customers. Defending or prosecuting such litigation may
result in a diversion of management's time and attention away from business operations,
which could have a material adverse effect on our business, results of
operations and financial condition. </p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There
can be no assurance that such litigation will not result in liability in excess
of our insurance coverage, that our insurance will cover such claims or that
appropriate insurance will continue to be available to us in the future at
commercially reasonable rates.</p>
<p style='margin-bottom:6.0pt;text-align:center'><font size="2">-18-</font></p>
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<p style='margin-bottom:6.0pt;text-align:justify'><b>Proprietary
Technology </b></p>
<p style='margin-bottom:6.0pt;text-align:justify'><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</i>We
are dependent on the maintenance and protection of our intellectual property
and rely on exclusive development and supply agreements, confidentiality
procedures, and employee nondisclosure agreements to protect our intellectual
property. </p>
<p style='text-align:justify;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There
can be no assurance that the legal protections and precautions taken by us will
be adequate to prevent misappropriation of our technology or that competitors
will not independently develop technologies equivalent or superior to ours.
Further, the laws of some foreign countries do not protect our proprietary
rights to as great an extent as do the laws of the United States and are often
not enforced as vigorously as those in the United States.</p>
<p style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We do not believe
that our operations or products infringe on the intellectual property rights of
others. However, there can be no assurance that others will not assert infringement
or trade secret claims against us with respect to our current or future
products or that any such assertion will not require us to enter into a license
agreement or royalty arrangement with the party asserting the claim. </p>
<p style='margin-bottom:6.0pt;text-align:justify'><b>Ability to
Manage Growth</b><i> </i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
have in the past experienced periods of growth that have placed, and may
continue to place, a significant strain on our resources. We also anticipate
expanding our overall development, marketing, sales, management and training
capacity as market demand requires.&nbsp; In the event we are unable to identify,
hire, train and retain qualified individuals in such capacities within a
reasonable timeframe, such failure could have a material adverse effect on the
Company. </p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
addition, our ability to manage future increases, if any, in the scope of our
operations or personnel may depend on significant expansion of our research and
development, marketing and sales, management, and administrative and financial
capabilities. The ineffective management of expansion in the business could
have a material adverse effect on our business, results of operations and
financial condition.</p>
<p style='margin-bottom:6.0pt;text-align:justify'><b>Dependence
Upon Key Personnel</b>&nbsp; </p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Our
future performance also depends in significant part upon the continued service
of our key technical and senior management personnel, many of who have been
with the Company for a significant period of time.&nbsp; We purchased an annually
renewable one-year term key man life insurance policy for our president in
December 2004, but do not maintain key man life insurance on any other of our
employees. Because we have a relatively small number of employees when compared
to other leading companies in the same industry, our dependence on maintaining
our relationship with key employees is particularly significant. We are also
dependent on our ability to attract and retain high quality personnel,
particularly in the areas of product development, operations management and
finance. </p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A
high level of employee mobility and the aggressive recruiting of skilled
personnel characterize the healthcare and motion control industries.&nbsp; There can
be no assurance that our current employees will continue to work for us.&nbsp; Loss
of services of key employees could have a material adverse effect on our
business, results of operations and financial condition. Furthermore, we may
need to grant additional stock options to key employees and provide other forms
of incentive compensation to attract and retain such key personnel.</p>
<p style='margin-bottom:6.0pt;text-align:justify'><b>Product
Liability</b><i> </i></p>
<p style='margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
maintain insurance to protect against claims associated with the use of our
products, but there can be no assurance that our insurance coverage would
adequately cover any claim asserted against us. A successful claim brought
against us in excess of our insurance coverage could have a material adverse
effect on our business, results of operations and financial condition. Even
unsuccessful claims could result in the expenditure of funds in litigation and
management time and resources.</p>
<p style='margin-bottom:6.0pt;text-align:center'><font size="2">-19-</font></p>
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<p style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There can be no
assurance that we will not be subject to product liability claims, that such
claims will not result in liability in excess of our insurance coverage, that
our insurance will cover such claims or that appropriate insurance will
