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<SEC-DOCUMENT>0001003297-06-000198.txt : 20060522
<SEC-HEADER>0001003297-06-000198.hdr.sgml : 20060522
<ACCEPTANCE-DATETIME>20060522160807
ACCESSION NUMBER:		0001003297-06-000198
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20060331
FILED AS OF DATE:		20060522
DATE AS OF CHANGE:		20060522

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:		06858676

	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>prodex10qsb.htm
<TEXT>
<html>

<head>


<title> PRO DEX INC FORM 10QSB</title>


</head>

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















<p class=MsoNormal align=center style='text-align:center;text-autospace:none'>
<font size="2">&nbsp;</font></p>
<p class=MsoNormal align=center style='text-align:center;text-autospace:none'>
&nbsp;</p>



  <h4 align="center"><b>UNITED STATES <br>
	SECURITIES AND EXCHANGE COMMISSION</b></h4>
  <h5 align=center style='text-align:center'><font size="3">Washington, D.C. 20549</font></h5>

  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">&nbsp;</font></b></p>
  <h6 align=center style='text-align:center'><font size="5">FORM 10-QSB</font></h6>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>
  <p class=MsoNormal style='margin-left:54.0pt;text-indent:-54.0pt;text-autospace:
  none'><b>[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934.</b></p>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">For the quarterly period ended March 31, 2006</font></b></p>
  <p class=MsoNormal align=center style='text-align:center'><b>OR</b></p>
  <p class=MsoNormal style='margin-left:54.0pt;text-indent:-54.0pt;text-autospace:
  none'><b>[ &nbsp; ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE&nbsp; 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>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<table class=MsoNormalTable border=0 cellpadding=0 width=721
 style='width:100%;border-collapse:collapse'>
 <tr>
  <td colspan=2 valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">Commission File Number&nbsp;&nbsp;&nbsp; 0-14942 </font> </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0pt; '>
  <p class=MsoNormal 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 class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">(Exact name of small business issuer as specified in
  its charter)&nbsp;&nbsp;&nbsp;&nbsp; </font> </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;&nbsp;
	</font> </b></p>
  </td>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
	</font> </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b><u>
	<font size="2">Colorado </font> </u></b></p>
  </td>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b><u>
	<font size="2">84-1261240 </font> </u></b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">(State or Other Jurisdiction of&nbsp;&nbsp;&nbsp; </font> </b></p>
  </td>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">(IRS Employer Identification No.) </font> </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">Incorporation or Organization)&nbsp;&nbsp;&nbsp; </font> </b></p>
  </td>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;&nbsp;
	</font> </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;&nbsp;
	</font> </b></p>
  </td>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
	</font> </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b><u>
	<font size="2">151 E. Columbine Avenue, Santa Ana, California 92707&nbsp;&nbsp;&nbsp;
  </font>
  </u></b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">(Address of Principal Executive
  Offices)&nbsp;&nbsp;&nbsp;&nbsp; </font> </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;&nbsp;
	</font> </b></p>
  </td>
  <td valign=top style='padding:0pt; '>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;&nbsp; &nbsp;
	</font> </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0pt; '>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">Issuer's telephone number: </font> <u><font size="2">714-241-4411&nbsp;&nbsp;&nbsp;
  </font>
  </u></b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0pt 0pt 0pt 0pt'>
  <p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
 </tr>
</table>





<p class=MsoNormal 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 class=MsoNormal style='text-autospace:none'><font size="2">Indicate
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 class=MsoNormal style='text-autospace:none'><font size="2">Indicate
the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:&nbsp; 9,539,792 shares of Common Stock, no
par value, as of May12, 2006. </font> </p>



<p class=MsoNormal 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 class=MsoNormal style='text-autospace:none'>&nbsp;</p>
<p class=MsoNormal 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>



<font size="2">



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










</font>










<p class=MsoNormal><b><font size="2">Item 1. &nbsp;&nbsp;&nbsp;&nbsp; Financial
Statements</font></b></p>
<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=604
 style='width:75%;margin-left:4.65pt;border-collapse:collapse' id="table3">
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">PRO-DEX, INC. and SUBSIDIARIES</font></b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">CONSOLIDATED BALANCE SHEETS</font></b></p>
  </td>
 </tr>
 </table>

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

<table class=MsoNormalTable border=0 cellpadding=0 width=604
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:27.0pt'>
  <td width="55%" valign=bottom style='height:27.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </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'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">March 31, 2006
	<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'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">June 30,2005</font></i></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><b><font size="2">ASSETS</font></b></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">Current assets:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Cash and cash equivalents </font> </p>
  </td>
  <td width="2%" valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td width="21%" valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">409,000&nbsp; </font> </p>
  </td>
  <td width="2%" valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td width="19%" valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,584,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Accounts receivable, net of allowance for doubtful </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  accounts of $40,000 at March 31 and $100,000 at June 30</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,899,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,521,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Inventories, net </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,603,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,145,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Prepaid expenses </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">173,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">66,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Income tax receivable</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">96,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Deferred income taxes</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">771,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">519,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current
  assets </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8,855,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,931,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:6.75pt'>
  <td width="55%" valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:6.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;

  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:6.75pt; 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:6.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">Property, Plant, equipment
  and leasehold improvements, net&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,702,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,156,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">Other assets:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Goodwill</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,892,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,110,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Intangibles - Patents,
  net</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,441,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">392,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">541,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Other </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">36,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">18,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other assets
  </font>
  </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  1.0pt solid windowtext;border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,761,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  1.0pt solid windowtext;border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,669,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:6.75pt'>
  <td width="55%" valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:6.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:6.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:6.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width="55%" 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' nowrap>
  <p class=MsoNormal><font size="2">Total assets</font></p>
  </td>
  <td width="2%" 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 class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td width="21%" valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">17,318,000&nbsp; </font> </p>
  </td>
  <td width="2%" valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td width="19%" 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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">12,756,000&nbsp; </font> </p>
  </td>
 </tr>
 </table>

<p class=MsoNormal align=center style='text-align:center'><b><font size="2">&nbsp;</font></b><i><font size="2">See notes to unaudited consolidated financial
  statements.</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><b><font size="2">&nbsp;</font></b></p>
<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>
<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>
<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>
<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>
<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>
<p class=MsoNormal 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>



<font size="2">



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










</font>










<p class=MsoNormal align=center style='text-align:center'><b><font size="2">&nbsp;</font></b></p>
<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=623
 style='width:75%;margin-left:4.65pt;border-collapse:collapse' id="table4">
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">PRO-DEX, INC. and SUBSIDIARIES</font></b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">CONSOLIDATED BALANCE SHEETS (con't)</font></b></p>
  </td>
 </tr>
 </table>

</div>
<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>

<table class=MsoNormalTable border=0 cellpadding=0 width=623
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:27.0pt'>
  <td valign=bottom style='height:27.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </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'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">March 31, 2006
	<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'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">June 30,2005</font></i></p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><b><font size="2">LIABILITIES AND
  SHAREHOLDERS' EQUITY</font></b></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:.95pt; 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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">Current liabilities:</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:.95pt; 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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Line of credit</font></p>
  </td>
  <td valign=bottom style='height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,000,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable</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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">851,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,158,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses</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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">701,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">472,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Income taxes payable
	</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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">13,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp; &nbsp;Current portion of
  term note</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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">250,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Current portion of
  real estate loan</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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">26,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Current portion of
  &quot;patent&quot; deferred payable</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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">71,000&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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current
  liabilities </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-top:
  medium none;border-left:medium none;border-right:1.0pt solid windowtext;
  height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,899,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-top:
  medium none;border-left:medium none;border-right:1.0pt solid windowtext;
  height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,643,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; 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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">Long-term liabilities:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:
  medium none;border-left:medium none;border-right:1.0pt solid windowtext;
  height:.95pt; 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:medium none;border-right:1.0pt solid windowtext;
  height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp; Real estate loan
  payable</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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,624,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp; Term note</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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">709,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp; Patent deferred payable</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid #000000; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">245,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid #000000; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total long-term
  liabilities </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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,578,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:.95pt; 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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">Total liabilities</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:medium none;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5,477,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:medium none;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,643,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:.95pt'>
  <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:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border-top:
  medium none;border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  height:.95pt; 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:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:.95pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1px solid windowtext;border-bottom:medium none;border-right:1px solid windowtext;
  height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

<p class=MsoNormal align=center style='text-align:left'><font size="2">
Commitments and contingencies </font> </p>

  </td>
  <td colspan=2 valign=bottom style='border-left:1px solid #000000; border-top:medium none; border-bottom:medium none; border-right:1px solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border-left:1px solid #000000; border-top:medium none; border-bottom:medium none; border-right:1px solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
 </tr>
 <tr style='height:.95pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1px solid windowtext;border-bottom:medium none;border-right:1px solid windowtext;
  height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">Shareholders' equity:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:1px solid #000000; border-top:medium none; border-bottom:medium none; border-right:1px solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:1px solid #000000; border-top:medium none; border-bottom:medium none; border-right:1px solid windowtext; height:.95pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-top:medium none 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Common shares; no par
  value; 50,000,000 shares authorized;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:
  medium none windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-top:medium none 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='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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,539,792 shares
  issued and outstanding March 31, </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'>

  </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;
  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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,449,396 shares
  issued and outstanding June 30.</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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">16,065,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">15,933,000&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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit
	</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 class=MsoNormal align=right style='text-align:right'><font size="2">(4,224,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(4,820,000)</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' nowrap>

  &nbsp;</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 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;
  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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total shareholders'
  equity</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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">11,841,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">11,113,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td 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' nowrap>

  &nbsp;</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'>

  </td>
  <td colspan=2 valign=bottom style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:3px double #000000; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and
  shareholders' equity</font></p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:3px double #000000; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-bottom:3px double #000000; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">17,318,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:3px double #000000; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:3px double #000000; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">12,756,000&nbsp; </font> </p>
  </td>
 </tr>
 </table>

<p class=MsoNormal align=center style='text-align:center'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal align=center style='text-align:center'><b><i><font size="2">&nbsp;</font></i><font size="2">&nbsp;</font></b><i><font size="2">See notes to unaudited consolidated financial
  statements.</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><font size="2">&nbsp;-3-</font></p>

<p class=MsoNormal><i><font size="2">&nbsp;</font></i></p>



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

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

</div>



<font size="2">



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












</font>
<div align="center">












<table class=MsoNormalTable border=0 cellpadding=0 width=560
 style='width:75%;margin-left:4.65pt;border-collapse:collapse' id="table5">
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">PRO-DEX, INC. and SUBSIDIARIES</font></b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">CONSOLIDATED STATEMENTS OF OPERATIONS</font></b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">Three months ended March 31 (unaudited)</font></b></p>
  </td>
 </tr>
</table>



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












<table class=MsoNormalTable border=0 cellpadding=0 width=560
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <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='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2006</font></i></p>
  </td>
  <td colspan=2 valign=top style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2005</font></i></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

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

  </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'>

  </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' nowrap>
  <p class=MsoNormal><font size="2">Net sales </font> </p>
  </td>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,214,000&nbsp; </font> </p>
  </td>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,241,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

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

  </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'>

  </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' nowrap>
  <p class=MsoNormal><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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,759,000&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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,598,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,455,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,643,000&nbsp; </font> </p>
  </td>
 </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' nowrap>

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

  </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'>

  </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; 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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">317,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">249,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; General and
  administrative</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">564,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">586,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Research and
  development</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">566,000&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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">467,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,447,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,302,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

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

  </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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">341,000&nbsp; </font> </p>
  </td>
 </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' nowrap>

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

  </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'>

  </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; 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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Other income, net
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">12,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Interest (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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(13,000)</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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(8,000)</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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">18,000&nbsp; </font> </p>
  </td>
 </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' nowrap>

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

  </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'>

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

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

  </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'>

  </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; height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">(Benefit) 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;height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(6,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">84,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6,000&nbsp; </font> </p>
  </td>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">275,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </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'>

  </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height: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' nowrap>
  <p class=MsoNormal><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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.00&nbsp; </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.00&nbsp; </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height: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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,523,212&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,163,900&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,998,691&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,615,127&nbsp; </font> </p>
  </td>
 </tr>
</table>



<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><i><font size="2">See notes to unaudited consolidated financial
statements.</font></i></p>
<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>
<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>
<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>





