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<SEC-DOCUMENT>0001003297-07-000252.txt : 20070928
<SEC-HEADER>0001003297-07-000252.hdr.sgml : 20070928
<ACCEPTANCE-DATETIME>20070928114549
ACCESSION NUMBER:		0001003297-07-000252
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20070630
FILED AS OF DATE:		20070928
DATE AS OF CHANGE:		20070928

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:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-14942
		FILM NUMBER:		071141256

	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>10KSB
<SEQUENCE>1
<FILENAME>esform10ksb.htm
<TEXT>
<html>

<head>
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<title> PRO DEX INC. Form 10KSB </title>



</head>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<h4 style='margin:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:normal;'>
<b><font style="font-size: 14.0pt">UNITED STATES </font></b></h4>
<h4 style='margin:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:normal;'>
<b><font style="font-size: 14.0pt">SECURITIES AND EXCHANGE COMMISSION</font></b></h4>
<h5 style='margin-top:12.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in;font-size:13.0pt;font-family:"Times New Roman";font-weight:bold;font-style:italic;text-align:center'>Washington, D.C. 20549</h5>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b><font style="font-size: 6.0pt">&nbsp;</font></b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<b><font style="font-size: 6.0pt">&nbsp;</font></b></p>
<h6 style='margin-top:12.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in;font-size:11.0pt;font-family:"Times New Roman";font-weight:bold;text-align:center'>
<font style="font-size: 24.0pt">FORM
  10-KSB</font></h6>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b><font style="font-size: 14.0pt">&nbsp;</font></b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>&nbsp;</b></p>
<table border="0" style="border-collapse: collapse" width="100%" id="table3">
	<tr>
		<td valign="top"><font face="Times New Roman"><b>[X]</b></font></td>
		<td width="925" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:
  none; margin-right:0in; margin-top:0in'><b>ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.</b></p></td>
	</tr>
</table>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:
  none; margin-top:0in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>For
  the fiscal year ended June 30, 2007</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<b><font style="font-size: 6.0pt">&nbsp;</font></b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<b>OR</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<table border="0" style="border-collapse: collapse" width="100%" id="table4">
	<tr>
		<td valign="top"><font face="Times New Roman"><b>[&nbsp; ]</b></font></td>
		<td width="924" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:
  none; margin-right:0in; margin-top:0in'><b>TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934.&nbsp;&nbsp; FOR THE TRANSITION PERIOD FROM&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>TO&nbsp;
  		<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .</u></b></p>
		</td>
	</tr>
</table>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<table class=MsoNormalTable border=0 cellpadding=0
 style='width:100%;border-collapse:collapse' id="table5">
	<tr>
		<td colspan=2 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>Commission
  File Number&nbsp;&nbsp;&nbsp; 0-14942 </b></p></td>
	</tr>
	<tr>
		<td colspan=2 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>&nbsp;</b></p></td>
	</tr>
	<tr>
		<td colspan=2 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b><font style="font-size: 24.0pt">PRO-DEX, INC.&nbsp;&nbsp;&nbsp;
		</font></b></p></td>
	</tr>
	<tr>
		<td colspan=2 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>(Name
  of small business issuer in its charter)&nbsp;&nbsp;&nbsp;&nbsp; </b></p></td>
	</tr>
	<tr>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<b>&nbsp;&nbsp; </b></p></td>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<b>&nbsp;&nbsp;&nbsp;&nbsp; </b></p></td>
	</tr>
	<tr>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b><u>Colorado </u></b></p></td>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b><u>84-1261240
  </u></b></p></td>
	</tr>
	<tr>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>(State
  or other jurisdiction of</b></p></td>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>(I.R.S.
  Employer Identification No.) </b></p></td>
	</tr>
	<tr>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>incorporation
  or organization)</b></p></td>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<b>&nbsp;&nbsp; </b></p></td>
	</tr>
	<tr>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<b>&nbsp;&nbsp; </b></p></td>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<b>&nbsp;&nbsp;&nbsp;&nbsp; </b></p></td>
	</tr>
	<tr>
		<td colspan=2 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b><u>151 E. Columbine Avenue, Santa Ana, California&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 92707</u></b></p>
		</td>
	</tr>
	<tr>
		<td colspan=2 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>(Address
  of principal executive offices)&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Zip
  Code)</b></p></td>
	</tr>
	<tr>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<b><font style="font-size: 10.0pt">&nbsp;&nbsp; </font></b></p></td>
		<td valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<b><font style="font-size: 10.0pt">&nbsp;&nbsp; &nbsp; </font></b></p>
		</td>
	</tr>
	<tr>
		<td colspan=2 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>Issuer's
  telephone number: (<u>714) 241-4411 </u></b></p></td>
	</tr>
	<tr>
		<td colspan=2 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>&nbsp;</b></p>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>Securities
  registered under Section 12(b) of the Exchange Act: </b></p>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b><font style="font-size: 7.0pt">&nbsp;</font></b></p>
		</td>
	</tr>
</table>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<div align="center">
	<table border="0" style="border-collapse: collapse" width="50%" id="table13">
		<tr>
			<td width="248" valign="bottom">
					<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
    none'>&nbsp;</p></td>
			<td align="center" valign="bottom"><b><font style="font-size: 10.0pt">Name of each exchange </font></b>
					</td>
		</tr>
		<tr>
			<td width="248" valign="bottom">
					<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
    none'><b><u><font style="font-size: 10.0pt">Title of each class </font></u>
					</b></p></td>
			<td valign="bottom">
					<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
    none'><b><u><font style="font-size: 10.0pt">on which registered </font></u>
					</b></p></td>
		</tr>
		<tr>
			<td width="248" valign="bottom">
					<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
    none'><b><font style="font-size: 10.0pt">Common Stock, no par Value</font></b></p>
					</td>
			<td valign="bottom">
					<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
    none'><b><font style="font-size: 10.0pt">NASDAQ Capital Market </font></b>
					</p></td>
		</tr>
	</table>
</div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>Securities
registered under Section 12(g) of the Exchange Act: </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>None</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>(Title
of class) </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font>-1-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Check whether the issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act.&nbsp; [&nbsp; ]</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Check whether the issuer (1) filed all reports required by Section 13 or
15(d) of the Exchange Act during the past 12 months, and (2) has been subject
to such filing requirements for the past 90 days. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>Yes
[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No&nbsp; [&nbsp; ]</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ X ]</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Indicate by check mark whether the registrant is a shell company (as
defined by rule 12b-2 of the Exchange Act).</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>Yes
[&nbsp; ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No&nbsp; [&nbsp;X ]</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>State issuer's revenues for its most recent fiscal year: <u>$21,563,000</u>.