continue to be available to us in the future at commercially reasonable rates.
Such claims could have a material adverse affect on our business, results of
operations and financial condition. </p>
<p style='text-autospace:none'><b>Accounting Matters</b></p>
<p style='text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
are subject to changes in and interpretations of financial accounting matters
that govern the measurement of our performance. Based on our reading and interpretations
of relevant guidance, principles or concepts issued by, among other
authorities, the American Institute of Certified Public Accountants, the
Financial Accounting Standards Board, and the United States Securities and
Exchange Commission, our management believes our current sales contract terms
and business arrangements have been properly reported. However, there continue
to be issued interpretations and guidance for applying the relevant standards
to a wide range of contract terms and business arrangements that are prevalent
in the industries in which we operate. Future interpretations or changes by the
regulators of existing accounting standards or changes in our business
practices could result in future changes in our accounting policies and
practices that could have a material adverse effect on our business, financial
condition, cash flows, revenue and results of operations.&nbsp; </p>
<p style='text-align:justify'><b>Internal Controls</b></p>
<p style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any weaknesses
identified in our internal controls as part of the evaluation being undertaken
by us and our registered independent public accountants pursuant to Section 404
of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our
business.&nbsp; We are in the process of evaluating and documenting our controls
pursuant to Section 404 of the Sarbanes-Oxley Act.&nbsp; We are working toward being
fully compliant with the requirements of Section 404 of the Sarbanes-Oxley
Act.&nbsp; Failure to comply could have a material adverse affect on our business,
financial condition, and our ability to remain listed as a publicly held
exchange traded company.</p>
<p style='text-align:justify'><b>Stock Option Expense<i>&nbsp; </i></b></p>
<p style='text-align:justify'><b><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</i></b>Stock
options have from time to time been an important component of the compensation
packages for many of our directors and employees.&nbsp; We currently do not deduct
the expense of director or employee stock option grants from our income.&nbsp; As
issued on December 16, 2004, FAS 123(R) requires companies to change their
accounting policies to record the value of stock options vested as an expense
and a charge against earnings.&nbsp; We are a small business issuer and thus the
rule would require that we comply at the beginning of the first fiscal year
after December 15, 2005, so reports issued for dates after July 1, 2006 will
reflect the change and our reported earnings will be adversely affected. </p>
<p style='text-autospace:none'><b>RECENT ACCOUNTING
PRONOUNCEMENTS</b></p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>We are subject to the revised requirements of the Statement of Financial
Accounting Standards (&quot;SFAS&quot;) No. 123R &quot;Accounting for Stock-Based
Compensation&quot; as revised in December 2004.&nbsp; This standard establishes the
accounting standards for share-based compensation, and will apply to us in the
recognition of the cost of share based awards based on the grant-date fair
value of those awards.&nbsp; As a small business issuer, the statement is effective
for us at the beginning of the first fiscal year that begins after December 15,
2005. Upon adoption of SFAS 123(R), all stock option awards to employees will
be recognized as expense in the income statement, typically over any related
vesting period.&nbsp; We will be required to adopt SFAS 123(R) in the first quarter
of fiscal year 2007.&nbsp; We believe the impact of adopting SFAS 123(R) will be
similar to the pro-forma disclosure impact presented.</p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p style='text-autospace:none' align="center"><font size="2">-20-</font></p>
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<p style='text-autospace:none'><b>MAJOR CUSTOMERS</b></p>
<p style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>The Company had one Major Customer (defined as a customer that represents
greater than 10% of the Company's total revenues) in each of the quarters ended
September 30, 2004 and 2005.&nbsp; The 10% customer was the same customer in 2005
and 2004.&nbsp;&nbsp; Net sales to the Major Customer in 2005 amounted to $1,374,000 and
at September 30, 2005 the accounts receivable included a balance of $1,255,000 due
from this Major Customer.&nbsp; Net sales to the Major Customer in 2004 amounted to
$811,000 and at September 30, 2004 the accounts receivable included a balance
of $726,000 due from this Major Customer.</p>
<p style='text-align:justify;text-autospace:none'><b>Item 3.
Controls and Procedures</b></p>
<p style='text-align:justify;text-indent:36.0pt'>&nbsp;The Chief Executive Officer and Chief Financial
Officer (the principal executive officer and principal financial officer,
respectively) conducted an evaluation of the design and operation of our
&quot;disclosure controls and procedures&quot; (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (&quot;Exchange
Act&quot;)).&nbsp; Based on that evaluation, which was conducted within 90 days of the
date on which this quarterly report was filed with the Securities and Exchange
Commission, the Chief Executive Officer and Chief Financial Officer concluded
that the disclosure controls and procedures are effective to ensure that
information required to be disclosed by use in the reports filed or submitted