<p class=MsoPlainText 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>



<font size="2">



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










</font>










<p class=MsoNormal align=center style='text-align:center'>&nbsp;</p>
<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=560
 style='width:75%;margin-left:4.65pt;border-collapse:collapse' id="table6">
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">PRO-DEX, INC. and SUBSIDIARIES</font></b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">CONSOLIDATED STATEMENTS OF OPERATIONS</font></b></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">Nine months ended March 31 (unaudited)</font></b></p>
  </td>
 </tr>
 </table>



</div>
<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>

<table class=MsoNormalTable border=0 cellpadding=0 width=560
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:12.75pt'>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=4 valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2006</font></i></p>
  </td>
  <td colspan=2 valign=top style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2005</font></i></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

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

  </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'>

  </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' nowrap>
  <p class=MsoNormal><font size="2">Net sales </font> </p>
  </td>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">11,728,000&nbsp; </font> </p>
  </td>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,466,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

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

  </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'>

  </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' nowrap>
  <p class=MsoNormal><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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6,854,000&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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,344,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,874,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5,122,000&nbsp; </font> </p>
  </td>
 </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' nowrap>

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

  </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'>

  </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; 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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">827,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">726,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; General and
  administrative</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,684,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,711,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Research and
  development</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,451,000&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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,343,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,962,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,780,000&nbsp; </font> </p>
  </td>
 </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' nowrap>

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

  </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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">912,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,342,000&nbsp; </font> </p>
  </td>
 </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' nowrap>

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

  </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'>

  </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; 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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Other income
  (expense), net </font> </p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(7,000)</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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">47,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">42,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">56,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">31,000&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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(9,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">66,000&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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">94,000&nbsp; </font> </p>
  </td>
 </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' nowrap>

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

  </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'>

  </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">978,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,436,000&nbsp; </font> </p>
  </td>
 </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' nowrap>

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

  </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'>

  </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; height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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;height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">382,000&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; height:13.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">515,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">596,000&nbsp; </font> </p>
  </td>
  <td valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">921,000&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
	</font> </p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </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'>

  </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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height: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' nowrap>
  <p class=MsoNormal><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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.06&nbsp; </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.06&nbsp; </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp; </font> </p>
  </td>
 </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' nowrap>

  &nbsp;</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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height: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' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,490,317&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,006,073&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><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; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">10,020,766&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,434,431&nbsp; </font> </p>
  </td>
 </tr>
 </table>



<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><i><font size="2">See notes to unaudited consolidated financial
statements.</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>



<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><font size="2">&nbsp;-5-</font></p>

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

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

</div>



<font size="2">



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










</font>










<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=629
 style='width:75%;margin-left:4.65pt;border-collapse:collapse' id="table7">
		<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 class=MsoNormal 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 valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
			<p class=MsoNormal align=center style='text-align:center'><b>
			<font size="2">CONSOLIDATED STATEMENTS OF CASH FLOWS</font></b></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'>
			<p class=MsoNormal align=center style='text-align:center'><b>
			<font size="2">Nine months ended March (unaudited)</font></b></p>
			</td>
		</tr>
	</table></div>
<p class="MsoNormal" align="center">&nbsp;</p>












<table class=MsoNormalTable border=0 cellpadding=0 width=629
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <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='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2006</font></i></p>
  </td>
  <td colspan=2 valign=top style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">2005</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' nowrap>
  <p class=MsoNormal><font size="2">Cash Flows from Operating
  Activities: </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td 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' nowrap>
  <p class=MsoNormal><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 class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">596,000&nbsp; </font> </p>
  </td>
  <td valign=top style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">921,000&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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to
  reconcile net income to net cash used in operating activities:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and
  amortization </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">302,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">176,000&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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">7,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Recovery of)
  Provision for doubtful accounts</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(60,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">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' nowrap>
  <p class=MsoNormal><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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">267,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">37,000&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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based
  compensation</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">19,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred taxes</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(103,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (Increase) Decrease in accounts receivable</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">683,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(200,000)</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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (Increase) in inventories</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(1,724,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(447,000)</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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (Increase) in prepaid expenses</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(107,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(94,000)</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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)
  in other assets</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(19,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(32,000)</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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (Decrease) in accounts payable and accrued expenses</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(79,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(120,000)</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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase
  (Decrease) in income taxes payable</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">83,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(154,000)</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' nowrap>
  <p class=MsoNormal><font size="2">Net Cash (used in) provided
  by Operating Activities </font> </p>
  </td>
  <td colspan=2 valign=top style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(154,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">111,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:4.5pt'>
  <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:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:4.5pt; 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:4.5pt; 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' nowrap>
  <p class=MsoNormal><font size="2">Cash Flows From Investing
  Activities: </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='border-top:
  1.0pt solid windowtext;border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height: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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of
  Astromec, net of assets acquired</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(2,359,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from
  equipment sale</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Purchase of equipment
  and leasehold improvements</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(588,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(156,000)</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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp; Purchase of Intangible
  Assets - Patents related to Interflow</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(1,165,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:4.5pt'>
  <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:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:4.5pt; 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:4.5pt; 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' nowrap>
  <p class=MsoNormal><font size="2">Net Cash (used in)
  Investing Activities </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(4,111,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(156,000)</font></p>
  </td>
 </tr>
 <tr style='height:4.5pt'>
  <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:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:4.5pt; 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:4.5pt; 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' nowrap>
  <p class=MsoNormal><font size="2">Cash Flows from Financing
  Activities:</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td 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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Principal payments on long-term shareholder borrowings </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(145,000)</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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Borrowing on Line of Credit</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,000,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Borrowing on Term Note</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,000,000&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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Principal payment on Term Note</font></p>
  </td>
  <td colspan=2 valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(42,000)</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;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </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' nowrap>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;
  Proceeds from option and warrant exercise</font></p>
  </td>
  <td colspan=2 valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">132,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">379,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:4.5pt'>
  <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:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:4.5pt; 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:4.5pt; 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' nowrap>
  <p class=MsoNormal><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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,090,000&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:
  medium none;border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">234,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:4.5pt'>
  <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:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:4.5pt; 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:4.5pt; 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' nowrap>
  <p class=MsoNormal><font size="2">Net (decrease) increase&nbsp; in
  Cash and Cash Equivalents </font> </p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(2,175,000)</font></p>
  </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">189,000&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' nowrap>
  <p class=MsoNormal><font size="2">Cash and Cash Equivalents,
  beginning of period </font> </p>
  </td>
  <td colspan=2 valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,584,000&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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,070,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:4.5pt'>
  <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:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:4.5pt; 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:4.5pt; 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' nowrap>
  <p class=MsoNormal><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 class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">409,000&nbsp; </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,259,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:4.5pt'>
  <td valign=top style='height:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp;</td>
  <td colspan=2 valign=top style='height:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='height:4.5pt; 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' nowrap>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">Supplemental Information</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' nowrap>
  <p class=MsoNormal><font size="2">Cash payments for interest</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">18,000&nbsp; </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top: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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:4.5pt'>
  <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:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  &nbsp; </td>
  <td colspan=2 valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:4.5pt; 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:4.5pt; 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' nowrap>
  <p class=MsoNormal><font size="2">Cash payments for income
  taxes </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">385,000&nbsp; </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">668,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:4.5pt'>
  <td valign=top style='height:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

  </td>
  <td colspan=2 valign=top style='height:4.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=top style='height:4.5pt; 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' nowrap>
  <p class=MsoNormal align=center style='text-align:center'><i><font size="2">Non-Cash Disclosure of Investing and Financing
  Activities</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-bottom:1.0pt solid windowtext; border-top:1pt solid #000000; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p align="left"><font size="2">Long term payable incurred
  in acquisition of intangible assets</font></td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:1pt solid #000000; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p align="center">
  <font size="2">$&nbsp;</font></td>
  <td valign=top style='border-top:1pt solid #000000;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p align="right"><font size="2">316,000&nbsp;</font></td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:1pt solid #000000; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <font size="2">$</font></td>
  <td valign=top style='border-top:1pt solid #000000;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"><font size="2">-</font></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' nowrap>
  <p class=MsoNormal><font size="2">Acquisition of building and
  land - Real Estate Loan</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,650,000&nbsp; </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </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-bottom:1.0pt solid windowtext; border-top:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>
  <p class=MsoNormal><font size="2">Intravantage Deferred
  Payable</font></p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">317,000&nbsp; </font> </p>
  </td>
  <td valign=top style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt' nowrap>

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

  </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>



<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><i><font size="2">&nbsp;</font></i></p>

<p class=MsoNormal align=center style='text-align:center'><i><font size="2">See notes to unaudited consolidated financial
statements.</font></i></p>
<p class=MsoNormal 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>



<font size="2">



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










</font>










<p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
<font size="2">PRO-DEX, INC. AND SUBSIDIARIES <br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS </font> </b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">NOTE 1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
BASIS OF PRESENTATION</font></b></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">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 consolidated
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. </font> </p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">NOTE 2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
INVENTORIES</font></b></p>



<p class=MsoNormal style='text-align:justify;text-autospace:none'>
<font size="2">&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:</font></p>

<div align="center">
	<table class="MsoNormalTable" border="0" cellpadding="0" width="492" style="width: 75%; border-collapse: collapse; margin-left: 4.65pt">
		<tr style="height:15.75pt">
			<td valign="bottom" style="height: 15.75pt; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			</td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: 1.0pt solid windowtext; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="center" style="text-align:center">
			<font size="2">March 31, 2006</font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: medium none; border-right: 1.0pt solid windowtext; border-top: 1.0pt solid windowtext; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="center" style="text-align:center">
			<font size="2">June 30, 2005</font></td>
		</tr>
		<tr style="height:15.75pt">
			<td valign="bottom" style="height: 15.75pt; 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="height: 15.75pt; border-left: 1.0pt solid windowtext; 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 class="MsoNormal" align="center" style="text-align:center">
			<font size="2">(unaudited)</font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: medium none; border-right: 1.0pt solid windowtext; border-top: medium none; border-bottom: 1.0pt solid windowtext; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="center" style="text-align:center">
			<font size="2">(audited)</font></td>
		</tr>
		<tr style="height:15.75pt">
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">Raw Materials</font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">&nbsp;$</font></td>
			<td valign="bottom" style="height: 15.75pt; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">2,147,000&nbsp; </font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">&nbsp;$</font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: medium none; border-right: 1.0pt solid windowtext; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">1,421,000&nbsp; </font></td>
		</tr>
		<tr style="height:15.75pt">
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">Work in process</font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">652,000&nbsp; </font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: 1.0pt solid windowtext; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">409,000&nbsp; </font></td>
		</tr>
		<tr style="height:15.75pt">
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">Development costs under contract</font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">273,000&nbsp; </font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: 1.0pt solid windowtext; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">132,000&nbsp; </font></td>
		</tr>
		<tr style="height:15.75pt">
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">Finished goods</font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; 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 class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">2,088,000&nbsp; </font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: 1.0pt solid windowtext; border-top: medium none; border-bottom: 1.0pt solid windowtext; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">1,473,000&nbsp; </font></td>
		</tr>
		<tr style="height:15.75pt">
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">&nbsp;&nbsp;&nbsp; Total</font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">&nbsp;$</font></td>
			<td valign="bottom" style="height: 15.75pt; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">5,160,000&nbsp; </font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">&nbsp;$</font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: medium none; border-right: 1.0pt solid windowtext; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">3,435,000&nbsp; </font></td>
		</tr>
		<tr style="height:15.75pt">
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: medium none; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">Reserve for slow moving items</font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; 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 class="MsoNormal" align="right" style="text-align:right">
			<font size="2">(557,000)</font></td>
			<td colspan="2" valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: 1.0pt solid windowtext; border-top: medium none; border-bottom: 1.0pt solid windowtext; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="text-align:right">
			<font size="2">(290,000)</font></td>
		</tr>
		<tr style="height:15.75pt">
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; 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 class="MsoNormal"><font size="2">&nbsp;&nbsp;&nbsp; Total
			inventories, net</font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; 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 class="MsoNormal"><font size="2">&nbsp;$</font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: medium none; border-right: medium none; border-top: medium none; border-bottom: 1.0pt solid windowtext; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">4,603,000&nbsp; </font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: 1.0pt solid windowtext; border-right: medium none; border-top: medium none; border-bottom: 1.0pt solid windowtext; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal"><font size="2">&nbsp;$</font></td>
			<td valign="bottom" style="height: 15.75pt; border-left: medium none; border-right: 1.0pt solid windowtext; border-top: medium none; border-bottom: 1.0pt solid windowtext; padding-left: .85pt; padding-right: .85pt; padding-top: 0pt; padding-bottom: 0pt">
			<p class="MsoNormal" align="right" style="margin-right:.7pt;text-align:right">
			<font size="2">3,145,000&nbsp; </font></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="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 class=MsoNormal style='text-autospace:none'><b><font size="2">NOTE 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GOODWILL</font></b></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">We account for goodwill in accordance with 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; </font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">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; Management determined that there were no events or
circumstances which have occurred that would indicate an impairment of the
goodwill during the three and nine-month periods ended March 31, 2006.&nbsp;
</font> </p>