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the average bid and
asked price of such common equity as of August 31, 2007: <u>$10,220,725</u>. &nbsp;For
the purpose of this calculation, shares owned by officers, directors and 10%
stockholders known to the registrant have been deemed to be owned by
affiliates. This determination of affiliate status is not a determination for
other purposes. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The number of shares outstanding of each of the issuer&#146;s classes of
Common Stock outstanding as of the latest practicable date: 9,718,366 shares of Common Stock, no par value, as
of August 31, 2007. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>DOCUMENTS INCORPORATED BY REFERENCE: Part III incorporates by reference
certain information from the registrant's definitive proxy statement (the
&quot;Proxy Statement&quot;) for the 2007 Annual Meeting of Shareholders.&nbsp;
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>Transitional
Small Business Disclosure Format:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Yes [&nbsp; ] No [X]</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Courier New";text-align:center'>-2-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>PART
I</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>Cautionary
statement pursuant to safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>When used in this report on Form 10-KSB, the words &quot;expects,&#148;
&quot;anticipates,&quot; &quot;estimates,&quot; &quot;believes,&quot;
&quot;hopes,&quot; &quot;intends,&quot; &quot;forecasts&quot; and similar
expressions are intended to identify &quot;forward-looking statements.&quot;
These statements which are not historical or current facts are made pursuant to
the safe harbor provisions of Section 27a of the Securities Act of 1933, as
amended and Section 21e of the Securities Exchange Act of 1934, as amended, and
the Company intends that such forward-looking statements be subject to those
safe harbor provisions for such statements. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date of this report. While forward-looking
statements represent management's best judgment as to what may occur in the
future, they are subject to risks, uncertainties and important factors beyond
the control of the Company that could cause actual results and events to differ
materially from historical results of operations and events as well as those
presently anticipated or projected. These factors include adverse economic
conditions, entry of new and stronger competitors, capital availability, unexpected
costs, failure to capitalize upon access to new customers, and marketplace
delisting. Other risks and uncertainties which may affect forward-looking
statements about the Company's business and prospects include, but are not
limited to, the ramifications of the continued industry consolidation of dental
and medical products manufacturers, dealers and distributors, managed health
care, the Company's ability to effectively integrate operations of acquired
companies, market acceptance and support of new products, maintaining favorable
supplier relationships, the inability to engage qualified human resources as
needed, regulatory compliance and general economic conditions. The Company
disclaims any obligations subsequently to revise any forward-looking statements
to reflect events or circumstances after the date of such statement or to
reflect the occurrence of anticipated or unanticipated events.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>-3-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b><font style="font-size: 11.0pt">Item 1. &nbsp;&nbsp;&nbsp;&nbsp; Description
of </font>Business</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>Company Overview</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;Pro-Dex, Inc. (&#147;Company,&#148; &#147;Pro-Dex&#148;, &#147;we,&#148; &#147;our,&#148;, &#147;us&#148;), 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. &nbsp;The company names of Micro Motors, Oregon Micro Systems, and
Astromec are used for marketing purposes as brand names.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Pro-Dex&#146;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  www.pro-dex.com .&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
(&#147;SEC&#148;) 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&#146;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>www.sec.gov
</u>.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>Description of Business</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The majority of our revenue is derived from designing, developing and
manufacturing 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 for aerospace, medical and
military applications. A large part of the revenue 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; 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; 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, and apparel industries.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>All years relating to financial data herein shall refer to fiscal years
ending June 30, unless indicated otherwise.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Company-funded research and development supports the development of
generic rotary drive, motion control and electric motor technology platforms.&nbsp;
We 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 research and development costs not associated
with contracts or purchase orders are expensed as incurred.&nbsp; In the year ended
June 30, 2007, $2,474,000 was expensed; an increase of $465,000 from the $2,009,000
expensed in the year ended June 30, 2006.&nbsp; The addition of costs of Pro-Dex
Astromec, our wholly owned subsidiary established in January 2006, accounted
for $184,000 of the increase and the remainder was attributable to increased
internal costs and external engineering consulting fees for product
improvement, specialty design and validation work.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<p style="font-size: 12.0pt; font-family: Times New Roman; text-align: right; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</p>
	<p style="font-size: 12.0pt; font-family: Times New Roman; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">-4-</p>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;In fiscal year 2007, there was a $95,000 change in revenue
from customer-funded research and development as there was $24,000 negative
revenue from customer-funded research and development as fees were refunded due
to cancelled development projects in the year ended June 30, 2007 compared to recognizing
$71,000 in revenue in the year ended June 30, 2006.&nbsp; The reduction in
customer-funded research and development fees reflected efforts that were
focused on pre-contract development work, upgrading current products and
supporting warranty work</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>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. For the
year ended June 30, 2007, $124,000 was recognized as cost of sales reflecting
the recognition of inventory costs associated with the cancelled development
projects, compared to $54,000 recognized as cost of sales for the year ended
June 30, 2006, reflecting the completion of various development contracts
during the year. </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-autospace:ideograph-numeric ideograph-other'>
The Company&#146;s revenue is derived from five main customer types.&nbsp; The
proportion of sales compared to our total sales, sales to each customer type and
sales by location are noted in the tables below:</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-autospace:ideograph-numeric ideograph-other'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=705
 style='width:95%;margin-left:5.4pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.4pt;padding:0in .85pt 0in .85pt;
  height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Sales by customer type ($'000)</p>
			</td>
			<td width=103 nowrap colspan=2 valign=bottom style='width:77.0pt;border:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td width=103 nowrap colspan=2 valign=bottom style='width:77.0pt;border-top:
  solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
			<td width=103 nowrap colspan=2 valign=bottom style='width:77.0pt;border-top:
  solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2005</p>
			</td>
			<td width=103 nowrap colspan=2 valign=bottom style='width:77.0pt;border-top:
  solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2004</p>
			</td>
			<td width=103 nowrap colspan=2 valign=bottom style='width:77.0pt;border-top:
  solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2003</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.4pt;border:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Dental</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$&nbsp; 4,298
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>20%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$&nbsp; 3,789
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>22%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$&nbsp; 3,368
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>24%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$&nbsp; 4,578
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>32%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$&nbsp; 5,156
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>43%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.4pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Medical</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  9,453 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>44%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  6,447 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>38%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  5,849 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>42%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  5,864 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>41%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  3,357 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>28%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.4pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Industrial</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  3,317 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>15%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  3,753 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>22%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  3,570 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>26%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  2,533 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>18%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  2,278 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>19%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.4pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Aerospace</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  2,445 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  1,194 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;--
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;--
			</p></td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;--
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;--
			</p></td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;--
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;--
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.4pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Repairs,
  Government and other</p></td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  2,050 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  1,878 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  1,047 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  1,225 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  1,199 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.4pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total
  Sales</p></td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$21,563
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>100%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$17,061
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>100%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$13,834
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>100%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$14,200
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>100%</p>
			</td>
			<td width=62 nowrap valign=bottom style='width:46.35pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$11,990
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.65pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>100%</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify;text-indent:.5in;
text-autospace:none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=715
 style='width:95%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.0pt;padding:0in .85pt 0in .85pt;
  height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Sales by location ($'000)</p>
			</td>
			<td width=105 nowrap colspan=2 valign=bottom style='width:79.0pt;border:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td width=105 nowrap colspan=2 valign=bottom style='width:79.0pt;border-top:
  solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
			<td width=105 nowrap colspan=2 valign=bottom style='width:79.0pt;border-top:
  solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2005</p>
			</td>
			<td width=105 nowrap colspan=2 valign=bottom style='width:79.0pt;border-top:
  solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2004</p>
			</td>
			<td width=103 nowrap colspan=2 valign=bottom style='width:77.0pt;border-top:
  solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2003</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.0pt;border:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Santa Ana</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$13,852
			</p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>64%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$10,823
			</p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>63%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$&nbsp; 9,946
			</p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>72%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$10,900
			</p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>77%</p>
			</td>
			<td width=61 nowrap valign=bottom style='width:46.1pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$&nbsp; 9,281
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.9pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>77%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.0pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Beaverton</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  4,121 </p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>19%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  4,585 </p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>27%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  3,888 </p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>28%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  3,300 </p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>23%</p>
			</td>
			<td width=61 nowrap valign=bottom style='width:46.1pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  2,709 </p></td>
			<td width=41 nowrap valign=bottom style='width:30.9pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>23%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.0pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Carson
  City</p></td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  3,590 </p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>17%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;
  1,653 </p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  -&nbsp;&nbsp; </p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;
			</p></td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  -&nbsp;&nbsp; </p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp; - &nbsp;&nbsp;</p>
			</td>
			<td width=61 nowrap valign=bottom style='width:46.1pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  -&nbsp;&nbsp; </p></td>
			<td width=41 nowrap valign=bottom style='width:30.9pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=191 nowrap valign=bottom style='width:143.0pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total
  Sales</p></td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$21,563
			</p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$17,061
			</p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$13,834
			</p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%</p>
			</td>
			<td width=63 nowrap valign=bottom style='width:47.3pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$14,200
			</p></td>
			<td width=42 nowrap valign=bottom style='width:31.7pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%</p>
			</td>
			<td width=61 nowrap valign=bottom style='width:46.1pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;$11,990
			</p></td>
			<td width=41 nowrap valign=bottom style='width:30.9pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Medical product sales represent the manufacture of products that utilize
proprietary designs developed by us 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 markets our own
branded line of dental products, including the Intraflow dental anesthesia
product we acquired the rights to in October, 2005. &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,
scientific research, 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 with the purchase of the assets
of Astromec Inc., and establishing Pro-Dex Astromec Inc. in January 2006.&nbsp; The
products sold include reliable fractional horsepower DC motors designed for
harsh environments primarily for the aerospace and medical markets.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>In 2007, the top 20 customers accounted for 77% of our sales, compared to
73% in 2006.&nbsp; In 2007, our two largest customers accounted for 41% of such
sales with the largest customer accounting for over 23% of our sales.&nbsp; This
compares to 2006 when our two largest customers accounted for 33% of our sales
with the largest customer accounting for 22% of such sales.&nbsp; Our larger customers,
based on revenue, include Smith and Nephew, Medtronic, Sullivan Schein,
Lawrence Livermore National Laboratories, Monogram, and Benchmark Electronics.&nbsp;
In many cases, disclosure of other larger customer names is prohibited by
confidentiality agreements with such entities.&nbsp; We have no plans to discontinue
the sales relationships with our existing significant customers. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>-5-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>In the second quarter of 2007, one of our major customers advised us that
it plans to internally manufacture two of the products that we developed for
them and have manufactured for the past four years.&nbsp; This decision is
consistent with this customer&#146;s general strategy of vertical integration and
their targeted time deadline for the transition is January 1, 2008.&nbsp; This
customer represents sales of $2,314,000 in 2007 and $1,431,000 in 2006.&nbsp; At
this point, the customer has purchased and has expressed its intention to
continue to purchase some of the major components for these products from us,
as these components contain our proprietary technology, although they are under
no obligation to make such purchases.&nbsp; Such major components could account
for as much as 50% of the price of the fully manufactured product. &nbsp;As a result
of this advisement, no existing purchase orders were cancelled for these two
products and the customer has placed a blanket purchase order for delivery of
the products throughout calendar year 2007.&nbsp; We have no other knowledge that other
significant customers have any plans to discontinue their relationships with
us, although the relationships may change over time.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>All of the raw materials used to manufacture our products are purchased
from various suppliers and are available from several sources. Precipart
Corporation, Tyco Precision Interconnect and Transicoil are some examples of
our key suppliers.&nbsp; We consider our relationships with our suppliers and
manufacturers to be good.&nbsp; We do not intend to terminate any such relationship
at this time, nor does management have knowledge that any supplier or
manufacturer intends to terminate its relationship with Pro-Dex.&nbsp; Pro-Dex has
no exclusive arrangements with any of its suppliers.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our commitment to quality design and manufacturing are demonstrated by
our three independently verified certifications for maintaining quality
processes and products.&nbsp; We hold the following certifications: &nbsp;ISO
13485:2003, the Medical Device Directive 93\42\EEC Annex II, and CMDCAS (Canadian
Medical Device Regulation).</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>At the present time, we are generally able to fill orders for recurring
product within sixty (60) days from initial order receipt.&nbsp; At June 30, 2007,
we had a backlog, including orders for delivery beyond 60 days, of $10.1
million compared with a backlog of $11.7 million at June 30, 2006.&nbsp; We expect
to ship most of our backlog in fiscal year 2008 and the remainder in fiscal
year 2009.&nbsp; The decreased backlog from 2006 is due normal fluctuations in the
timing of receipt and shipment of orders.&nbsp; Backlog reductions in medical/dental
products of approximately $1.1 million, due to the slow down in new product
development, were offset by increases in motor component orders of
approximately $0.5 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. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We sell our
products using several methods; directly to the customer, directly to original
equipment manufacturers and through a network of high technology and dental
product distributors within North America.&nbsp; Internationally, we maintain sales
agreements with foreign distributors or sell through the domestic subsidiaries
of foreign customers.</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>
<b>&nbsp;</b></p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>
<b>Competition</b>&nbsp;
</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>
<i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </i>The
markets for products in the healthcare, fractional motors, motion control and
factory automation industries are intensely competitive, and we face significant
competition from a number of different sources.&nbsp; Several of our competitors
have significantly greater name recognition as well as substantially greater
financial, technical, product development and marketing resources than us.</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>-6-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
compete in all of our markets with other major healthcare, fractional motors, motion
control and factory automation related companies. Competitive pressures and
other factors, such as new product or new technology introductions by us or our
competitors, may result in price or market share erosion that could have a
material adverse effect on our business, results of operations and financial
condition.&nbsp; Also, there can be no assurance that our products and services will
achieve broad market acceptance or will successfully compete with other
products targeting the same customers. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>Research
and Development </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We conduct company-funded and customer-funded research and development
programs. These product development programs are important to both maintain and
improve our market position. The net amounts spent on company-funded research
and development activities in 2007 and 2006 were approximately $2.5 million and
$2.0 million, respectively.&nbsp; Our research and development effort involves the
design and manufacture of products that perform specific applications for our
customers.&nbsp; We continue to target our research and development expenses toward
three goals:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<ul>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:60.0pt;text-align:justify;text-autospace:none; margin-right:0in; margin-top:0in'>expanding our knowledge base in the medical device, fractional
motor and motion control industry to solidify our products with current
customers and expand our customer base;</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:60.0pt;text-align:justify;text-autospace:none; margin-right:0in; margin-top:0in'>general technical advances; and
	</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:60.0pt;text-align:justify;text-autospace:none; margin-right:0in; margin-top:0in'>enhancements of current product lines.
	</p></li>
</ul>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:42.0pt;text-align:justify;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>One of our strategies is to gain a greater commitment level from our
customers to share research and development costs by billing them for
non-recurring engineering expenses. The fees received for non-recurring
engineering expenses do not, however, represent a significant portion of our
revenue.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>Employees </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>At June 30, 2007, we had 124 full-time employees compared to 122
full-time employees at June 30, 2006.&nbsp; At June 30, 2007, there were 86 persons
employed at the Santa Ana location, 26 persons employed at the Carson City
location and 12 persons employed at the Beaverton location compared to 86
persons employed at the Santa Ana location, 24 persons employed at the Carson City location and 12 persons employed at the Beaverton location at June 30, 2006.&nbsp; Due
to the high level of shipments in the fourth quarter of 2007, the use of
temporary labor from temporary staffing agencies was increased and we employed 7
agency temps at June 30, 2007, up from 2 agency temps at June 30, 2006. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>None of our employees are a party to any collective bargaining agreements
with us. We consider our relationships with our employees to be good. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>Government
Regulations </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our manufacture and distribution of dental and medical devices are
subject to a number of state and federal regulatory bodies, including state
dental boards and the Food and Drug Administration (&quot;FDA&quot;). The
statutes, regulations, administrative orders, and advisories that affect the
Company's businesses are complex and subject to diverse, often conflicting,
interpretations. While we make every effort to maintain full compliance with
all applicable laws and regulations, we are unable to eliminate an ongoing risk
that one or more of our activities may at some point be determined to have been
non-compliant. The penalties for non-compliance could range from an
administrative warning to termination of a portion of our business.&nbsp; Furthermore,
even if we are subsequently determined to have fully complied with applicable
laws or regulations, our costs to achieve such a determination and the
intervening loss of business could adversely affect or even terminate a portion
of our business. A change in such laws or regulations at any time may have an