by us under the Exchange Act is accumulated, recorded, processed, summarized
and reported to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, and to allow timely decisions regarding
whether or not disclosure is required.</p>
<p style='text-align:justify;text-indent:36.0pt'>During the
quarter ended September 30, 2005, there were no changes in our internal
controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f)
under the Exchange Act) that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial reporting, except
that subsequent to the ending of our second quarter of fiscal 2005, we improved
the information and financial controls by consolidating our accounting and
Enterprise Resource Planning system to a unified platform. This allowed us to
eliminate two of the previous three accounting systems which we operated.&nbsp; As
the systems were consolidated, many of the operating procedures and information
processing steps were streamlined, reducing the opportunity for error and
increasing the Company's information processing efficiency.</p>
<p style='text-align:justify'><b>&nbsp;</b></p>
<p style='text-align:justify'>&nbsp;</p>
<p style='text-align:justify'>&nbsp;</p>
<p style='text-align:center'><font size="2">-21-</font></p>
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<p style='text-align:justify'><b>PART II</b></p>
<p align=center style='text-align:center;text-autospace:none'><b>OTHER
INFORMATION</b></p>
<p style='text-autospace:none'>
<b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Item 1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Legal Proceedings
</font>
</b></p>
<p style='margin-left:72.0pt;text-align:justify;text-autospace:
none'><font size="2">The Company is a party to various legal
proceedings incidental to its business, none of which are considered by the
Company to be material at this time.</font></p>
<p style='margin-top:18.0pt;text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>Item 2. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unregistered Sales of
Equity Securities and Use of Proceeds. </b>&nbsp;<br>
&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; None.</font></p>
<p style='margin-top:18.0pt;text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>Item 3. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Defaults Upon Senior
Securities. </b>&nbsp;<br>
&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; None.</font></p>
<p style='margin-top:18.0pt;text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>Item 4. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Submissions of Matters
to a Vote of Securities Holders.&nbsp; </b>&nbsp;<br>
&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; None.</font></p>
<p style='margin-top:18.0pt;text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>Item 5. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Information.
</b>&nbsp;<br>
&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; None.</font></p>
<p style='margin-top:18.0pt;text-align:justify'><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Item 6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibits.
</font>
</b><font size="2">&nbsp;</font></p>
<p style='margin-left:36.0pt;text-indent:36.0pt'><u><font size="2">Exhibits</font></u><font size="2">:</font></p>
<p style='margin-left:144.0pt;text-indent:-36.0pt'><font size="2">31.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certifications of Chief Executive Officer
Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</font></p>
<p style='margin-left:144.0pt;text-indent:-36.0pt'><font size="2">31.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certifications of Chief Financial
Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as
amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</font></p>
<p style='margin-left:144.0pt;text-indent:-36.0pt'><font size="2">32&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certification of the Chief Executive
Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</font></p>
<p><font size="2">SIGNATURES <br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
accordance with the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.</font></p>
<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=684
 style='width:513.0pt;border-collapse:collapse'>
	<tr>
		<td width=306 valign=top style='width:229.5pt;padding:0pt 0pt 0pt 0pt'>
		<p><font size="2">Date:&nbsp; November 14, 2005</font></p>
		<p><font size="2">PRO-DEX INC. </font> </p></td>
		<td width=378 valign=top style='width:283.5pt;padding:0pt 0pt 0pt 0pt'>
		<p><font size="2">Date:&nbsp; November 14, 2005</font></p>
		<p><font size="2">PRO-DEX INC. </font> </p></td>
	</tr>
	<tr>
		<td width=306 valign=top style='width:229.5pt;padding:0pt 0pt 0pt 0pt'>
		<p><font size="2">By: / s / Patrick Johnson </font> </p></td>
		<td width=378 valign=top style='width:283.5pt;padding:0pt 0pt 0pt 0pt'>
		<p><font size="2">By: / s / Jeffrey J. Ritchey
  </font>
  </p></td>
	</tr>
	<tr>
		<td width=306 valign=top style='width:229.5pt;padding:0pt 0pt 0pt 0pt'>
		</td>
		<td width=378 valign=top style='width:283.5pt;padding:0pt 0pt 0pt 0pt'>
		<font size="2">&nbsp; </font>
		</td>
	</tr>
	<tr>
		<td width=306 valign=top style='width:229.5pt;padding:0pt 0pt 0pt 0pt'>
		<p><font size="2">Patrick Johnson </font> </p></td>
		<td width=378 valign=top style='width:283.5pt;padding:0pt 0pt 0pt 0pt'>
		<p><font size="2">Jeffrey J. Ritchey </font> </p></td>
	</tr>
	<tr>
		<td width=306 valign=top style='width:229.5pt;padding:0pt 0pt 0pt 0pt'>
		<p><font size="2">Chief Executive Officer</font></p></td>
		<td width=378 valign=top style='width:283.5pt;padding:0pt 0pt 0pt 0pt'>
		<p><font size="2">Secretary and Chief
  Financial Officer<br>
		(Principal Financial and
  Accounting Officer)</font></p></td>
	</tr>
</table>
<p>&nbsp;</p>
<p align="center"><b>End of Filing</b></p>