<p class=MsoNormal style='text-autospace:none'><b><font size="2">NOTE 4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WARRANTY</font></b></p>



<p class=MsoNormal style='text-align:justify;text-autospace:none; text-indent:36pt'>
<font size="2">The warranty
accrual is based on historical costs of warranty repairs and expected future
identifiable warranty expenses.&nbsp; We have had extraordinary warranty expenses in
this fiscal year dealing with products introduced in the last fiscal year.&nbsp; As
of March 31, 2006 we carried a $275,000 warranty accrual for future warranty
expenses related to the products for which we have had recent high expense
levels.&nbsp; Warranty expenses are reflected in the financial statements as Cost of
Sales (&quot;COS&quot;).&nbsp; The warranty accrual and expenses for the three and nine month
periods ending March 31, 2006 and March 31, 2005 are presented below: </font> </p>
<p class=MsoNormal style='text-align:justify;text-autospace:none'>
&nbsp;</p>
<p class=MsoNormal style='text-align:center;text-autospace:none'>
<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>



<font size="2">



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












</font>












<table class=MsoNormalTable border=0 cellpadding=0 width=518
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Three Months Ended March 31,</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Beginning Balance (January
  1)</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">85,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">40,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp; Accrual used</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(45,000)</font></p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;&nbsp;&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp; Additional accrual</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">235,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;&nbsp;&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Ending Warranty Accrual
  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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">275,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">40,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Direct Warranty Expense</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">124,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">33,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp; Additional accrual</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">235,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;&nbsp;&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Three month warranty
  expense</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">359,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">33,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Beginning Balance (July 1,
  05 and 04)</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">40,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">40,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp; Additional accrual</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">235,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;&nbsp;&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Ending Warranty Accrual
  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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">275,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">40,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</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:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Direct Warranty Expense</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">316,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">65,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp; Additional accrual</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">235,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;&nbsp;&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Nine month warranty expense</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">551,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">65,000&nbsp; </font> </p>
  </td>
 </tr>
</table>







<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none' align="center"><font size="2">&nbsp;-8-</font></p>

<p class=MsoNormal style='text-autospace:none'>&nbsp;</p>

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

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

</div>



&nbsp;<p><font size="2">



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










</font>










<b><font size="2">NOTE 5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NET
INCOME PER SHARE</font></b></p>










<p class=MsoNormal style='margin-top:6.0pt;text-align:justify'><font size="2">&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).</font></p>

<table class=MsoNormalTable border=0 cellpadding=0 width=640
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Three Months Ended March 31,</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net income</font></p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">275,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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; height:15.75pt; 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:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,523,212&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,163,900&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.00&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</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:15.75pt; 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:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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; height:15.75pt; 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:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,523,212&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;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,163,900&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">444,891&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;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">370,351&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of potentially
  dilutive securities (warrants)</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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">30,588&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">80,876&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Weighted average number of
  common shares - </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;
  height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Diluted&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,998,691&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,615,127&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.00&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; 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'>

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

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net income</font></p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">596,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">921,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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; height:15.75pt; 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:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,490,317&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,006,073&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.06&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</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:15.75pt; 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:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</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:15.75pt; 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:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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; height:15.75pt; 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:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,490,317&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;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,006,073&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">496,673&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;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">352,032&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of potentially
  dilutive securities (warrants)</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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">33,776&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">76,326&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Weighted average number of
  common 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; height:15.75pt; 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:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">10,020,766&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,434,431&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.06&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; 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='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='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='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='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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



<p class=MsoNormal style='text-autospace:none'><b><font size="2">NOTE 6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CREDIT FACILITIES</font></b></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">In October 2005, we renewed our credit facility with
Wells Fargo Bank N.A. (&quot;Wells Fargo&quot;) for borrowings up to $2,000,000.&nbsp;
Its terms require monthly interest payments at either the prime rate of
interest (7.75% at March 31, 2006), or LIBOR plus 2.50% (7.33% (one month) to
7.50% (three months) at March 31, 2006), at our discretion, based on
outstanding borrowings with no minimum interest charge.&nbsp; The outstanding
borrowings are secured by all assets of the Company.&nbsp; There was $1,000,000
outstanding balance under the terms of this credit facility as of March 31,
2006.&nbsp; The total eligible borrowing capacity at March 31, 2006 was
$1,000,000.</font></p>



<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'><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>



<font size="2">



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










</font>










<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">In January 2006, we extended the credit facility and
entered into a 4 year term note with Wells Fargo for $1,000,000.&nbsp; Its
terms require monthly interest payments at either the prime rate of interest
(7.75% at March 31, 2006), or LIBOR plus 2.50% at various maturities ranging
from one month at 7.33% to three months at 7.50% at March 31, 2006, at our
discretion, based on outstanding borrowings.&nbsp; The principal payments on
the note are $20,833 per month.&nbsp; The outstanding borrowings are secured by all
assets of the Company.&nbsp; There was $958,333 outstanding balance under the terms
of this term note as of March 31, 2006.&nbsp; </font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">In March 2006, we entered into a 10 year mortgage with
Union Bank of California for $1,650,000.&nbsp; Its terms require monthly
interest payments at a fixed rate of 6.73% based on outstanding
borrowings.&nbsp; The principal payments on the mortgage note are based on a 25
year amortization of the note and are $11,379 per month beginning May 1, 2006.&nbsp;
The outstanding borrowings are secured by our Carson City land and building.&nbsp;
There was $1,650,000 outstanding balance under the terms of this mortgage as of
March 31, 2006.&nbsp;</font></p>



<p class=MsoBodyTextIndent style='text-autospace:ideograph-numeric ideograph-other; text-indent:36pt' align="justify">
<font size="2">There are certain financial and non-financial
covenants that we must meet to be in compliance with the terms of the October
2005 Wells Fargo credit facility, as amended, and the Union Bank mortgage.&nbsp; At
March 31, 2006, Management believes that the Company was in compliance with all
such covenants.&nbsp; </font> </p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">NOTE 7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
INCOME TAXES</font></b></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">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 $191,000 for state tax purposes that do not
expire and can be carried forward indefinitely until fully utilized.&nbsp;
</font> </p>



<p class=MsoNormal style='text-align:justify'><font size="2">&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; Such determination 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.</font></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">NOTE 8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; STOCK OPTIONS</font></b></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">During the quarter ended March 31, 2006,
the Company granted 50,000 Common Stock Options under our Employee's Plan
exercisable at an average per share price of $2.55 (fair market value $0.97 per
option) and no Common Stock Options under our Director's Plan.&nbsp; </font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">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%, risk-free interest rate of approximately 4.32%; and
expected lives of five years.&nbsp; We are required to adopt FAS 123(R) next fiscal
year.&nbsp; The effect on the income in the statement of operations is expected to
be similar to that presented below.</font></p>

<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'><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>



<font size="2">



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












</font>












<table class=MsoNormalTable border=0 cellpadding=0 width=647
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Three Months Ended March 31,
	</font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net income as reported:</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">275,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Add stock-based employee</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">compensation expense
  included</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">in reported net income, net
  of</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">related tax effects</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;&nbsp;&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;&nbsp;&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">(Deduct) total stock-based</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">employee and director</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">compensation expense&nbsp;&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">determined under fair value</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">based method for all
  awards,</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">net of related tax effects</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(14,000)</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(22,000)</font></p>
  </td>
 </tr>
 <tr style='height:18.0pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Pro-forma net income:</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:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.5pt double windowtext; height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.5pt double windowtext;border-right:1.0pt solid windowtext;
  height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(8,000)</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.5pt double windowtext; height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.5pt double windowtext;border-right:1.0pt solid windowtext;
  height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">253,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Basic earnings per share</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">As reported</font></p>
  </td>
  <td valign=bottom style='border:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.00&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Pro-forma</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(0.00)</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Diluted earnings per share:</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">As reported </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.00&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Pro-forma</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(0.00)</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.03&nbsp; </font> </p>
  </td>
 </tr>
</table>

<p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
<font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<table class=MsoNormalTable border=0 cellpadding=0 width=647
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,
	</font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net income as reported:</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">596,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">921,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Add stock-based employee</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">compensation expense
  included</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">in reported net income, net
  of</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">related tax effects</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;&nbsp;&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-&nbsp;&nbsp;&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">(Deduct) total stock-based</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">employee and director</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">compensation expense&nbsp;&nbsp; </font> </p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">determined under fair value</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">based method for all
  awards,</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:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">net of related tax effects</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(43,000)</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(76,000)</font></p>
  </td>
 </tr>
 <tr style='height:18.0pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Pro-forma net income:</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:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.5pt double windowtext; height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.5pt double windowtext;border-right:1.0pt solid windowtext;
  height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">553,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.5pt double windowtext; height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.5pt double windowtext;border-right:1.0pt solid windowtext;
  height:18.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">845,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Basic earnings per share</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">As reported</font></p>
  </td>
  <td valign=bottom style='border:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.06&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Pro-forma</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.06&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.09&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Diluted earnings per share:</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">As reported </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.06&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Pro-forma</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.06&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.09&nbsp; </font> </p>
  </td>
 </tr>
</table>

<p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
<font size="2">&nbsp;</font></b></p>



<p class=MsoNormal style='text-autospace:none'><b><font size="2">NOTE 9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MAJOR CUSTOMERS</font></b></p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">The Company had two major customers
(defined as a customer that represents greater than 10% of the Company's total
revenues) in the nine months ended March 31, 2006 and 2005.&nbsp; Net sales to these
customers during the nine months ended March 31, 2006 amounted to $2,909,000
and $1,505,000, respectively.&nbsp; Net sales to these customers during the three
months ended March 31, 2006 amounted to $469,000 and $594,000, respectively.&nbsp;
At March 31, 2006, the accounts receivable included balances of $575,000 and
$16,000 respectively due from these two customers.&nbsp; Net sales to these
customers during the nine months ended March 31, 2006 amounted to $1,473,000
and $293,000, respectively.&nbsp; Net sales to these customers during the three
months ended March 31, 2005 amounted to $224,000 and $235,000, respectively At
March 31, 2005, the accounts receivable included balances of $146,000 and
$205,000 respectively due from these two customers.</font></p>



<p class=MsoNormal style='text-autospace:none'>&nbsp;</p>

<p class=MsoNormal style='text-autospace:none'>&nbsp;</p>
<p class=MsoNormal style='text-autospace:none' 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>



<font size="2">



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










</font>
<p><b><font size="2">NOTE 10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INTRAVANTAGE ASSET ACQUISITION</font></b></p>










<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">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 consisted of the following:</font></p>



<p align="justify" style="text-indent: -18pt; margin-left: 72pt"><font size="2">
&#149;&nbsp;&nbsp; $226,087 in cash paid to IntraVantage on October 31, 2005;</font></p>
<p align="justify" style="text-indent: -18pt; margin-left: 72pt"><font size="2">&#149;&nbsp;&nbsp; $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</font></p>
<p align="justify" style="text-indent: -18pt; margin-left: 72pt"><font size="2">&#149;&nbsp;&nbsp; $400,000 to IntraVantage in annual
installments of $100,000 in cash payable on each of October 31, 2006, 2007,
2008 and 2009.</font></p>

<p class=MsoNormal style='margin-top:12.0pt;text-align:justify;text-indent:
36.0pt'><font size="2">As further inducement for IntraVantage
to enter into the Purchase Agreement, </font> </p>

<p class=MsoNormal 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'><font size="2">&#9679;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company 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.</font></p>