adverse effect on our operations. Notwithstanding the risks inherent in our
business, management believes that our operations are in compliance with
applicable laws and regulations. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>-7-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The FDA regulates our dental and medical products as Class 1, Class 2 and
Class 3 medical devices.&nbsp; The FDA has broad enforcement powers to recall and
prohibit the sale of products that do not comply with federal regulations, and
to order the cessation of non-compliant processes. No claim has been made to
date by the FDA regarding any of our products or processes.&nbsp; Nevertheless, as
is common in the industry, certain of our products and processes have been the
subject of routine governmental reviews and investigations. While our management
is confident that our products and processes fully comply with applicable laws
and regulations, we are unable to predict the outcome of any such investigation
or review, pending its completion. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our management believes that our business is conducted in a manner
consistent with Environmental Protection Agency (&#147;EPA&#148;) regulations governing
disposition of industrial waste materials.&nbsp; While our management is confident
that our products and processes fully comply with applicable laws and
regulations, we are unable to predict the outcome of any investigation or
review which may in the future be undertaken with respect to our products or
processes. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our management believes that we follow Good Manufacturing Practices for
all of our products at each of our locations. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Patents, Trademarks, and
Licensing Agreements </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We hold patents relating to intraosseous dental anesthesia delivery, multi-axis
motion controllers and our miniature rotary drive products.&nbsp; Our patents have
varying expiration dates.&nbsp; The near term expiration of the patents, if any, is
not expected to cause any change in the Company&#146;s revenue generating operations
as the revenue from the products associated with those patents would not be
material.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We believe that the use of the patents acquired in connection with the
1995 OMS and Micro Motors acquisitions as well as the patents acquired with the
intraosseous dental anesthesia delivery (&#147;Intraflow&#148;) acquisition is neither
infringed upon by any third party, nor infringes upon any prior art of any third
party. &nbsp;We are unable to assess the validity, scope, or defensibility of our
patents with any degree of certainty, and any challenge to or claim of
infringement relating to our patents could materially and adversely affect our
business and results of operations.</p>
<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;text-align:left;page-break-after:
auto;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We have certain trademarks relating to our miniature pneumatic motor
products, including Dynatorq&trade;, Dynasurg&trade;, PDL&trade;, Micro Motors&trade;, Micro Handpiece&trade;
and Intraflow&trade;. &nbsp;We have filed for federal trademark protection for OMS-EZ&trade;.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We have not entered into any licensing or franchising agreements for
revenue generating purposes, however we do have a royalty agreement in place
for a previously designed product.&nbsp; This income is reflected as &#147;other income&#148;
and not &#147;revenue&#148;.</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>
<b>&nbsp;</b></p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>
<b>Risk Factors</b></p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>
<b>We face
significant competition from a number of different sources which could
negatively impact our results of operations and business conditions.&nbsp; &nbsp;</b></p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>
<i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </i>The
markets for healthcare, factory automation and small motor manufacturing
industries are intensely competitive, and we face significant competition from
a number of different sources.&nbsp; Several of our competitors have significantly
greater name recognition as well as substantially greater financial, technical,
product development and marketing resources than us.</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:center;line-height:normal'>-8-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
compete in all of our markets with other major healthcare, factory automation
and small motor manufacturing related companies. Competitive pressures and
other factors, such as new product or new technology introductions by us or our
competitors may result in price or market share erosion that could have a
material adverse effect on the our business, results of operations and
financial condition. Also, there can be no assurance that our products and
services will achieve broad market acceptance or will successfully compete with
other products.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>Our
quarterly results can fluctuate significantly from quarter to quarter which may
negatively impact the price of our shares and/or provide significant variances
in the prices at which such shares trade.</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </i>Our
revenues have fluctuated in the past, and may fluctuate in the future from
quarter to quarter and period to period, as a result of a number of factors
including, without limitation: the size and timing of orders from customers;
the length of new product development cycles; market acceptance of new
technologies; the extent and timing of eligible product returned for repair or
replacement under warranty coverage;&nbsp; changes in pricing policies or price
reductions by us or our competitors; the timing of new product announcements
and product introductions by us or our competitors; the financial stability of
major customers; our success in expanding our sales and marketing programs;
deferrals of customer orders and deliveries; changes in our strategy; personnel
changes; and general market/economic factors. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Because
a significant percentage of our expenses are relatively fixed, a variation in
the timing of sales can cause significant variations in operating results from
quarter to quarter. As a result, we believe that interim period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance. Further, our
historical operating results are not necessarily indicative of future
performance for any particular period.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Due to
all of the foregoing factors, it is possible that in some future quarter(s),
our operating results may be below the expectations of public market analysts
and investors. In such event, the price of our Common Stock would likely be
materially adversely affected.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>A
substantial portion of our business is derived from our three core business
areas which, if not serviced properly, may result in a material adverse impact
upon our business, results of operations and financial condition.</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
currently derive a substantial part of our net revenues from sales of our
healthcare, factory automation and small motor products and services. &nbsp;We
believe that a primary factor in the market acceptance of our product and
services is the value that is created for our customers by those products and
services. Our future financial performance will depend in large part on our
ability to continue to meet the increasingly sophisticated needs of our
customers through the timely development, successful introduction and
implementation of new and enhanced products and services. We have historically
expended a significant percentage of our net revenues on product development
and believe that significant continued product development efforts will be
required to sustain our growth. Continued investment in our sales and marketing
efforts will also be required to support future growth.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There can be no
assurance that we will be successful in our product development efforts, that
the market will continue to accept our existing products, or that new products
or product enhancements will be developed and implemented in a timely manner,
meet the requirements of our customers, or achieve market acceptance. If new
products or product enhancements do not achieve market acceptance, our
business, results of operations and financial condition could be materially
adversely affected.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>The
industry in which we operate is subject to significant technological change and
any failure or delay in addressing such change could adversely affect our
competitive position or could make our current products obsolete.</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>-9-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </i>
</b>The
healthcare, factory automation and small motor markets are generally
characterized by rapid technological change, changing customer needs, frequent
new product introductions, and evolving industry standards. The introduction of
products incorporating new technologies and the emergence of new industry
standards could render the Company's existing products obsolete and
unmarketable. There can be no assurance that we will be successful in
developing and marketing new products that respond to technological changes or
evolving industry standards.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; New
product development requires significant research and development expenditures
that are ultimately funded by sales growth.&nbsp; Any significant decrease in
revenues or research funding could impair our ability to respond to
technological advances in the marketplace and to remain competitive. If we are
unable, for technological or other reasons, to develop and introduce new
products in a timely manner in response to changing market conditions or
customer requirements, our business, results of operations and financial
condition may be materially adversely affected.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In response to
increasing market demand, we are currently developing new products and updating
existing products. There can be no assurance that we will successfully develop
these new products or that these products will operate successfully, or that
any such development, even if successful, will be completed concurrently with
or prior to the introduction of competing products.&nbsp; Any such failure or delay
could adversely affect our competitive position or could make our current
products obsolete.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>We face
the risks and uncertainties that are associated with litigation against us
which could have a material adverse effect on our business, results of
operations and financial condition</b><b><font style="font-size: 10.0pt">.
</font></b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<i>&nbsp;</i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
continually face the possibility of litigation as either a plaintiff or a
defendant.&nbsp; It is not reasonably possible to estimate the awards or damages, or
the range of awards or damages, if any, that we might incur in connection with
such litigation. The uncertainty associated with potential litigation may have
an adverse impact on our business. In particular, such litigation could impair
our relationships with existing customers and our ability to obtain new
customers. Defending or prosecuting such litigation may result in a diversion
of management's time and attention away from business operations, which could
have a material adverse effect on our business, results of operations and
financial condition.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Many
of our products are complex and technologically advanced.&nbsp; Such products
may, from time to time, be the subject of claims concerning product performance
and construction, including warranty claims.&nbsp;&nbsp; While we are committed
to correcting such problems as soon as possible, there is no assurance that
solutions can be found or found on a timely basis to satisfy customer demands
and avoid potential claims or litigation.&nbsp; Such matters could have a
material and adverse effect upon our business, results of operations and
financial condition. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There
can be no assurance that such litigation will not result in liability in excess
of our insurance coverage, that our insurance will cover such claims or that
appropriate insurance will continue to be available to us in the future at
commercially reasonable rates.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>We rely
heavily on our proprietary technology which, if not properly protected or
deemed invalid, could have a material adverse effect on our business, results
of operations and financial condition.</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </i>We
are dependent on the maintenance and protection of our intellectual property
and rely on exclusive development and supply agreements, confidentiality
procedures, and employee nondisclosure agreements to protect our intellectual
property. </p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There
can be no assurance that the legal protections and precautions taken by us will
be adequate to prevent misappropriation of our technology or that competitors
will not independently develop technologies equivalent or superior to ours.