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<p class=FlushLeft>&nbsp;</p>
<p class=FlushLeft>&nbsp;</p>
<p class=FlushLeft><b>EXHIBIT
31.1&nbsp;</b></p>

<p class=FlushLeft align=center style='text-align:center'><b><u>CERTIFICATIONS</u></b></p>



<p class=MsoNormal>I, Patrick L. Johnson,
certify that:</p>



<ol>
	<li>
	<p class=MsoNormal style='text-align:justify;'>I have reviewed this
Form 10-QSB of Pro-Dex, Inc.;</p></li>
	<li>
	<p class=MsoNormal style='text-align:justify;'>Based on my knowledge,
this quarterly report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report; </p>
	</li>
	<li>
	<p class=MsoNormal style='text-align:justify;'>Based on my knowledge,
the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the
periods presented in this report; </p></li>
	<li>
	<p class=MsoNormal style='text-align:justify;'>The registrant's other
certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) [language omitted pursuant to SEC release 34-47986] for the
registrant and have:</p></li>
</ol>
<ol type="a">
	<li>
	<p class=MsoNormal style='margin-left:0.25in;text-align:justify;'>Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this
report is being prepared;</p></li>
	<li>
	<p class=MsoNormal style='margin-left:0.25in;text-align:justify;'>[Omitted pursuant to SEC
Release 34-47986];</p></li>
	<li>
	<p class=MsoNormal style='margin-left:0.25in;text-align:justify;'>Evaluated the
effectiveness of the registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and</p></li>
	<li>
	<p class=MsoNormal style='margin-left:0.25in;text-align:justify;'>Disclosed in this report
any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and</p></li>
</ol>
<ol start="5">
	<li>
	<p class=MsoNormal style='text-align:justify;'>The registrant's other
certifying officer(s) and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent functions):</p></li>
</ol>
<ol type="a">
	<li>
	<p class=MsoNormal style='margin-left:0.25in;text-align:justify;'>all significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report
financial information; and </p></li>
	<li>
	<p class=MsoNormal style='margin-left:0.25in;text-align:justify;'>Any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.</p></li>
</ol>