<p class=MsoBodyTextIndent3 style='margin-left:36.0pt;text-align:justify;
text-indent:36.0pt'><font size="2">&#9679;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company
agreed to terminate a supply agreement between the Company and IntraVantage,
along with all amendments thereto. Pursuant to this termination, IntraVantage
returned to the Company certain products previously delivered to IntraVantage
under the previously executed supply agreement in exchange for the Company
issuing to IntraVantage a credit memo of approximately $275,000, equal to the
full value of outstanding IntraVantage invoices related to the supply
agreement.</font></p>



<p class=MsoNormal style='text-align:justify;text-autospace:none'><b>
<font size="2">NOTE 11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ASTROMEC ASSET ACQUISITION</font></b></p>



<p class=NormalJustified style='text-align:justify;text-indent:36.0pt'>
<font size="2">&nbsp;On January 5, 2006, we entered into an Asset
Purchase Agreement with Astromec, Inc., a Nevada corporation (&quot;Astromec&quot;),
whereby the Company's wholly owned subsidiary, Pro-Dex Astromec purchased from
Astromec substantially all of Astromec's assets. &nbsp;The purchase price for the
assets was comprised of the following consideration:</font></p>



<p class=NormalJustified style='margin-left:72.0pt;text-align:justify;
text-indent:-18.0pt; margin-top:0; margin-bottom:0.001pt'><font size="2">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$2,600,000 in cash paid to Astromec on January 5, 2006;</font></p>

<p class=NormalJustified style='margin-left:72.0pt;text-align:justify;
text-indent:-18.0pt; margin-top:0; margin-bottom:0.001pt'><font size="2">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$100,000 to be paid at the end of
a six month period, subject to adjustments based on the asset values presented
in Astromec's audited closing balance sheet; and</font></p>

<p class=NormalJustified style='margin-left:72.0pt;text-align:justify;
text-indent:-18.0pt; margin-top:0; margin-bottom:0.001pt'><font size="2">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assumption of operating
liabilities of approximately $300,000.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">On January 4, 2006, our credit facility
with Wells Fargo was amended to allow for a $1,000,000 four year term loan in
addition to the existing $2,000,000 line of credit.&nbsp; The term loan is
fully amortizing and requires monthly principal and interest payments at either
the prime rate of interest (7.25% at March 31, 2005); or LIBOR plus 2.50%
(6.90% (one month) to 7.04% (three months) at March 31, 2005), at our
discretion, based on the outstanding balance.&nbsp; The outstanding borrowings
are secured by all assets of the Company.&nbsp; Pro-Dex used the full proceeds of
the term loan toward financing the Astromec asset purchase.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">The consolidated Balance sheet, statements
of operations and cash flows include the Pro-Dex Astromec operations beginning
January 5, 2006.</font></p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:center;text-autospace:
none'><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>



<font size="2">



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










</font>










<p class=Body style='text-indent:0pt;page-break-after:avoid'><b><u>
<font size="2">Unaudited
Pro Forma Financial Information</font></u><font size="2">.</font></b></p>

<p class=Body style='text-align:justify; text-indent:36pt'><font size="2">The accompanying unaudited pro forma
condensed consolidated statements of operations for the three and nine month
period ended March 31, 2005 are set forth herein to give effect to the
acquisition of Astromec as if the acquisition had been consummated as of June
30, 2004. </font> </p>

<p class=Body style='text-align:justify; text-indent:36pt'><font size="2">The unaudited pro forma condensed
consolidated statement of operations does not reflect any potential cost
savings that may be realized following the acquisition. The pro forma
adjustments and assumptions are based on estimates, evaluations and other data
currently available and, in our opinion, provide a reasonable basis for the
fair presentation of the estimated effects directly attributable to the
acquisition and related transactions. The unaudited pro forma condensed
consolidated statement of operations is provided for illustrative purposes only
and is not necessarily indicative of what the consolidated results of
operations or financial position would actually have been had the acquisitions
occurred at the dates noted above, nor do they represent a forecast of the
consolidated results of operations or financial position for any future period or
date.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">All information contained herein should be
read in conjunction with our annual report on Form 10-KSB for the year ended
June 30, 2005, the financial statements and notes thereto of Astromec, Inc.
included in Item 9.01(a) of the Company's Form 8-K filed March 20, 2006) and
the notes to the unaudited pro forma financial information included herein.&nbsp;
The following unaudited pro forma financial information is included in this
report:</font></p>

<p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
<font size="2">PRO-DEX, INC. AND SUBSIDIARIES<br>
Pro Forma Condensed Consolidated Statement
of Operations with Astromec <br>
for the Three Months Ended March 31, 2005<br>
(in thousands, except per share data)</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<div align=center>

<table class=MsoNormalTable border=0 cellpadding=0 width=433
 style='width:60%;border-collapse:collapse'>
 <tr style='height:13.5pt'>
  <td valign=bottom style='height:13.5pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:13.5pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">Pro-Dex</font></b></p>
  </td>
  <td valign=bottom style='height:13.5pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:13.5pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">Astromec</font></b></p>
  </td>
  <td valign=bottom style='height:13.5pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:13.5pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><font size="2">Totals</font></b></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Sales</font></p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.7pt; padding-right:.7pt; padding-top:0pt; padding-bottom:0pt'>
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<font size="2">PRO-DEX, INC. AND SUBSIDIARIES<br>
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  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.7pt; padding-right:.7pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp;</font></p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.7pt; padding-right:.7pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net Income Per Share -
  Diluted</font></p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.7pt; padding-right:.7pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.10&nbsp;</font></p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.7pt; padding-right:.7pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.09&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Shares Outstanding - Basic</font></p>
  </td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,006&nbsp;&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:12.75pt; padding-left:.8pt; padding-right:.8pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,006&nbsp;&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='height:14.05pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Shares Outstanding -
  Diluted</font></p>
  </td>
  <td colspan=2 valign=bottom style='height:14.05pt; padding-left:.8pt; padding-right:.8pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,434&nbsp;&nbsp; </font> </p>
  </td>
  <td valign=bottom style='height:14.05pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:14.05pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='height:14.05pt; padding-left:.8pt; padding-right:.8pt; padding-top:.8pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='height:14.05pt; padding-left:.8pt; padding-right:.8pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,434&nbsp;&nbsp; </font> </p>
  </td>
 </tr>
</table>

</div>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">NOTE 12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; REAL PROPERTY ACQUISITION</font></b></p>

<p class=NormalJustified style='text-align:justify;text-indent:36.0pt'>
<font size="2">On January 3, 2006, the Company entered into escrow
with respect to a Purchase and Sale Agreement with M. D. Glover, Inc., whereby
the Company purchased 4.4 acres of real property and a 20,000 square foot
industrial building and related improvements located in Carson City, Nevada
(collectively, the Property) for $2,200,000. </font> </p>



<p class=NormalJustified style='text-align:justify;text-indent:36.0pt'>
<font size="2">On March 30, 2006, the Company completed its purchase
of the property and closed escrow.&nbsp; The purchase was financed with cash on hand
and by a 10 year Promissory Note (the Note) and related Loan Agreement with
Union Bank of California (the Bank), whereby the Company borrowed the principal
sum of $1,650,000.00 (collectively, the Loan). </font> </p>



<p class=NormalJustified style='text-align:justify;text-indent:36.0pt'>
<font size="2">The principal balance of the Loan evidenced by the
Note bears interest at a fixed rate per annum of 6.73%. Under the terms of the
Note, the Loan amortizes as a 25 year obligation due in 10 years with 120 equal
monthly payments of $11,379 beginning May 1, 2006. The maximum amount of future
payments due under the Note (undiscounted and assuming no prepayment) is
$2,653,036.&nbsp; As of March 31, 2006 we were in compliance with the covenants of
the Note. </font> </p>

<p class=MsoNormal style='text-align:justify'><a
name="prodex10q_htm_item_2__management_s_discu"><font size="2"></font></a>
<font size="2"><b>NOTE 13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font><b>
<font size="2">SUBSEQUENT EVENT</font></b></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">On April 12, 2006, the Company accepted
the resignation and employment agreement termination of Patrick Johnson, the
Company's Chief Executive Officer. Mr. Jeff Ritchey, the Company's Chief
Financial Officer, will serve as interim Chief Executive Officer as well as
continuing his duties as Chief Financial Officer, Treasurer and Secretary until
a successor is named.&nbsp; Mr. Johnson remains with the Company as its Executive
Vice President and Chief Business Development Officer.&nbsp; He also remains on the
Company's Board of Directors. The Board has formed an executive search
committee to oversee the search for a successor Chief Executive Officer.</font></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-autospace:none' align="center"><font size="2">&nbsp;-14-</font></p>

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

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

</div>



<font size="2">



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










</font>










<p class=MsoNormal style='text-autospace:none'><b><font size="2">Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations</font></b></p>

<p class=MsoNormal><b><font size="2">COMPANY OVERVIEW</font></b></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">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 and nine-month periods ended March 31, 2005 and
2006, 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.</font></p>










<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">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; A list of risk factors
is contained in our Form 10-KSB for the year ended June 30, 2005 as filed with
the Securities and Exchange Commission.&nbsp; However, additional risks and
uncertainties may also impair our business operations including but not limited
to those outlined in our prior Securities and Exchange Commission filings.&nbsp; If
any of these or other risks actually occur, our business, financial condition
or results of operations will likely suffer.&nbsp; Any of these or other factors
could harm our business and future&nbsp;&nbsp; results of operations and may cause you to
lose all or part of your investment.&nbsp; Interested persons are urged to review
the risks described in our other public disclosures and filings with the
Securities and Exchange Commission.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">Pro-Dex Inc., with operations
in Santa Ana, California, Beaverton, Oregon and Carson City, Nevada,
specializes in bringing speed to market in the development and manufacture of
technology-based solutions that incorporate embedded motion control, miniature
rotary drive systems and fractional horsepower DC motors, serving the medical,
dental, semi-conductor, scientific research and aerospace markets. Pro-Dex's
products are found in hospitals, dental offices, medical engineering labs,
commercial and military aircraft, scientific research facilities and high tech
manufacturing operations around the world.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">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 100 F Street, N.E.,
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 <u>
<font color="#0000FF">www.sec.gov</font>. </u> </font> </p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><u><font size="2">&nbsp;</font></u></p>



<p class=MsoNormal><b><font size="2">&nbsp;</font></b></p>
<p class=MsoNormal 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>



<font size="2">



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










</font>










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

<p class=MsoNormal><b><font size="2">Description of Business</font></b></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">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, motion
control software and hardware for industrial and scientific applications and
fractional horsepower DC motors. The Company 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, fractional
horsepower DC motors and motion control systems for industrial applications in
the automotive, aerospace, apparel and entertainment industries.</font></p>



<p class=NormalJustified style='text-align:justify;text-indent:36.0pt'>
<font size="2">&nbsp;On January 5, 2006, we entered into an Asset
Purchase Agreement with Astromec, Inc., a Nevada corporation (&quot;Astromec&quot;),
whereby the Company's wholly owned subsidiary, Pro-Dex Astromec purchased from
Astromec substantially all of Astromec's assets.&nbsp; The purchase price for the
assets was comprised of the following consideration:</font></p>



<p class=NormalJustified style='margin-left:72.0pt;text-align:justify;
text-indent:-18.0pt; margin-top:0; margin-bottom:0.001pt'><font size="2">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$2,600,000 in cash paid to Astromec on January 5, 2006;</font></p>

<p class=NormalJustified style='margin-left:72.0pt;text-align:justify;
text-indent:-18.0pt; margin-top:0; margin-bottom:0.001pt'><font size="2">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$100,000 to be paid at the end of
a six month period, subject to adjustments based on the asset values presented
in Astromec's audited closing balance sheet; and</font></p>

<p class=NormalJustified style='margin-left:72.0pt;text-align:justify;
text-indent:-18.0pt; margin-top:0; margin-bottom:0.001pt'><font size="2">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assumption of operating
liabilities of approximately $300,000.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">On January 4, 2006, our credit facility
with Wells Fargo was amended to allow for a $1,000,000 four year term loan in
addition to the existing $2,000,000 line of credit.&nbsp; The term loan is
fully amortizing and requires monthly principal and interest payments at either
the prime rate of interest (7.25% at March 31, 2005); or LIBOR plus 2.50%
(6.90% (one month) to 7.04% (three months) at March 31, 2005), at our
discretion, based on the outstanding balance.&nbsp; All assets of the Company
secure the outstanding borrowings.&nbsp; Pro-Dex used the full proceeds of the term
loan toward financing the Astromec asset purchase.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">The consolidated Balance sheet, statements
of operations and cash flows include the Pro-Dex Astromec operations beginning
January 5, 2006.</font></p>