Further, the laws of some foreign countries do not protect our proprietary
rights to as great an extent as do the laws of the United States and are often
not enforced as vigorously as those in the United States.</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:center;line-height:normal'>-10-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We do not believe
that our operations or products infringe on the intellectual property rights of
others. However, there can be no assurance that others will not assert
infringement or trade secret claims against us with respect to our current or
future products or that any such assertion will not require us to enter into a
license agreement or royalty arrangement with the party asserting the claim. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>Our
failure to manage growth could harm us by having a material adverse effect on
our business and results of operations.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
have in the past experienced periods of growth that have placed, and may
continue to place, a significant strain on our resources. We also anticipate
expanding our overall development, marketing, sales, management and training
capacity as market demand requires.&nbsp; In the event we are unable to identify,
hire, train and retain qualified individuals in such capacities within a
reasonable timeframe, such failure could have a material adverse effect on the
Company. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
addition, our ability to manage future increases, in the scope of our
operations or personnel may depend on significant expansion of our research and
development, marketing and sales, management, and administrative and financial
capabilities. The ineffective management of expansion in the business could
have a material adverse effect on our business, results of operations and
financial condition.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>Our
operations are dependent upon our key personnel. If such personnel were to
leave unexpectedly, we may not be able to execute our business plan.</b><font style="font-size: 10.0pt">
</font>&nbsp;&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Our
future performance also depends in significant part upon the continued service
of our key technical and senior management personnel, many of whom have been
with the Company for a significant period of time.&nbsp; We maintain term key man
life insurance policy for the CEO, and do not maintain key man life insurance
on any other of our employees.&nbsp; Because we have a relatively small number of
employees when compared to other leading companies in the same industry, our
dependence on maintaining our relationship with key employees is particularly
significant. We are also dependent on our ability to attract and retain high
quality personnel, particularly in the areas of product development, operations
management, marketing and finance. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A
high level of employee mobility and the aggressive recruiting of skilled
personnel characterize the healthcare and motion control industries.&nbsp; There can
be no assurance that our current employees will continue to work for us.&nbsp; Loss
of services of key employees could have a material adverse effect on our
business, results of operations and financial condition. Furthermore, we may
need to grant additional stock options to key employees and provide other forms
of incentive compensation to attract and retain such key personnel.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>
<b>Our
products may be subject to product liability legal claims which may cost us
significant amounts in both money and management time and resources.</b><i> </i>
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
maintain insurance to protect against claims associated with the use of our
products, but there can be no assurance that our insurance coverage would
adequately cover any claim asserted against us. A successful claim brought
against us in excess of our insurance coverage could have a material adverse
effect on our business, results of operations and financial condition.&nbsp; Even
unsuccessful claims could result in the expenditure of funds in litigation and
management time and resources.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There can be no
assurance that we will not be subject to product liability claims, that such
claims will not result in liability in excess of our insurance coverage, that
our insurance will cover such claims or that appropriate insurance will
continue to be available to us in the future at commercially reasonable rates.
Such claims could have a material adverse affect on our business, results of
operations and financial condition.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Our evaluation of internal
control and remediation of potential problems will be costly and time consuming
and could expose weaknesses in financial reporting.</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none' align="center">-11-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The
regulations implementing Section 404 of the Sarbanes-Oxley Act of 2002 require
management's assessment of the effectiveness of the Company's internal control
over financial reporting beginning with our Annual Report on Form 10-KSB for
the fiscal year ending June 30, 2008. &nbsp;Our independent auditors will be
required to confirm in writing whether management's assessment of the
effectiveness of the internal control over financial reporting is fairly stated
in all material respects, and separately report on whether they believe
management maintained, in all material respects, effective internal control
over financial reporting as of June 30, 2008. &nbsp;This process will be expensive
and time consuming, and will require significant attention of management. &nbsp;Management
can give no assurance that material weaknesses in internal controls will not be
discovered. If a material weakness is discovered, corrective action may be time
consuming, costly and further divert the attention of management. &nbsp;The
disclosure of a material weakness, even if quickly remedied, could reduce the
market's confidence in our financial statements and harm our stock price,
especially if a restatement of financial statements for past periods is
required. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>We are subject to changes in
and interpretations of financial accounting matters that govern the measurement
of our performance, compliance with which could be costly and time consuming</b>.<font style="font-size: 10.0pt">
</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We
are subject to changes in and interpretations of financial accounting matters
that govern the measurement of our performance. Based on our reading and interpretations
of relevant guidance, principles or concepts issued by, among other
authorities, the American Institute of Certified Public Accountants, the
Financial Accounting Standards Board, and the United States Securities and
Exchange Commission, our management believes our current sales contract terms
and business arrangements have been properly reported. However, there continue
to be issued interpretations and guidance for applying the relevant standards
to a wide range of contract terms and business arrangements that are prevalent
in the industries in which we operate. Future interpretations or changes by the
regulators of existing accounting standards or changes in our business
practices could result in future changes in our accounting policies and
practices that could have a material adverse effect on our business, financial
condition, cash flows, revenue and results of operations.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
<b>Our per share price may be
adversely effected if material weaknesses in our internal controls are
identified by ourselves or our independent auditors</b>.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any weaknesses
identified in our internal controls as part of the evaluation being undertaken
by us and our registered independent public accountants pursuant to Section 404
of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our
business.&nbsp; We are in the process of evaluating and documenting our controls
pursuant to Section 404 of the Sarbanes-Oxley Act.&nbsp; We are working toward being
fully compliant with the requirements of Section 404 of the Sarbanes-Oxley Act
at the time it applies to us.&nbsp; Failure to comply could have a material adverse
affect on our business, financial condition, and our ability to remain listed
as a publicly held exchange traded company.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 2.&nbsp;&nbsp;
Description of Property </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our executive offices and Santa Ana manufacturing facility are located at
  151 East Columbine Avenue, Santa Ana, California 92707.&nbsp; We lease the 18,000
square foot facility from an unrelated third party at a base monthly lease rate
of $15,000 through June 2007.&nbsp; The building is a two-story stand-alone building
of concrete tilt-up construction, approximately 35 years old and in good
condition.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>-12-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>As of July 1, 2007, the base rent was increased to $22,500 per month and
will increase to $30,000 per month in Mid-October on the facility located at 151 East Columbine Avenue, Santa Ana, California as we entered the &#147;holdover&#148; or &#147;month to
month&#148; portion of the lease.&nbsp; We identified a new facility and signed a lease in
August, 2007 with an unrelated third party at a base monthly rental rate of
approximately $31,000 for a 28,000 square foot one story building at 2361 McGaw
Avenue, Irvine, Ca 92614, in order to relocate the executive offices and Santa
Ana manufacturing facility in approximately January, 2008. &nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our Beaverton office and manufacturing facility is located at 1800 N.W. 169th Place, Building C100, Beaverton, Oregon 97006.&nbsp; The Company leases the
11,000 square foot facility from an unrelated third party, at a base monthly
lease rate of $9,600 through October 2007.&nbsp; Beginning in the third quarter of
2007, an unrelated third party subleased approximately 2,500 square feet from us
for $1,960 per month.&nbsp; The building is a one-story suite in a 20-year-old
industrial office complex and in good condition.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Our
Pro-Dex Astromec office and manufacturing facility is located at 2950 Arrowhead Drive, Carson City, NV 89708.&nbsp; We 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 &#147;Property&#148;) for $2,200,000 in March 2006.&nbsp;
The building is a two-story building of concrete block construction in an
industrial park near the Carson City airport and in good condition.&nbsp; The
purchase was financed with cash on hand and by a 10 year Promissory Note and
related Loan Agreement with Union Bank of California (the &#147;Bank&#148;), whereby we
borrowed $1,650,000.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The principal balance of the Union Bank loan evidenced by the Promissory Note
bears interest at a fixed rate of 6.73% per annum. Under the terms of the Promissory
Note, the Union Bank 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 Promissory Note (undiscounted and
assuming no prepayment) is $2,517,088.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;We believe that the base monthly rental rates on the leased facilities are
comparable to rents charged for comparable properties in the market area, while
we believe the holdover rent is above market rates.&nbsp; The current facility in Santa Ana is believed to be inadequate but the planned facilities are adequate for our
expected needs.&nbsp; We believe there is full compliance with applicable state and
EPA environmental standards at each facility.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 3.&nbsp;&nbsp; Legal
Proceedings </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We are from time to time a party to various legal proceedings incidental