<p class=MsoNormal>Date: November 14, 2005</p>
<div align="left">
	<table border="0" width="740" id="table1" cellspacing="0" cellpadding="0">
		<tr>
			<td>&nbsp;</td>
			<td width="360">
			<div style="border-bottom: 1px solid #000000">
				/s/&nbsp;&nbsp; PATRICK L. JOHNSON</div>
			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="360">

<p class=MsoNormal>Patrick L. Johnson</p>

			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="360">

<p class=MsoNormal>Chief Executive Officer</p></td>
		</tr>
	</table>
</div>

<p class=MsoNormal>&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;&nbsp;&nbsp;</p>
<p class=MsoNormal>&nbsp;</p>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>ex31-2.htm
<TEXT>
<html>

<head>
<title>EXHIBIT 31.2</title>
</head>

<body>
<p>&nbsp;</p>
<p><b>EXHIBIT 31.2</b></p>
<p>I, Jeffrey J. Ritchey, certify that:</p>
<ol>
	<li>
	<p class="MsoNormal" style="text-align:justify;">I have reviewed this Form
	10-QSB of Pro-Dex, Inc.;</li>
	<li>
	<p class="MsoNormal" style="text-align:justify;">Based on my knowledge, this
	quarterly report does not contain any untrue statement of a material fact or
	omit to state a material fact necessary to make the statements made, in
	light of the circumstances under which such statements were made, not
	misleading with respect to the period covered by this quarterly report; </li>
	<li>
	<p class="MsoNormal" style="text-align:justify;">Based on my knowledge, the
	financial statements, and other financial information included in this
	report, fairly present in all material respects the financial condition,
	results of operations and cash flows of the registrant as of, and for, the
	periods presented in this report; </li>
	<li>
	<p class="MsoNormal" style="text-align:justify;">The registrant's other
	certifying officer(s) and I are responsible for establishing and maintaining
	disclosure controls and procedures (as defined in Exchange Act Rules
	13a-15(e) and 15d-15(e)) [language omitted pursuant to SEC release 34-47986]
	for the registrant and have:</li>
</ol>
<ol type="a">
	<li>
	<p class="MsoNormal" style="margin-left:0.25in;text-align:justify;">Designed
	such disclosure controls and procedures, or caused such disclosure controls
	and procedures to be designed under our supervision, to ensure that material
	information relating to the registrant, including its consolidated
	subsidiaries, is made known to us by others within those entities,
	particularly during the period in which this report is being prepared;</li>
	<li>
	<p class="MsoNormal" style="margin-left:0.25in;text-align:justify;">[Omitted
	pursuant to SEC Release 34-47986];</li>
	<li>
	<p class="MsoNormal" style="margin-left:0.25in;text-align:justify;">
	Evaluated the effectiveness of the registrant's disclosure controls and
	procedures and presented in this report our conclusions about the
	effectiveness of the disclosure controls and procedures, as of the end of
	the period covered by this report based on such evaluation; and</li>
	<li>
	<p class="MsoNormal" style="margin-left:0.25in;text-align:justify;">
	Disclosed in this report any change in the registrant's internal control
	over financial reporting that occurred during the registrant's most recent
	fiscal quarter (the registrant's fourth fiscal quarter in the case of an
	annual report) that has materially affected, or is reasonably likely to
	materially affect, the registrant's internal control over financial
	reporting; and</li>
</ol>
<ol start="5">
	<li>
	<p class="MsoNormal" style="text-align:justify;">The registrant's other
	certifying officer(s) and I have disclosed, based on our most recent
	evaluation of internal control over financial reporting, to the registrant's
	auditors and the audit committee of registrant's board of directors (or
	persons performing the equivalent functions):</li>
</ol>
<ol type="a">
	<li>
	<p class="MsoNormal" style="margin-left:0.25in;text-align:justify;">all
	significant deficiencies and material weaknesses in the design or operation
	of internal controls over financial reporting which are reasonably likely to
	adversely affect the registrant's ability to record, process, summarize and
	report financial information; and </li>
	<li>
	<p class="MsoNormal" style="margin-left:0.25in;text-align:justify;">Any
	fraud, whether or not material, that involves management or other employees
	who have a significant role in the registrant's internal control over
	financial reporting.</li>
</ol>