<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">All years relating to financial data
herein shall refer to fiscal years ending June 30, unless indicated otherwise.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">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 March 31, 2006, $566,000 was expensed, an increase of
$99,000 from the $467,000 expensed in the three months ended March 31, 2005.&nbsp;
$85,000 of the increase was due to Pro-Dex Astromec, the Company's wholly owned
subsidiary, and, the remainder attributable to increased engineering consulting
fees for specialty design and validation work.&nbsp; </font> </p>



<p class=MsoBodyTextIndent align="justify" style="text-indent: 36pt"><font size="2">&nbsp;Customer-funded
research and development provided $10,000 in revenue in the three months ended
March 31, 2006, and $285,000 in revenue in the three months ended March 31,
2005, reflecting a decrease in development fees billable during the quarter as
engineering efforts were focused on upgrading current products and supporting
warranty work.&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.</font></p>
<p class=MsoBodyTextIndent>&nbsp;</p>
<p class=MsoBodyTextIndent>&nbsp;</p>
<p class=MsoBodyTextIndent 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>



<font size="2">



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










</font>










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



<p class=MsoBodyTextIndent align="justify" style="text-indent: 36pt"><font size="2">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 March 31, 2006,
$27,000 was recognized as cost of sales, compared to $88,000 recognized as cost
of sales in the three months ended March 31, 2005, reflecting an decrease in
costs associated with the development fees billable during the quarter. </font> </p>



<p class=MsoBodyTextIndent style='text-autospace:ideograph-numeric ideograph-other; text-indent:36pt' align="justify">
<font size="2">The Company's revenue is derived from five main
customer types.&nbsp; The proportion of Pro-Dex total sales to each customer type is
noted in the table below:</font></p>



<table class=MsoNormalTable border=0 cellpadding=0 width=702
 style='width:75%;margin-left:4.65pt;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 class=MsoNormal align=center style='text-align:center'><font size="2">Three Months Ended March 31,</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 black;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,</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'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">FY</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'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">FY</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'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">FY</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'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">% of Total Sales</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;height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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 class=MsoNormal align=center style='text-align:center'><font size="2">2005</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 class=MsoNormal align=center style='text-align:center'><font size="2">2006</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 class=MsoNormal align=center style='text-align:center'><font size="2">2005</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 class=MsoNormal align=center style='text-align:center'><font size="2">2005</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 class=MsoNormal 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 class=MsoNormal align=center style='text-align:center'><font size="2">2003</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 class=MsoNormal><font size="2">Dental</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 class=MsoNormal align=center style='text-align:center'><font size="2">24%</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 class=MsoNormal align=center style='text-align:center'><font size="2">25%</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 class=MsoNormal align=center style='text-align:center'><font size="2">24%</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 class=MsoNormal align=center style='text-align:center'><font size="2">25%</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 class=MsoNormal align=center style='text-align:center'><font size="2">24%</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 class=MsoNormal align=center style='text-align:center'><font size="2">32%</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 class=MsoNormal align=center style='text-align:center'><font size="2">43%</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 class=MsoNormal><font size="2">Medical* </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 class=MsoNormal align=center style='text-align:center'><font size="2">31%</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 class=MsoNormal align=center style='text-align:center'><font size="2">45%</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 class=MsoNormal align=center style='text-align:center'><font size="2">42%</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 class=MsoNormal align=center style='text-align:center'><font size="2">45%</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 class=MsoNormal align=center style='text-align:center'><font size="2">42%</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 class=MsoNormal align=center style='text-align:center'><font size="2">41%</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 class=MsoNormal align=center style='text-align:center'><font size="2">28%</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 class=MsoNormal><font size="2">Industrial</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 class=MsoNormal align=center style='text-align:center'><font size="2">19%</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 class=MsoNormal align=center style='text-align:center'><font size="2">23%</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 class=MsoNormal align=center style='text-align:center'><font size="2">19%</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 class=MsoNormal align=center style='text-align:center'><font size="2">23%</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 class=MsoNormal align=center style='text-align:center'><font size="2">26%</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 class=MsoNormal align=center style='text-align:center'><font size="2">18%</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 class=MsoNormal align=center style='text-align:center'><font size="2">19%</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 class=MsoNormal><font size="2">Aerospace*</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 class=MsoNormal align=center style='text-align:center'><font size="2">14%</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 class=MsoNormal align=center style='text-align:center'><font size="2">--</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 class=MsoNormal align=center style='text-align:center'><font size="2">5%</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 class=MsoNormal align=center style='text-align:center'><font size="2">--</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 class=MsoNormal align=center style='text-align:center'><font size="2">--</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 class=MsoNormal align=center style='text-align:center'><font size="2">--</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 class=MsoNormal align=center style='text-align:center'><font size="2">--</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 class=MsoNormal><font size="2">Government
  research and other</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 class=MsoNormal align=center style='text-align:center'><font size="2">12%</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 class=MsoNormal align=center style='text-align:center'><font size="2">7%</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 class=MsoNormal align=center style='text-align:center'><font size="2">10%</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 class=MsoNormal align=center style='text-align:center'><font size="2">7%</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 class=MsoNormal align=center style='text-align:center'><font size="2">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 class=MsoNormal align=center style='text-align:center'><font size="2">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 class=MsoNormal align=center style='text-align:center'><font size="2">10%</font></p>
  </td>
 </tr>
</table>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">*Pro-Dex Astromec's sales are primarily to
the aerospace and medical markets and became a part of Pro-Dex with the
acquisition of substantially all of Astromec's assets in January 2006.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">Medical product sales represent the manufacture
of products that 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 now including Intraflow 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; We added significant sales to the aerospace market with the
purchase of the Astromec business and establishing Pro-Dex Astromec in January
2006.&nbsp; These products include highly reliable fractional horsepower DC motors
designed for harsh environments.&nbsp; . </font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">The Company holds many independently
verified certifications for maintaining quality processes and products,
including ISO 13485:2003, and Medical Device Directive 93\42\EEC Annex II
company.</font></p>










<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">At March 31, 2006, we had a backlog,
including orders for delivery beyond 60 days, of $10.7 million compared with a
backlog of $8.3 million at March 31, 2005 and $7.9 million at June 30, 2005.&nbsp;
We expect to ship our backlog in the remainder of fiscal year 2006 and in
fiscal year 2007.&nbsp; The increased backlog compared to March 31, 2005 is due to
an increase in the number and size of new purchase orders in the last twelve
months from new and existing customers and the addition of the Pro-Dex Astromec
backlog of $1.9 million.&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;
</font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">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.</font></p>



<p class=MsoNormal><b><font size="2">&nbsp;</font></b></p>
<p class=MsoNormal align="center"><font size="2">-17-</font></p>

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

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

</div>



<font size="2">



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










</font>










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

<p class=MsoNormal><b><font size="2">CRITICAL ACCOUNTING
ESTIMATES AND JUDGMENTS</font></b></p>



<p class=MsoNormal style='text-align:justify; text-indent:36pt'><font size="2">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 revenue recognition, warranty reserve, inventory
valuations for slow moving items, impairment of goodwill, and the recovery of
deferred income tax assets.</font></p>



<p class=MsoNormal style='text-align:justify; text-indent:36pt'><font size="2">We recognize sales
and associated cost of sale, upon shipment, FOB origin.&nbsp; There have been minimal
returns, so no reserve for product returns has been established. </font> </p>



<p class=MsoNormal style='text-align:justify; text-indent:36pt'><font size="2">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.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">The majority
of our products have a twelve month warranty.&nbsp; We determine our warranty
reserve based on considering the historical costs to repair warranty eligible
products and by estimating the number and type of products that may be eligible
for warranty return and repair.&nbsp; </font> </p>



<p class=MsoBodyText style='text-indent:36.0pt' align="justify"><font size="2">The Company accounts for
goodwill under 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; We have recorded no impairment
charge in 2004 or 2005.&nbsp; We prepare our annual impairment testing on April 1 of
each year.&nbsp; </font> </p>



<p class=MsoNormal style='text-align:justify; text-indent:36pt'><font size="2">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.</font></p>



<p class=MsoNormal style='text-align:justify; text-indent:36pt'><font size="2">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. </font> </p>

<p class=MsoNormal style='text-align:justify'><b><font size="2">&nbsp;</font></b></p>
<p class=MsoNormal style='text-align:center'><font size="2">-18-</font></p>

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

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

</div>



<font size="2">



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










</font>










<p class=MsoNormal style='text-align:justify'>&nbsp;</p>

<p class=MsoNormal style='text-autospace:none'><font size="2"><b>RESULTS OF
OPERATIONS</b></font></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">For
the Three-Month periods ended March 31, 2006 and 2005</font></b></p>

<p class=MsoNormal><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font> </b><font size="2">The following table sets forth for the periods
indicated the percentage of net revenues represented by each item in our
Consolidated Statements of Income. </font> </p>



<table class=MsoNormalTable border=0 cellpadding=0
 style='margin-left:24.65pt;border-collapse:collapse' width="75%">
 <tr style='height:15.75pt'>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">(In Thousands)</font></p>
  </td>
  <td colspan=6 valign=bottom style='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:15.75pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Three Months Ended March 31,
	</font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td colspan=3 valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:solid windowtext 1.0pt;border-right:none;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</font></p>
  </td>
  <td colspan=3 valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:solid windowtext 1.0pt;border-right:solid black 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-top:solid windowtext 1.0pt;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:none;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal><font size="2">Net sales:</font></p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,214&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">100.0&nbsp;%</font></p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3,241&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">100.0&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Cost of sales</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,759&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-bottom:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">65.5&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,598&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:none;border-bottom:
  solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">49.3&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Gross Profit</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,455&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">34.5&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,643&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">50.7&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Selling, general and
  administrative expenses</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">881&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">20.9&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">835&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">25.8&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Research and development
  costs</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">566&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-bottom:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">13.4&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">467&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:none;border-bottom:
  solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">14.4&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Income from Operations</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.2&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">341&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">10.5&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Net interest and other
  income</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(8)</font></p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">(0.2&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">18&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.6&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
  <td colspan=2 valign=bottom style='height:15.75pt; border-bottom-style:none; border-bottom-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Provision for Income Taxes</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1px solid #000000; border-top:medium none; border-bottom:1px solid #000000; border-left:1px solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">(6)</font></p>
  </td>
  <td valign=bottom style='border-left:1px solid windowtext; border-right:1px solid windowtext; border-bottom:1px solid windowtext; border-top:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-0.1&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000; height:15.75pt; border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">84&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:1px solid windowtext; border-right:1px solid windowtext; border-bottom:1px solid windowtext; border-top:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2.6&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:16.5pt'>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:solid windowtext 1.0pt;border-right:none;padding:0pt .85pt 0pt .85pt;
  height:16.5pt'>
  <p class=MsoNormal><font size="2">Net Income</font></p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;border-left:
  1.0pt solid windowtext;border-bottom:2.25pt double windowtext;border-right:
  medium none;height:16.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;border-left:medium none;
  border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:16.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-bottom:double windowtext 2.25pt;
  padding:0pt .85pt 0pt .85pt;height:16.5pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.1&nbsp;%</font></p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;border-left:
  1.0pt solid windowtext;border-bottom:2.25pt double windowtext;border-right:
  medium none;height:16.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:none;border-left:none;border-bottom:double windowtext 2.25pt;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:16.5pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">275&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:none;border-bottom:
  double windowtext 2.25pt;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:16.5pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8.5&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:13.5pt'>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:13.5pt'>