to our business, none of which we consider to be material at this time.&nbsp; There
can be no certainty that we may not ultimately incur liability or that such
liability will not be material and adverse.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 4.&nbsp;&nbsp;
Submission of Matters to a Vote of Security Holders </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>No matter was submitted to a vote of our shareholders during the fourth
quarter ended June 30, 2007.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>PART II</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 5.&nbsp;&nbsp; Market
for Common Equity and Related Stockholder Matters and Small Business Issuer
Purchases of Equity Securities </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our common stock, no par value, is quoted under the symbol
&quot;PDEX&quot; on the automated quotation system of the Nasdaq Capital Market
(&quot;NASDAQ&quot;). The following table sets forth for the quarters indicated
the high and low sales prices as reported by NASDAQ.&nbsp; The quotations reflect
inter-dealer prices, without retail markup, markdown, or commissions, and may
not necessarily represent actual transactions. &nbsp;On September 19, 2007, the last
sale price of our common stock as reported by NASDAQ was $1.47 per share.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>-13-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=283
 style='width:60%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:16.5pt'>
			<td valign=top style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">
			<b>Quarter Ended </b></p></td>
			<td 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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>
			<b>High </b></p></td>
			<td 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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>
			<b>Low </b></p></td>
		</tr>
		<tr style='height:16.5pt'>
			<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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>September 30, 2005</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.73
			</p></td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp; 2.72
			</p></td>
		</tr>
		<tr style='height:16.5pt'>
			<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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>December 31, 2005</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3.60</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2.39</p>
			</td>
		</tr>
		<tr style='height:16.5pt'>
			<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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>March 31, 2006</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2.78</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2.38</p>
			</td>
		</tr>
		<tr style='height:16.5pt'>
			<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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>June 30, 2006</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2.53</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.68</p>
			</td>
		</tr>
		<tr style='height:16.5pt'>
			<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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>September 30, 2006</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.75</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.32</p>
			</td>
		</tr>
		<tr style='height:16.5pt'>
			<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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>December 31, 2006</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.57</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.16</p>
			</td>
		</tr>
		<tr style='height:16.5pt'>
			<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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>March 31, 2007</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.50</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.23</p>
			</td>
		</tr>
		<tr style='height:16.5pt'>
			<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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>June 30, 2007</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.68</p>
			</td>
			<td valign=top style='border-top:medium none;border-left:medium none;
  border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.31</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>At June 30, 2007, there were approximately 268 holders of record of our
common stock. This number does not include beneficial owners including holders
whose shares are held in nominee or &quot;street&quot; name.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We have not paid a cash dividend with respect to our common stock, and do
not intend to pay cash dividends in the foreseeable future. &nbsp;The current policy
of our Board of Directors is to retain earnings to provide funds for the
operation and expansion of the business.&nbsp; The Board of Directors, in light of
the circumstances then existing, including our earnings and financial
requirements and general business conditions, will determine future dividends,
if any.&nbsp; There are restrictions associated with our credit facilities on the
Company issuing dividends. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Equity Compensation Plan
Information</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0
 style='border-collapse:collapse;border:none' width="100%">
		<tr>
			<td width=184 valign=bottom style='width:137.7pt;border:solid windowtext 1.0pt;
  border-bottom:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>As of June 30, 2007</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>Plan Category</p>
			</td>
			<td width=184 valign=bottom style='width:137.7pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>Number
  of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and
  Rights</p></td>
			<td width=184 valign=bottom style='width:137.7pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>Weighted
  Average Exercise Price of Outstanding Options, Warrants and Rights</p></td>
			<td width=184 valign=bottom style='width:137.7pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>Number
  of Securities Available for Issuance Under Equity Compensation Plans
  (excluding services reflected in column (a))</p></td>
		</tr>
		<tr>
			<td width=184 valign=top style='width:137.7pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
			</td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>(a)</p>
			</td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>(b)</p>
			</td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>(c)</p>
			</td>
		</tr>
		<tr>
			<td width=184 valign=top style='width:137.7pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>Plans Approved by Stockholders</p>
			</td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>1,293,500</p>
			</td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>$1.55</p>
			</td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>547,045</p>
			</td>
		</tr>
		<tr>
			<td width=184 valign=top style='width:137.7pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>Plans Not Approved by
  Stockholders</p></td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;&nbsp;
  100,000</p></td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;
  1.25</p></td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>---</p>
			</td>
		</tr>
		<tr>
			<td width=184 valign=top style='width:137.7pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>Total</p>
			</td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>1,393,500</p>
			</td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>$1.53</p>
			</td>
			<td width=184 valign=top style='width:137.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>547,045</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>We made no repurchases of our securities
during the fourth quarter ended June 30, 2007. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 6. Management's
Discussion and Analysis or Plan of Operation </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following discussion and analysis provides information that
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition for each of the two
years ended June 30, 2007 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; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">
<b>&nbsp;</b>-14-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>Critical Accounting Estimates and Judgments</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Our consolidated
financial statements are prepared in accordance with accounting principles
generally accepted in the United States (&#147;GAAP&#148;).&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.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We recognize sales
and associated cost of sales, upon shipment, FOB origin.&nbsp; There have been
minimal returns for credit, so no reserve for product returns has been
established. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We determine our
inventory value at the lower of cost (first-in, first-out method) or market
value and calculate a reserve for slow moving items to reflect a reduced
marketability for the item.&nbsp; The reserve is calculated by comparing the
quantity of the item on hand with our prior 12-month sales history.&nbsp; If
inventory on hand for a specific part exceeds an estimated 24 months of usage,
between 20% and 100% of its value may be included in the inventory reserve.&nbsp;
The actual percentage reserved depends on the total quantity on hand, its sales
history, and expected near term sales prospects.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>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; We calculate our reserve by calculating a cost
estimate based on what products are known to be warranty-eligible, have been
returned, and are in process of being repaired, and combining it with an
expected cost for units in the field that have a potential to be returned for
warranty-eligible repair.&nbsp; The potential return amount is based on historical
return and repair cost data.&nbsp;&nbsp; At June 30, 2007 we had $469,000 in accrued
warranty reserves.&nbsp; Of this amount, $163,000 was for known deficiencies and $306,000
was for future anticipated costs. </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>The Company accounts for goodwill
under SFAS No. 142 &#147;Goodwill and Other Intangible Assets.&#148;&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 fiscal 2007 or 2006.&nbsp; We prepare our annual impairment testing on
April 1 of each year.&nbsp; We prepared an additional review of the intangible
assets associated with the Astromec acquisition as of June 30, 2007.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of the process of preparing our consolidated financial statements, we
are required to estimate our income taxes in each of the jurisdictions in which
we operate.&nbsp; This process involves estimating the actual current tax liabilities
together with assessing temporary differences resulting from differing
treatment of items for tax and accounting purposes.&nbsp; These differences
result in deferred tax assets and liabilities, which are included within the
consolidated balance sheet.&nbsp; The most significant tax assets are future
deductions from the amortization of intangibles over the next ten years.&nbsp;
Tax assets also result from net operating losses and research and development
tax credits.&nbsp; We must then assess the likelihood that the deferred tax
assets will be recovered from future taxable income and, to the extent we
believe that recovery is not likely, a valuation allowance must be
established.&nbsp; To the extent we establish a valuation allowance or increase
or decrease this allowance in a period, the impact will be included in the tax
provision in the statement of operations.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>-15-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Significant management judgment is required to determine our provision for
income taxes and the recoverability of the deferred tax asset.&nbsp; It is
based on our estimates of future taxable income by jurisdiction in which we
operate and the period over which the deferred tax assets will be