<p class=MsoNormal>Date: November 14, 2005</p>
<div align="left">
	<table border="0" width="740" id="table1" cellspacing="0" cellpadding="0">
		<tr>
			<td>&nbsp;</td>
			<td width="360">
			<div style="border-bottom: 1px solid #000000">
				/s/&nbsp;&nbsp; JEFFREY J. RITCHEY</div>
			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="360">

<p class=MsoNormal>Jeffrey J. Ritchey</p>

			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="360">

<p class=MsoNormal>Chief Financial Officer</p></td>
		</tr>
	</table>
</div>

<p class=MsoNormal>&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;&nbsp;&nbsp;</p>
<p class="MsoNormal" style="margin-left:0.25in;text-align:justify;">&nbsp;</p>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>ex32.htm
<TEXT>
<html>

<head>
<title>EXHIBIT 32</title>
</head>

<body>












<p class=FlushLeft>&nbsp;</p>
<p class=FlushLeft><b>EXHIBIT 32<br>
&nbsp;</b></p>





<p class=FlushLeft align=center style='margin-top:0pt;text-align:center'><b>CERTIFICATIONS
OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER<br>
PURSUANT
TO 18 U.S.C. SECTION 1350, <br>
AS ADOPTED PURSUANT TO <br>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</b></p>

<p class=FlushLeft align=center style='margin-top:0pt;text-align:center'><b>Certifications
of Chief Executive Officer and Chief Financial Officer</b></p>



<p class=Body style='margin-top:0pt;text-align:justify; text-indent:36pt'>In connection with the
quarterly report on Form 10-QSB of Pro-Dex Inc. (the &quot;Company&quot;) for the
quarterly period ended September 30, 2005 (the &quot;Report&quot;), the undersigned
hereby certify in their capacities as Chief Executive Officer and Chief
Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:</p>

<p class=Body style='text-align:justify; text-indent:36pt'>1.&nbsp;&nbsp; The Report fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended; and</p>

<p class=Body style='text-align:justify; text-indent:36pt'>2.&nbsp;&nbsp; The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.</p>





<p class=MsoNormal>Date: November 14, 2005</p>
<div align="left">
	<table border="0" width="740" id="table1" cellspacing="0" cellpadding="0">
		<tr>
			<td>&nbsp;</td>
			<td width="360">
			<div style="border-bottom: 1px solid #000000">
				/s/&nbsp;&nbsp; PATRICK L. JOHNSON</div>
			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="360">

<p class=MsoNormal>Patrick L. Johnson</p>

			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="360">

<p class=MsoNormal>Chief Executive Officer</p></td>
		</tr>
	</table>
</div>





<p class=MsoNormal>Date: November 14, 2005</p>
<div align="left">
	<table border="0" width="740" id="table2" cellspacing="0" cellpadding="0">
		<tr>
			<td>&nbsp;</td>
			<td width="360">
			<div style="border-bottom: 1px solid #000000">
				/s/&nbsp;&nbsp; JEFFREY J. RITCHEY</div>
			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="360">

<p class=MsoNormal>Jeffrey J. Ritchey</p>

			</td>
		</tr>
		<tr>
			<td>&nbsp;</td>
			<td width="360">

<p class=MsoNormal>Chief Financial Officer</p></td>
		</tr>
	</table>
</div>



<p class=MsoPlainText>A signed
original of this written statement required by Section 906, or other document
authenticating, acknowledging, or otherwise adopting the signatures that appear
in typed form within the electronic version of this written statement required
by Section 906, has been provided to the Company and will be retained by the
Company and Furnished to the Securities and Exchange Commission or its staff
upon request.<u><br>
<br>
</u></p>
<p class=MsoPlainText>&nbsp;</p>
<p class=MsoPlainText>&nbsp;</p>





<div class=MsoNormal align=center style='text-align:center;text-autospace:none'>

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

</div>







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</DOCUMENT>
</SEC-DOCUMENT>
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