  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:13.5pt'>

  </td>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:13.5pt'>

  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:13.5pt'>

  </td>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:13.5pt'>

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



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><b>
<font size="2">Net Sales.</font></b><font size="2">&nbsp;
Consolidated sales increased 30% from $3,241,000 to $4,214,000 for the quarter
ended March 31, 2006, compared to the quarter ended March 31, 2005.&nbsp; The
Pro-Dex Astromec acquisition added $818,000 of the sales increase.&nbsp; Medical
products decreased in total and as a percentage of total sales to 31% from 45%
in the same quarter last year.&nbsp; Shipments to dental customers increased by 25%
due to higher sales in both the legacy dental products and the recently
introduced Intraflow products.&nbsp; Sales to industrial customers decreased to 19%
from 23% for the same quarter in the prior year as increased shipments of
legacy motion control devices were offset by decreases in industrial motor
sales.&nbsp; Electric motor sales to the aerospace industry were 14% of sales, the
first quarter as a part our product offering.&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;
</font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Gross Profit and Gross Profit
Percentage of Sales</font></b><font size="2">.&nbsp; Our
consolidated gross profit for the quarter ended March 31, 2006 decreased 3%
over the same quarter in the previous year as a material level of excess
product warranty costs were incurred and were coupled with a corresponding
reduction in overall manufacturing efficiencies.&nbsp; The Pro-Dex Astromec
acquisition accounted for $221,000 of the gross profit.&nbsp; Gross profit as a
percentage of sales decreased to 37.9% for the quarter ended March 31, 2006
compared to 50.7% for the quarter ended March 31, 2005, as $202,000 of excess
rework and warranty costs associated with products introduced in the last fiscal
year were incurred.&nbsp; Included in the $202,000 is an increase in our warranty
costs of $234,000 for estimated future warranty costs.&nbsp; Gross profit and gross
profit percentage were as follows:</font></p>












<div align="center">












<table class=MsoNormalTable border=0 cellpadding=0 width=463
 style='width:60%;margin-left:4.65pt;border-collapse:collapse' id="table1">
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Three Months Ended March 31,</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">(Decrease)</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Gross Profit</font></p>
  </td>
  <td 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">$1,455,000</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">$1,643,000</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">-11.4%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Gross 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">34.5%</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">50.7%</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">-31.9%</font></p>
  </td>
 </tr>
</table>



</div>



<p class=MsoNormal style='text-align:center;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:center;text-autospace:
none'><font size="2">-19-</font></p>

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

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

</div>



<font size="2">



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












</font>












<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Selling, General and Administrative
Costs (S, G&amp;A)</font></b><font size="2">.&nbsp; S, G &amp; A
expenses increased to $881,000 for the quarter ended March 31, 2006 from
$835,000 for the quarter ended March 31, 2005. The Pro-Dex Astromec acquisition
accounted for $90,000 of the increase that was partially offset by reductions
in staffing expenses by $106,000.&nbsp; The increase in sales and marketing expense
is due to expenses associated with the Interflow product.&nbsp; S, G &amp; A costs
were as follows: </font> </p>



<div align="center">



<table class=MsoNormalTable border=0 cellpadding=0 width=478
 style='width:60%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Three Months Ended March 31,</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Increase/</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">(Decrease)</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Selling</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">317,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">249,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">27&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">564,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">586,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-4&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Total S, G&amp;A</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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">881,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">835,000&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6&nbsp;%</font></p>
  </td>
 </tr>
</table>





</div>





<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><b>
<font size="2">Research and Development Costs</font></b><font size="2">.&nbsp; Company-funded research and development
expenses increased to $566,000 for the quarter ended March 31, 2006 from
$467,000 for the quarter ended March 31, 2005.&nbsp; The Pro-Dex Astromec
acquisition accounted for $85,000 of the $99,000 increase in research and
development costs the remainder was attributable to increased consulting fees
for specialty design and validation work.&nbsp; Company-funded research and
development costs were as follows:</font></p>



<div align="center">



<table class=MsoNormalTable border=0 cellpadding=0 width=523
 style='width:60%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Three Months Ended March 31,</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</font></p>
  </td>
  <td colspan=2 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Increase</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">566,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">467,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">21&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 class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">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.
</font> </p>



<p class=MsoBodyTextIndent style="text-indent: 36pt" align="justify">
<font size="2">Customer-funded
research and development provided $10,000 in revenue in the three months ended
March 31, 2006, and $285,000 in revenue in the three months ended March 31,
2005, reflecting a decrease in development fees billable during the quarter as
engineering efforts were focused on current products.&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.</font></p>



<p class=MsoBodyTextIndent style="text-indent: 36pt" align="justify"><font size="2">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 March 31, 2006,
$27,000 was recognized as cost of sales, compared to $88,000 recognized as cost
of sales in the three months ended March 31, 2005, reflecting a decrease in
costs associated with the development fees billable during the quarter. </font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><b>
<font size="2">Operating Profit and Operating Profit </font> </b><font size="2"><b>Percentage of Sales</b>.&nbsp; Our consolidated operating profit for the quarter ended March
31, 2006 decreased to $8,000 compared to operating profit of $341,000 for the
same quarter in the previous year.&nbsp; The Pro-Dex Astromec acquisition accounted
for $46,000 of operating profit.&nbsp; The decrease was due to the reduced gross
margin from the warranty costs and increased inventory reserve.&nbsp; Consequently,
operating profit as a percentage of sales decreased to 3.5% for the quarter
ended March 31, 2006 compared to 10.5% for the quarter ended March 31, 2005.&nbsp;
Operating profit and margin were as follows: </font> </p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><b>
<font size="2">&nbsp;</font></b></p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'>&nbsp;</p>
<p class=MsoNormal style='text-align:center;'><font size="2">-20-</font></p>

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

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

</div>



<font size="2">



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












</font>












<div align="center">












<table class=MsoNormalTable border=0 cellpadding=0 width=511
 style='width:60%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Three Months Ended March 31,
	</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Increase/</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">(Decrease)</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">$8,000</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">$341,000</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">-98%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">0.2%</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='text-align:right'><font size="2">10.5%</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">-98%</font></p>
  </td>
 </tr>
</table>

</div>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Royalties and Other Income. </font> </b><font size="2">&nbsp;The Company recognized $5,000 in royalty income in
the three months ended March 31, 2006, compared to $6,000 in the prior year's
third fiscal quarter.</font></p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Interest. </font> </b><font size="2">&nbsp;Interest expense was $12,000 in the quarter ended
March 31, 2006, compared to no expense in the prior year's quarter as the
Company incurred debt to fund its' asset acquisitions. </font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Provision for Taxes</font></b><font size="2">. Our estimated effective combined federal and state
tax rate on income from operations for the quarter ended March 31, 2006 was not
meaningful as the use of R&amp;D tax credits caused an increase to earnings,
down from 40% for the quarter ended March 31, 2005.&nbsp;&nbsp; The consolidated tax rate
was not impacted by the Pro-Dex Astromec, the new Nevada corporation.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Net Income.</font></b><font size="2">&nbsp; Our net income for the three months ended March 31,
2006 was $6,000 or $0.00 per share on a basic and diluted basis, as compared to
a net income of $275,000 or $0.03 per share on a basic and diluted basis for
the three months ended March 31, 2005.</font></p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>
<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'>&nbsp;</p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">&nbsp;</font></b></p>

<p class=MsoPlainText align=center style='text-align:center'><font size="2">-21-</font></p>

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

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

</div>



<font size="2">



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










</font>










<p class=MsoNormal style='text-autospace:none'><b><font size="2">For
the Nine-Month periods ended March 31, 2006 and 2005</font></b></p>

<p class=MsoNormal><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font> </b><font size="2">The following table sets forth for the periods
indicated the percentage of net revenues represented by each item in our
Consolidated Statements of Income. </font> </p>



<table class=MsoNormalTable border=0 cellpadding=0
 style='margin-left:24.65pt;border-collapse:collapse' width="75%">
 <tr style='height:15.75pt'>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">(In Thousands)</font></p>
  </td>
  <td colspan=6 valign=bottom style='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:15.75pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,
	</font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td colspan=3 valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:solid windowtext 1.0pt;border-right:none;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</font></p>
  </td>
  <td colspan=3 valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:solid windowtext 1.0pt;border-right:solid black 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-top:solid windowtext 1.0pt;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:none;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal><font size="2">Net sales:</font></p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">11,728&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">100.0&nbsp;%</font></p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9,466&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">100.0&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Cost of sales</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6,854&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-bottom:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">58.4&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,344&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:none;border-bottom:
  solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">45.9&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Gross Profit</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,874&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">41.6&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5,122&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">54.1&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Selling, general and
  administrative expenses</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,511&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">21.4&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,437&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">25.7&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Research and development
  costs</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,451&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-bottom:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">12.4&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:solid windowtext 1.0pt;
  border-top:none;padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,343&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:none;border-bottom:
  solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">14.2&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Income from Operations</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">912&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">7.8&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,342&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">14.2&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Net interest and other
  income</font></p>
  </td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">66&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.6&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">94&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1.0&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  &nbsp;</td>
  <td colspan=2 valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
  <td colspan=2 valign=bottom style='height:15.75pt; border-bottom-style:none; border-bottom-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:none;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:15.75pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:none;border-left:solid windowtext 1.0pt;
  padding:0pt .85pt 0pt .85pt;height:15.75pt'>
  <p class=MsoNormal><font size="2">Provision for Income Taxes</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1px solid #000000; border-top:medium none; border-bottom:1px solid #000000; border-left:1px solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">382&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:1px solid windowtext; border-right:1px solid windowtext; border-bottom:1px solid windowtext; border-top:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3.3&nbsp;%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000; height:15.75pt; border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">515&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:1px solid windowtext; border-right:1px solid windowtext; border-bottom:1px solid windowtext; border-top:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5.4&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:16.5pt'>
  <td valign=bottom style='border-top:none;border-left:solid windowtext 1.0pt;
  border-bottom:solid windowtext 1.0pt;border-right:none;padding:0pt .85pt 0pt .85pt;
  height:16.5pt'>
  <p class=MsoNormal><font size="2">Net Income</font></p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;border-left:
  1.0pt solid windowtext;border-bottom:2.25pt double windowtext;border-right:
  medium none;height:16.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;border-left:medium none;
  border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  height:16.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">596&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border:none;border-bottom:double windowtext 2.25pt;
  padding:0pt .85pt 0pt .85pt;height:16.5pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5.1&nbsp;%</font></p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;border-left:
  1.0pt solid windowtext;border-bottom:2.25pt double windowtext;border-right:
  medium none;height:16.5pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:none;border-left:none;border-bottom:double windowtext 2.25pt;
  border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;height:16.5pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">921&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:none;border-left:none;border-bottom:
  double windowtext 2.25pt;border-right:solid windowtext 1.0pt;padding:0pt .85pt 0pt .85pt;
  height:16.5pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">9.7&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:13.5pt'>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:13.5pt'>

  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:13.5pt'>

  </td>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:13.5pt'>

  </td>
  <td colspan=2 valign=bottom style='padding:0pt .85pt 0pt .85pt;
  height:13.5pt'>

  </td>
  <td valign=bottom style='padding:0pt .85pt 0pt .85pt;height:13.5pt'>

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



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><b>
<font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><b>
<font size="2">Net Sales.</font></b><font size="2">&nbsp;
Consolidated sales increased from $9,466,000 to $11,728,000 ($2,262,000 or 24%)
for the nine months ended March 31, 2006, compared to the nine months ended March
31, 2005.&nbsp; Medical products continued to increase in total and as a
percentage of total sales to 42% from 36% in the same period last year.&nbsp;
Shipments to dental customers reflect a one time $245,000 credit for the
Intraflow product was realized at the completion of the Intravantage asset
acquisition in October 2005, reversing sales from the prior fiscal year as the
product was returned as a condition of the acquisition.&nbsp; Sales to
industrial customers decreased 19% from 28% for the same period in the prior
year as shipments of legacy motion control devices were reduced, primarily in
the first half of the year.&nbsp; Electric motor sales to the aerospace industry
represented 5% of sales, as there was only three months of this product's sales
in our year-to-date numbers.&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. </font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Gross Profit and Gross Profit
Percentage of Sales</font></b><font size="2">.&nbsp; Our
consolidated gross profit for the nine months ended March 31, 2006 decreased 5%
over the same period in the previous year as a material level of excess product
warranty costs were incurred and were coupled with a corresponding reduction in
overall manufacturing efficiencies.&nbsp; Gross profit as a percentage of sales
decreased to 41.6% for the nine months ended March 31, 2006 compared to 54.1%
for the nine months ended March 31, 2005.&nbsp; We had $365,000 in warranty costs
associated with products introduced in the last fiscal year.&nbsp; Included in the
$365,000 is an increase in our warranty reserves of $234,000 for estimated
future rework costs.&nbsp; Gross profit and gross profit percentage were as follows:</font></p>