recoverable.&nbsp; In the event that actual results differ from these estimates
or we adjust these estimates in future periods, a valuation allowance may need
to be established which could result in a tax provision equal to the carrying
value of the deferred tax assets. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>Year in Review</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Fiscal year 2007
was a year of growth and recovery at Pro-Dex.&nbsp; We grew our sales by over
26% in fiscal year 2007 and have now more than doubled sales in the five years
since fiscal year 2002. The sales growth can be attributed to both organic
growth as our medical products have been favorably accepted by the market, and acquisitive growth as the Pro-Dex Astromec
business added over $3.5 million to our revenues in 2007.&nbsp; We strengthened
the Company&#146;s financial position by generating almost $1.5 million in operating
cash for the 2007 fiscal year, allowing us to reduce our debt by over $950,000.&nbsp;
By remaining profitable, we increased our tangible net worth per share by 8.6%
from $0.81 per share to $0.88 per share. &nbsp;&nbsp;&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We accomplished
more than increasing our sales and financially strengthening the Company in
2007.&nbsp; We made significant advances in resolving the many engineering
projects that were open at the end of 2006.&nbsp; We have completed many of
these projects, realizing the financial benefit of shipping slower moving
inventory, while reestablishing more favorable positions with our current customers
and freeing up resources to quote additional work.&nbsp;&nbsp; We have begun to
win new business from these efforts, and will realize new revenue in fiscal
2008 for the proposals submitted in 2007.&nbsp; An exciting prospect of the
recent &#147;wins&#148; and quotes is that efforts from all three Pro-Dex locations will
be used to fulfill our customer needs, and we will begin to realize increasing
synergies between our locations.&nbsp; We have made substantial progress in the areas of Quality and Culture at Pro-Dex.&nbsp;
Finally, in 2007 we completed a building search that will result in the
relocation of our Santa Ana, California headquarters, engineering and
manufacturing facility to a larger, more efficient location in Irvine, California, 2.6 miles away.&nbsp;&nbsp;&nbsp;
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>As in 2006, our
margins were challenged.&nbsp; Most significantly, we expensed $976,000 in
warranty costs and accruals following the $709,000 expensed for such items in
2006.&nbsp; We have invested substantial resources to resolve this issue and
are continuing to do so.&nbsp; The second issue
impacting our margins is a less favorable sales mix in 2007 as compared to
2006.&nbsp; When we purchased the assets of the business that became Pro-Dex
Astromec, we understood that we were entering a business that had historic
margins closer to those providing mechanical components, as opposed to the
higher margins of our legacy medical and motion control/industrial businesses.&nbsp; Understandably, our margins reflected this
decision as we were impacted by a full year of Pro-Dex Astromec&#146;s growing sales
in 2007, as compared to a half year of such sales in 2006.&nbsp; Another factor
impacting the sales mix was a decline in industrial/motion control sales, as
this area had a very favorable performance in 2006 highlighted by a large order
from a single customer near the end of that year that was not repeated in
2007.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>As we enter
fiscal 2008, we are beginning to see the results of the efforts pay off in
improved product quality, better designs and more efficient
manufacturing.&nbsp; We believe we are changing the direction of the Company to
provide an incrementally higher level of earnings in the coming years and have
continued to transition Pro-Dex to a better, stronger, faster company.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none' align="center">
<b>&nbsp;</b>-16-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Results of Operations </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Results of Operations for
Fiscal Year Ended June 30, 2007, Compared to Fiscal Year Ended June 30, 2006 </b>
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following table sets forth financial data and the percentage of net
revenues regarding the Company's financial position and operating results. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=791
 style='width:85%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(In
  Thousands)</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year Ended June 30,
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net sales:</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;
  21,563 </p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100.0%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;
  17,061&nbsp; </p></td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100.0%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cost of
  sales</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  14,196 </p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>65.8%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  10,485&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>61.5%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross
  Profit</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  7,367 </p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>34.2%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  6,576&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>38.5%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling,
  general and administrative expenses</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  4,051 </p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>18.8%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,421&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>20.1%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research
  and development costs</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,474 </p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11.5%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,009&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11.8%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income
  from Operations</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  842 </p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3.9%</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,146&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6.7%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net
  interest and other (income)</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  267 </p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.2%</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (7)</p></td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.0%)</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Provision
  for Income Taxes</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  69 </p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.3%</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  326&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.9%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net
  Income</p></td>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  506 </p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2.3%</p>
			</td>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  827&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' colspan="2" align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4.8%</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>Net Sales.</b>&nbsp;&nbsp; Consolidated sales increased 26% or $4,502,000 to $21,563,000
from $17,061,000 for 2007, as compared to 2006.&nbsp; Approximately $1,937,000
or 43% of the increase was due to including a full year of the performance of Pro-Dex
Astromec as compared to including only 6 months of Pro-Dex Astromec performance
in 2006 as Astromec was acquired in the beginning of January 2006.&nbsp; Medical
sales were higher by $3,006,000 or 47%, due to higher sales to our two largest
customers by approximately the same amount.&nbsp; Astromec medical sales increases
of $672,000 were offset by an equivalent amount of decreases in sales to mid
range medical customers and reductions in medical product development sales.&nbsp; Shipments
to dental customers increased by 13% as sales were reduced last year due to a
one time $245,000 credit for the Intraflow product that was issued at the
completion of the Intravantage asset acquisition in October 2005 (fiscal year
2006).&nbsp; Without the effect of the credit, dental product sales rose
$264,000 or 7%, due largely to an increase in Interflow sales of $149,000.
&nbsp;Sales to industrial customers decreased $436,000 or 12% from the same period in
the prior year as sales to semiconductor related customers slowed.&nbsp; Sales related
to repairs, government and other customers had a $172,000 or 9% year over year increase
in 2007 due to the increase in repair and upgrade work for products that were not
warranty eligible.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>
In fiscal year 2007, there was a $95,000 decrease in revenue
from customer-funded research compared to 2006. $24,000 of the reduction in
revenue from customer-funded research and development was the result of refunds due
to cancelled development projects in the year ended June 30, 2007 compared to
recognizing $71,000 in revenue in the year ended June 30, 2006.&nbsp; The reduction
in customer-funded research and development fees reflected efforts that were
focused on pre-contract development work, upgrading current products and
supporting warranty work</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>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. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>-17-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The amount of Pro-Dex total sales to each customer type and the
year-to-year change is noted in the table below:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=454
 style='width:70%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year ended June 30,</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Increase/</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Sales by customer type ($'000)</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(Decrease)</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Dental</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4,298
			</p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3,789
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>13%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Medical</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,453
  			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  6,447 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>47%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Industrial</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  3,317 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  3,753 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>-12%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Aerospace</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,445 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,194 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>105%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Government
  research and other</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,050 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,878 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>9%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  21,563 </p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;$&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17,061
  			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>26%</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Gross Profit </b>The Company's consolidated gross profit for 2007 increased
$791,000 or 12% compared to the gross profit in the previous year due to the
higher medical product sales level and the inclusion of a full year of Pro-Dex Astromec.