<div align="center">



<table class=MsoNormalTable border=0 cellpadding=0 width=463
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Increase/</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</font></p>
  </td>
  <td colspan=2 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">(Decrease)</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Gross Profit</font></p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">4,874,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">5,122,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-4.8&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Gross Profit Percentage</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">41.6&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">54.1&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-23.2&nbsp;%</font></p>
  </td>
 </tr>
 </table></div>

<p class=MsoPlainText align=center style='text-align:center'><font size="2">-22-</font></p>

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

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

</div>



<font size="2">



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










</font>










<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Selling, General and Administrative
Costs (S, G&amp;A)</font></b><font size="2">.&nbsp; S, G &amp; A
expenses increased to $2,511,000 for the nine months ended March 31, 2006 from
$2,437,000 for the nine months ended March 31, 2005.&nbsp; The increase is due to
higher expenditures in advertising and consulting, primarily related to the
Intraflow product relaunch, by $33,000 and $37,000 respectively and the
addition of $90,000 in Astromec general and administrative expenses offset by
reduced staffing expenses.&nbsp; S, G &amp; A costs were as follows: </font> </p>



<table class=MsoNormalTable border=0 cellpadding=0 width=478
 style='width:60%;margin-left:24.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Increase</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Selling</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">827,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">726,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">14&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,684,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,711,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-2&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Total S, G&amp;A</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;height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,511,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,437,000&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">3&nbsp;%</font></p>
  </td>
 </tr>
</table>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><b>
<font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><b>
<font size="2">Research and Development Costs</font></b><font size="2">.&nbsp; Company-funded research and development expenses
increased to $1,451,000 for the nine months ended March 31, 2006 from $1,343,000
for the nine months ended March 31, 2005.&nbsp; The increase in Company-funded
research and development costs was due to the addition of Astromec motor
development costs.&nbsp; Company-funded research and development costs were as
follows:</font></p>



<table class=MsoNormalTable border=0 cellpadding=0 width=523
 style='width:60%;margin-left:24.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</font></p>
  </td>
  <td colspan=2 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Increase</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,451,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,343,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8&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>





<p class=MsoBodyTextIndent><font size="2">Customer-funded
research and development provided $58,000 and $534,000 in revenue in the nine
months ended March 31, 2006 and March 31, 2005, respectively reflecting the
fluctuations in the timing of prototypes and other related deliverables and the
delays in new product launches caused by the product warranty issues.&nbsp; In the
nine months ended March 31, 2006, $48,000 was recognized as cost of sales, and $130,000
was recognized as cost of sales in the nine months ended March 31, 2005.&nbsp;
</font> </p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><b>
<font size="2">Operating Profit and Operating Profit </font> </b><font size="2"><b>Percentage of Sales</b>.&nbsp; Our consolidated operating profit for the nine months ended
March 31, 2006 decreased to $912,000 compared to operating profit of $1,342,000
for the same nine months in the previous year.&nbsp; The decrease was due to the
reduced gross margin.&nbsp; Consequently, operating profit as a percentage of sales
decreased to 7.8% for the nine months ended March 31, 2006 compared to 14.2%
for the nine months ended March 31, 2005.&nbsp; Operating profit and margin were as
follows:</font></p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=511
 style='width:60%;margin-left:4.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,
	</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='height:15.75pt; 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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2005</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">(Decrease)</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Operating Profit</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">912,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,342,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-32&nbsp;%</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Operating Profit Percentage</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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">7.8&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">14.2&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:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">-45&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 class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
<font size="2">&nbsp;</font></b></p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Royalties and Other Income. </font> </b><font size="2">&nbsp;We received $42,000 in royalty payments in the nine
months ended March 31, 2006, compared to $56,000 in royalty payments in the
nine months ended March 31, 2005.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Net Interest Expense. </font> </b><font size="2">&nbsp;Net interest income was $31,000 in the nine months
ended March 31, 2006, compared to a $9,000 expense in the prior year's same
nine month period quarter as the company incurred debt to fund its asset
acquisitions only in the third quarter and had maintained a significant
positive cash balance and debt-free status in the first six months of the
fiscal year.</font></p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Provision for Taxes</font></b><font size="2">. Our estimated effective combined federal and state
tax rate on income from operations for the nine months ended March 31, 2006 was
39%, decreased from the 40% from the nine months ended March 31, 2005 due to
the use of R&amp;D tax credits.&nbsp; The consolidated tax rate was not impacted by
the Pro-Dex Astromec, the new Nevada corporation.</font></p>



<p class=MsoPlainText align=center style='text-align:center'><font size="2">-23-</font></p>

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

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

</div>



<font size="2">



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












</font>












<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><b><font size="2">Net Income.</font></b><font size="2">&nbsp; Our net income for the nine months ended March 31,
2006 was $596,000 or $0.06 per share on a basic and diluted basis, as compared
to a net income of $921,000 or $0.10 per share on a basic and diluted basis for
the nine months ended March 31, 2005.&nbsp; </font> </p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">Liquidity
and Capital Resources</font></b></p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">The following table presents selected
financial information for the comparative dates last year and the year ended
June 30, 2006:</font></p>

<table class=MsoNormalTable border=0 cellpadding=0 width=591
 style='width:75%;margin-left:24.65pt;border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td valign=bottom style='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;padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">As of March 31,
	</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 class=MsoNormal align=center style='text-align:center'><font size="2">As of</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='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'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">2006</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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">June 30, 2005</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">409,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,259,000&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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">2,584,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Working Capital&sup1;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</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'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">6,041,000&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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">7,027,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">8,288,000&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1,000,000&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-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 class=MsoNormal 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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Tangible book value/common
  share&sup2;</font></p>
  </td>
  <td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.80&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">0.97&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">1.10&nbsp; </font> </p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Number of days of sales
  outstanding (DSO)</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'>

  </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'>

  </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'>

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">in accounts receivable at
  end of quarter&sup3;</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'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">63&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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">72&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;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">75&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

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

  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</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'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">Nine Months Ended March 31,
	</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 class=MsoNormal align=center style='text-align:center'><font size="2">Year Ending</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>

  &nbsp;</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 class=MsoNormal align=center style='text-align:center'><font size="2">2006</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'>
  <p class=MsoNormal 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'>
  <p class=MsoNormal align=center style='text-align:center'><font size="2">June 30, 2005</font></p>
  </td>
 </tr>
 <tr style='height:15.75pt'>
  <td valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">Net cash provided by (used
  in) operations</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'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">(154,000)&nbsp; </font> </p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">111,000&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; padding-left:.85pt; padding-right:.85pt; padding-top:0pt; padding-bottom:0pt'>
  <p class=MsoNormal><font size="2">&nbsp;$</font></p>
  </td>
  <td valign=bottom style='border-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 class=MsoNormal align=right style='margin-right:.7pt;text-align:right'>
	<font size="2">557,000&nbsp; </font> </p>
  </td>
 </tr>
</table>





<p class=MsoNormal style='margin-left:36.0pt;text-align:justify;text-autospace:
none'><sup><font size="2">1</font></sup><font size="2"> Working Capital is calculated as follows:&nbsp; ending current assets
balance less ending current liabilities balance.</font></p>



<p class=MsoNormal style='margin-left:36.0pt;text-align:justify;text-autospace:
none'><sup><font size="2">2</font></sup><font size="2"> Tangible book value/common share<sup> </sup>is calculated as follows:
(Total shareholders' equity less Goodwill less intangibles - patents) divided
by (basic outstanding shares for the most recent quarter).</font></p>

<p class=MsoNormal style='margin-left:36.0pt;text-align:justify;text-autospace:
none'><sup><font size="2">3</font></sup><font size="2"> DSO is calculated as follows: Ending Net Accounts Receivable balance
divided by (Previous Quarter Sales divided by 91 days).</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">Our working capital at March 31, 2006
decreased to $6.0 million compared to $7.0 million at March 31, 2005 and
decreased from $8.3 million at June 30, 2005.&nbsp; Sustained profitability
contributed to the provision of cash and increased working capital for the year
but was offset by the use of cash and assumption of debt to fund the
Intravantage and Astromec asset acquisitions.&nbsp;</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">In October 2005, we renewed our credit facility with
Wells Fargo Bank N.A. (&quot;Wells Fargo&quot;) for borrowings up to $2,000,000.&nbsp;
Its terms require monthly interest payments at either the prime rate of
interest (7.75% at March 31, 2006), or LIBOR plus 2.50% (7.33% (one month) to
7.50% (three months) at March 31, 2006), at our discretion, based on
outstanding borrowings with no minimum interest charge.&nbsp; The outstanding
borrowings are secured by all assets of the Company.&nbsp; There was $1,000,000
outstanding balance under the terms of this credit facility as of March 31,
2006.&nbsp; The total remaining eligible borrowing capacity at March 31, 2006
was $1,000,000.</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">In January 2006, we extended the credit facility and
entered into a 4 year medium term note with Wells Fargo for $1,000,000.&nbsp;
Its terms require monthly interest payments at either the prime rate of
interest (7.75% at March 31, 2006), or LIBOR plus 2.50% (7.33% (one month) to
7.50% (three months) at March 31, 2006), at our discretion, based on
outstanding borrowings.&nbsp; The principal payments on the note are $20,833
per month.&nbsp; The outstanding borrowings are secured by all assets of the
Company.&nbsp; There was $958,333 outstanding balance under the terms of this medium
term note as of March 31, 2006.&nbsp; </font> </p>



<p class=MsoPlainText align=center style='text-align:center'><font size="2">-24-</font></p>

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

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</div>



<font size="2">



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</font>










<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">In March 2006, we entered into a 10 year mortgage with
Union Bank of California for $1,650,000.&nbsp; Its terms require monthly
interest payments at a fixed rate of 6.73% based on outstanding
borrowings.&nbsp; The principal payments on the mortgage note are based on a 25
year amortization of the note and are $11,379 per month beginning May 1, 2006.&nbsp;
The outstanding borrowings are secured by our Carson City land and building.&nbsp;
There was $1,650,000 outstanding balance under the terms of this mortgage as of
March 31, 2006.&nbsp;</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">There are certain financial and non-financial
covenants that we must meet to be in compliance with the terms of the October
2005 Wells Fargo credit facility, as amended, and the Union Bank mortgage.&nbsp; At
March 31, 2006, we were in compliance with all such covenants.&nbsp;</font></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">At March 31, 2006, we had cash and cash equivalents of
$409,000.&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
facilities will be sufficient to meet our working capital and capital
expenditure requirements for the next twelve months. </font> </p>



<p class=MsoNormal style='text-autospace:none'><b><font size="2">SUBSEQUENT
EVENTS</font></b></p>



<p class=NormalJustified style='text-align:justify;text-indent:36.0pt'>
<font size="2">On April 12, 2006, the Company accepted the
resignation and terminated the employment agreement of Patrick Johnson as the
Company's Chief Executive Officer. Mr. Jeff Ritchey, the Company's Chief
Financial Officer, will serve as interim Chief Executive Officer and continue
his duties as Chief Financial Officer, Treasurer and Secretary. Mr. Johnson
remains with the company as its Executive Vice President and Chief Business
Development Officer. He also remains on the Company's Board of Directors. The
Board has formed an executive search committee to oversee the search for a
successor Chief Executive Officer.</font></p>

<p class=MsoNormal style='text-autospace:none'><b><font size="2">Recent
Accounting Pronouncements</font></b></p>



<p class=MsoNormal style='text-align:justify;text-indent:36.0pt;text-autospace:
none'><font size="2">We are subject to the revised requirements
of the Statement of Financial Accounting Standards (&quot;SFAS&quot;) No. 123(R), &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 will be recognized as compensation 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 in Note 8.</font></p>

<p class=MsoNormal style='text-align:justify;text-autospace:none'><b>
<font size="2">Item 3. Controls and Procedures</font></b></p>

<p class=MsoNormal style='text-align:justify;text-indent:36.0pt'><font size="2">&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 for the quarter ended March 31, 2006, 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.</font></p>



<p class=MsoPlainText align=center style='text-align:center'><font size="2">-25-</font></p>

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

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</font>
<p align="justify" style="text-indent: 36pt"><font size="2">During the
quarter ended March 31, 2006, 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.&nbsp;Subsequent&nbsp;to the end&nbsp;of our third quarter of fiscal
2006,&nbsp;the Chief Executive Officer stepped down from his&nbsp;position and
on an interim basis the&nbsp;Chief Financial Officer assumed the Chief
Executive Officer position.&nbsp; As the two executive positions were combined
and held by one individual, our internal controls over financial reporting are
not currently effective.&nbsp; We are mitigating this deficiency&nbsp;through&nbsp;a
combination of&nbsp;documentation and review of the financial statements by the
Board. &nbsp;The Board of Directors will be more available for consultation and
will become more active in the review of the operating decisions and the review
of the financial statements.&nbsp; </font> </p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'>&nbsp;</p>
<p class=MsoPlainText align=center style='text-align:center'><font size="2">-26-</font></p>

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

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</div>



<font size="2">



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</font>










<p class=MsoNormal style='text-align:justify'><b><font size="2">PART
II</font></b></p>

<p class=MsoNormal align=center style='text-align:center;text-autospace:none'><b>
<font size="2">OTHER INFORMATION</font></b></p>



<table border="0" width="100%" id="table2">
	<tr>
		<td width="6%" valign="top" nowrap> <b><font size="2">Item 1.
</font> </b></td>
		<td colspan="3" valign="top"><b><font size="2">Legal Proceedings
</font> </b></td>
	</tr>
	<tr>
		<td colspan="4" valign="top" nowrap>

<p class=MsoNormal style='margin-left:36.0pt;text-indent:36.0pt'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top" nowrap>&nbsp;</td>
		<td colspan="3" valign="top"><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></td>
	</tr>
	<tr>
		<td width="6%" valign="top" nowrap> <b><font size="2">Item 2. </font> </b></td>
		<td colspan="3" valign="top"><font size="2"><b>Unregistered Sales of Equity
Securities and Use of Proceeds. <br>
		</b>None.</font></td>
	</tr>
	<tr>
		<td colspan="4" valign="top" nowrap>

<p class=MsoNormal style='margin-left:36.0pt;text-indent:36.0pt'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top" nowrap> <b><font size="2">Item 3. </font>
</b></td>
		<td colspan="3" valign="top"><font size="2"><b>Defaults Upon Senior
		Securities. <br>
</b>None.</font></td>
	</tr>
	<tr>
		<td colspan="4" valign="top" nowrap>

<p class=MsoNormal style='margin-left:36.0pt;text-indent:36.0pt'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top" nowrap><font size="2">&nbsp;<b>Item 4. </b></font>
		</td>
		<td colspan="3" valign="top"><font size="2"><b>Submissions of Matters to
		a Vote of Securities Holders. <br>
		</b>None. </font></td>
	</tr>
	<tr>
		<td colspan="4" valign="top" nowrap>

<p class=MsoNormal style='margin-left:36.0pt;text-indent:36.0pt'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top" nowrap> <b><font size="2">Item 5. </font> </b></td>
		<td colspan="3" valign="top"><font size="2"><b>Other Information. <br>
		</b>None.</font></td>
	</tr>
	<tr>
		<td colspan="4" valign="top" nowrap>

<p class=MsoNormal style='margin-left:36.0pt;text-indent:36.0pt'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top" nowrap><b>
<font size="2">Item 6.</font></b></td>
		<td width="5%" valign="top"><b>
<font size="2">Exhibits.</font></b></td>
		<td width="3%" valign="top">&nbsp;</td>
		<td width="85%" valign="top">

<p class=MsoNormal style='margin-top:18.0pt;text-align:justify'><b>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font> </b><font size="2">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td colspan="4" valign="top">

<p class=MsoNormal style='margin-left:36.0pt;text-indent:36.0pt'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="5%" valign="top"><u>
<font size="2">Exhibits</font></u><font size="2">:</font></td>
		<td width="3%" valign="top">&nbsp;</td>
		<td width="85%" valign="top">

<p class=MsoNormal style='margin-left:36.0pt;text-indent:36.0pt'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="5%" valign="top">&nbsp;</td>
		<td width="3%" valign="top">
<font size="2">31.1</font></td>
		<td width="85%" valign="top">

<p class=MsoNormal>
<font size="2">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>



		</td>
	</tr>
	<tr>
		<td colspan="4" valign="top">

<p class=MsoNormal style='margin-left:36.0pt;text-indent:36.0pt'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="5%" valign="top">&nbsp;</td>
		<td width="3%" valign="top">
<font size="2">31.2</font></td>
		<td width="85%" valign="top">



<p class=MsoNormal>
<font size="2">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>

		</td>
	</tr>
	<tr>
		<td colspan="4" valign="top">

<p class=MsoNormal style='margin-left:36.0pt;text-indent:36.0pt'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="5%" valign="top">&nbsp;</td>
		<td width="3%" valign="top">
<font size="2">32</font></td>
		<td width="85%" valign="top">

<p class=MsoNormal>
<font size="2">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>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="5%" valign="top">&nbsp;</td>
		<td width="3%" valign="top">&nbsp;</td>
		<td width="85%" valign="top">&nbsp;</td>
	</tr>
</table>

<p class=MsoNormal style="margin-top: 0; margin-bottom: 0.001pt"><font size="2">SIGNATURES </font> </p>

<p class=MsoNormal style='text-indent:36.0pt; margin-top:0; margin-bottom:0.001pt'><font size="2">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 valign=top style='width:454px;padding:0pt; '>
  <p class=MsoNormal><font size="2">Date:&nbsp; May 22, 2006</font></p>

  <p class=MsoNormal><font size="2">PRO-DEX INC. </font> </p>
  </td>
  <td valign=top style='width:230px;padding:0pt; '>

  </td>
 </tr>
 <tr>
  <td valign=top style='width:454px;padding:0pt; '>
  <p class=MsoNormal><font size="2">By: / s / Jeffrey J.
  Ritchey </font> </p>
  </td>
  <td valign=top style='width:230px;padding:0pt; '>

  </td>
 </tr>
 <tr>
  <td valign=top style='width:454px;padding:0pt; '>

  &nbsp;&nbsp;&nbsp;

  </td>
  <td valign=top style='width:230px;padding:0pt; '>

  </td>
 </tr>
 <tr>
  <td valign=top style='width:454px;padding:0pt; '>
  <p class=MsoNormal><font size="2">Jeffrey J. Ritchey </font> </p>
  </td>
  <td valign=top style='width:230px;padding:0pt; '>

  </td>
 </tr>
 <tr>
  <td valign=top style='width:454px;padding:0pt; '>
  <p class=MsoNormal><font size="2">Chief Executive Officer,
  Secretary and Chief Financial Officer<br>
	(Principal Financial and
  Accounting Officer)</font></p>
  </td>
  <td valign=top style='width:230px;padding:0pt; '>

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



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

&nbsp;</div>



&nbsp;<p>&nbsp;</p>
<p>&nbsp;</p>
<p align="center"><font size="2">-27-</font></p>







</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>ex31-1.htm
<TEXT>
<html>

<head>
<title>EXHIBIT 31.1</title>
</head>

<body>












<p class=FlushLeft>&nbsp;</p>
<p class=FlushLeft><b><font size="2">EXHIBIT
31.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></p>

<p class=FlushLeft align=center style='text-align:center'><b><u><font size="2">CERTIFICATIONS</font></u></b></p>



<p class=MsoNormal><font size="2">I, Jeffrey J. Ritchey,
certify that:</font></p>



<table border="0" width="100%" id="table2" cellspacing="4" cellpadding="3">
	<tr>
		<td width="3%"><font size="2">1.</font></td>
		<td colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">I have reviewed this Form
10-QSB of Pro-Dex, Inc.;</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%"><font size="2">2.</font></td>
		<td colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">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; </font> </p>



		</td>
	</tr>
	<tr>
		<td width="3%"><font size="2">3.</font></td>
		<td colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">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; </font> </p>



		</td>
	</tr>
	<tr>
		<td width="3%"><font size="2">4.</font></td>
		<td width="94%" colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">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:</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">a)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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;</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">b)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">[Omitted pursuant to SEC
Release 34-47986];</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">c)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">d)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%"><font size="2">5.</font></td>
		<td width="94%" colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">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):</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">a)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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 </font> </p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">b)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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.</font></p>





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





<p class=MsoNormal><font size="2">Date: May 22, 2006</font></p>

<p class=MsoNormal style="margin-left: 3.5in"><font size="2"><u>/s/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
JEFFREY J. RITCHEY&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u>Jeffrey J. Ritchey<br>
Chief Executive Officer </font></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 class=FlushLeft>&nbsp;</p>
<p class=FlushLeft>&nbsp;</p>
<p class=FlushLeft><b><font size="2">EXHIBIT
31.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font> </b></p>

<p class=FlushLeft align=center style='text-align:center'><b><u><font size="2">CERTIFICATIONS</font></u></b></p>



<p class=MsoNormal><font size="2">I, Jeffrey J. Ritchey,
certify that:</font></p>



<table border="0" width="100%" id="table1" cellspacing="4" cellpadding="3">
	<tr>
		<td width="3%"><font size="2">1.</font></td>
		<td colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">I have reviewed this Form
10-QSB of Pro-Dex, Inc.;</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%"><font size="2">2.</font></td>
		<td colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">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; </font> </p>



		</td>
	</tr>
	<tr>
		<td width="3%"><font size="2">3.</font></td>
		<td colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">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; </font> </p>



		</td>
	</tr>
	<tr>
		<td width="3%"><font size="2">4.</font></td>
		<td width="94%" colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">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:</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">a)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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;</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">b)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">[Omitted pursuant to SEC
Release 34-47986];</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">c)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">d)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%"><font size="2">5.</font></td>
		<td width="94%" colspan="2">



<p class=MsoNormal style='text-align:justify;'><font size="2">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):</font></p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">a)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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 </font> </p>



		</td>
	</tr>
	<tr>
		<td width="3%">&nbsp;</td>
		<td width="2%"><font size="2">b)</font></td>
		<td width="92%">



<p class=MsoNormal style='text-align:justify;'><font size="2">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.</font></p>





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





<p class=MsoNormal><font size="2">Date: May 22, 2006</font></p>

<p class=MsoNormal style="margin-left: 3.5in"><font size="2"><u>/s/
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; JEFFREY J. RITCHEY&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u>Jeffrey
J. Ritchey<br>
&nbsp;Chief
Financial Officer</font></p>

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</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>&nbsp;</p>
<p class=FlushLeft><b><font size="2">EXHIBIT 32</font></b></p>





<p class=FlushLeft align=center style='margin-top:0pt;text-align:center'><b>
<font size="2">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</font></b></p>

<p class=FlushLeft align=center style='margin-top:0pt;text-align:center'><b>
<font size="2">Certifications
of Chief Executive Officer and Chief Financial Officer</font></b></p>



<p class=Body style='margin-top:0pt;text-align:justify; text-indent:36pt'>
<font size="2">In connection with the
quarterly report on Form 10-QSB of Pro-Dex Inc. (the &quot;Company&quot;) for the
quarterly period ended March 31, 2006 (the &quot;Report&quot;), the undersigned hereby
certify in his 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:</font></p>

<p class=Body style='text-align:justify; text-indent:36pt'><font size="2">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</font></p>

<p class=Body style='text-align:justify; text-indent:36pt'><font size="2">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.</font></p>



<div align="left">



<table border="0" width="740" id="table1" cellspacing="0" cellpadding="0">
	<tr>
		<td nowrap><font size="2">Dated: May 22, 2006</font></td>
		<td width="475" nowrap>



<p class=MsoPlainText><font size="2">By:</font><u><font size="2"> /s/ &nbsp; JEFFREY J. RITCHEY&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font> </u></p>

		</td>
	</tr>
	<tr>
		<td nowrap>&nbsp;</td>
		<td width="475" nowrap>

<p class=MsoPlainText><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jeffrey
J. Ritchey</font></p>

		</td>
	</tr>
	<tr>
		<td nowrap>&nbsp;</td>
		<td width="475" nowrap>

<p class=MsoPlainText><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief
Executive Officer and Chief Financial Officer</font></p>





		</td>
	</tr>
</table>
</div>
<p class=MsoPlainText><u><font size="2">
<br>
</font>
</u></p>





<p class=MsoPlainText><font size="2">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.</font><u><font size="2"><br>
<br>
</font>
</u></p>





<p class=MsoNormal align=center style='text-align:center;text-autospace:none'>&nbsp;</p>
<p class=MsoNormal align=center style='text-align:center;text-autospace:none'>
<font size="2"><b>&nbsp;</b></font></p>
<p class=MsoNormal align=center style='text-align:center;text-autospace:none'>
<b><font size="2">End of Filing</font></b></p>

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</SEC-DOCUMENT>
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