&nbsp;Gross profit as a percentage of sales decreased to 34% for the year ended June
30, 2007 compared to 39% for the year ended June 30, 2006.&nbsp; The main factor in the
margin decrease is change in the sales mix within the product lines.&nbsp; The
products that had the greatest effect on the margin were the reduced high
margin industrial sales, combined with the consolidation of a full year of lower
margin Pro-Dex Astromec sales, as this component business historically had margins
in the 20% to 30% range.&nbsp; Medical and dental margins remained stable. &nbsp;Warranty
costs weighed heavily on our gross margin as $819,000 of warranty costs were
incurred in addition to an increase of $160,000 in accrued anticipated costs for
a total expense of $979,000 for 2007 as compared to $400,000 in warranty costs
and $309,000 in such accruals for a total expense of 709,000 for 2006.&nbsp; As a
percentage of sales, warranty costs accounted for approximately 4% reduction in
gross margin in each such year.&nbsp; Gross profit and gross profit percentage were
as follows: </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><font style="font-size: 10.0pt">&nbsp;</font></p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=439
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year ended June 30,</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Increase</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(Decrease)</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross
  Profit</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$7,367,000</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$6,576,000</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>12%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross
  Profit Percentage</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>34%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>39%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(11%)</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Selling, general and administrative costs (S, G&amp;A)</b>.&nbsp; S, G
&amp; A expenses increased 18% to $4,051,000 for the year ended June 30, 2007
from $3,421,000 for year ended June 30, 2006.&nbsp; The increase in selling expense is
mainly due to increased trade show and advertising expenditures of $56,000
combined with an increase in bad debt expense of $113,000.&nbsp; General and
administrative costs were higher primarily due to recognizing $242,000 in FAS
123(R) stock based compensation expenses and $105,000 for consolidating the
full year of normal S, G &amp; A costs at Pro-Dex Astromec into the total
Pro-Dex S, G&amp;A.&nbsp; As a percentage of sales, S, G&amp;A costs decreased from
20% to 19% due to the higher sales levels and ongoing cost containment efforts throughout
the Company.&nbsp; S, G &amp; A costs were as follows: </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=483
 style='width:75%;margin-left:4.65pt;border-collapse:collapse' id="table7">
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year ended June 30,
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Increase</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(Decrease)</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,352,000
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp; 1,191,000
			</p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>14%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General
  and administrative</p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2,699,000
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp; 2,230,000
			</p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>21%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total S,
  G&amp;A</p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  4,051,000 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;
  3,421,000 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>18%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>S,
  G&amp;A Percentage of Sales</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>19%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>20%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(6%)</p>
			</td>
		</tr>
	</table></div>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Research and development costs</b>.&nbsp; Company funded research and
development expenses increased $465,000 to $2,474,000 for the year ended June
30, 2007 from $2,009,000 for the year ended June 30, 2006, an increase of 23%. &nbsp;The
addition of a full year of Pro-Dex Astromec operations added $184,000 to total
consolidated research and development costs. &nbsp;The remainder of the increase was
due to Company-funded project research costs associated with upgrading and
developing line extensions for our current products.&nbsp; Company-funded research
and development costs were as follows:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=553
 style='width:75%;margin-left:4.65pt;border-collapse:collapse' id="table8">
		<tr style='height:12.75pt'>
			<td width=280 nowrap valign=bottom style='width:210.0pt;padding:0in .85pt 0in .85pt;
  height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width=199 nowrap colspan=2 valign=bottom style='width:149.0pt;border-top:
  solid windowtext 1.0pt;border-left:solid windowtext 1.0pt;border-bottom:none;
  border-right:solid black 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year ended June 30,</p>
			</td>
			<td width=75 nowrap valign=bottom style='width:56.0pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Increase</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=280 nowrap valign=bottom style='width:210.0pt;padding:0in .85pt 0in .85pt;
  height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width=99 nowrap valign=bottom style='width:74.5pt;border:none;border-left:
  solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td width=99 nowrap valign=bottom style='width:74.5pt;border:none;border-left:
  solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
			<td width=75 nowrap valign=bottom style='width:56.0pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(Decrease)</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=280 nowrap valign=bottom style='width:210.0pt;border:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research
  and Development (R&amp;D) Costs</p></td>
			<td width=99 nowrap valign=bottom style='width:74.5pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$2,474,000
			</p></td>
			<td width=99 nowrap valign=bottom style='width:74.5pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$2,009,000
			</p></td>
			<td width=75 nowrap valign=bottom style='width:56.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>23%</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=280 nowrap valign=bottom style='width:210.0pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>R&amp;D
  costs as a % of Sales</p></td>
			<td width=99 nowrap valign=bottom style='width:74.5pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%</p>
			</td>
			<td width=99 nowrap valign=bottom style='width:74.5pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>12%</p>
			</td>
			<td width=75 nowrap valign=bottom style='width:56.0pt;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(3%)</p>
			</td>
		</tr>
	</table></div>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>-18-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>
<b>Operating
Profit and Operating Profit as a </b><b>Percentage of Sales</b>.&nbsp; Our
consolidated operating profit for the year ended June 30, 2007 decreased to $842,000
from an operating profit of $1,155,000 for the year ended June 30, 2006.&nbsp;
Consequently, operating profit as a percentage of sales decreased to 4% for the
year ended June 30, 2007 compared to 7% for the year ended June 30, 2006.&nbsp;
Operating profit and margin were as follows:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=492
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year ended June 30,
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(Decrease)</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating
  Profit</p></td>
			<td nowrap valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$842,000
			</p></td>
			<td nowrap valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$1,146,000
			</p></td>
			<td nowrap valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; height:12.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(27%)</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating
  profit Percentage</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7%</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(42%)</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
text-autospace:none'><b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;<b>Royalties and Other Income. </b>&nbsp;We earned and received $38,000
in royalty payments in fiscal year 2007, compared to $51,000 in royalty
payments in 2006.&nbsp; The decline in royalty income resulted from a decrease in the
sales of products subject to royalties in 2007.&nbsp;&nbsp;&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Net Interest Income/Expense. </b>&nbsp;Net interest expense was $301,000 in
the year ended June 30, 2007, which included $319,000 in interest expense
offset by $18,000 in interest income, compared to $25,000 which included
$78,000 in interest expense offset by $53,000 in interest income, in the prior
year as we carried a full year of our term debt obligations used to fund our asset
acquisitions in 2006 as well as using the operating credit line throughout the
year.&nbsp; Included in the $301,000 is $68,000 in accrued interest relating to the
ongoing IRS examination for the tax years ending June 30, 2004 and 2005.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Income Tax Provision</b>.&nbsp; Our effective income tax rate was 12% for
the year ended June 30, 2007, compared to 28% for the year ended June 30, 2007.&nbsp;
Our effective income tax rate in 2007 decreased from 2006 primarily due to the realization
of a fixed amount of research and development tax credits and lower taxable
income.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The Company is undergoing an examination by the Internal Revenue Service
(IRS) of the Federal income tax returns filed for the fiscal years ending June
30, 2004, June 30, 2005 and June 30, 2006.&nbsp; Preliminary findings of the examination
indicate that there may have been differences in the timing of our quarterly
tax payments due to the treatment of overhead expenditures.&nbsp; The company
anticipates that these timing differences will result in $68,000 of interest
and $14,000 of additional tax payments due to the IRS.&nbsp; These amounts have been
accrued and are included in accrued expenses and interest as of June 30, 2007. &nbsp;Management
does not believe there will be any material adjustments resulting from the examination
beyond those described above.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; As
part of the process of preparing our consolidated financial statements, we are
required to estimate our income taxes in each of the jurisdictions in which we
operate. This process involves estimating our 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 our
consolidated balance sheet.&nbsp; The deferred tax assets result primarily from tax
basis of intangible assets in excess of book basis. We must then assess the likelihood
that our deferred tax assets will be recovered from future taxable income and
to the extent management believes that recovery is not likely, we must
establish a valuation allowance. To the extent a valuation allowance is either
increased or decreased in a period, the impact will be included in the tax
provision in the statement of operations.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>Net
Income.&nbsp; </b>We had net income of $506,000 or $0.05 per share, basic, and $0.05
per share, diluted, for the year ended June 30, 2007 compared to net income of $833,000
or $0.09 per share, basic, and $0.08 per share, diluted for the year ended June
30, 2006.&nbsp; This decrease is due to the impact of the adoption of FAS 123(R)
expenses recognized, increased reserves and other costs as discussed above.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>-19-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Liquidity and Capital
Resources </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify'>The following
table presents selected financial statistics and information for the periods
indicated: </p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=486
 style='width:85%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			As of </p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June 30, 2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June 30, 2006</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash and
  cash equivalents</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$403,000
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$358,000
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Working
  Capital&#185;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$6,647,000
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$6,087,000
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Credit
  Line outstanding balance</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$300,000
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$900,000
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Tangible
  book value/common share&#178;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$0.88
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$0.81
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Number of
  days of sales outstanding (DSO) in</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>accounts
  receivable at end of quarter&#179;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>61</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>66</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			Year ended</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June 30, 2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June 30, 2006</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net cash
  provided by operations</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$1,480,000
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$55,000
			</p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:center'>
<sup>&nbsp;</sup></p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'><sup><font size="2">1</font></sup><font size="2"> Working Capital = Ending Current Assets balance &#150; Ending
Current liabilities balance</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify;text-autospace:
none; margin-right:0in; margin-top:0in'><sup><font size="2">2</font></sup><font size="2"> Tangible book value/common share<sup>
</sup>= (Total
shareholders&#146; equity &#150; Net intangible asset (patents) &#150; Goodwill)/(basic
outstanding shares)</font></p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'><sup><font size="2">&nbsp;</font></sup></p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'><sup><font size="2">3</font></sup><font size="2"> DSO = Ending Net Accounts Receivable balance/(Previous
Quarter Sales/91)</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our working capital at June 30, 2007 increased to approximately $6.6
million compared to approximately $6.1 million at June 30, 2006 as cash flow form
operations was used to fund internal operations and pay down debt.&nbsp; Cash flow
provided by operations was $1,480,000 for the year ended June 30, 2007 compared
to $55,000 for the year ended June 30, 2006.&nbsp; Cash was provided through
continued profitability offset by increases in inventory supporting the higher
sales levels at the end of the fiscal year.&nbsp; In the year ended June 30, 2007, we
had a high level of non-cash charges associated with stock based compensation,
increased reserves for warranty, doubtful accounts and obsolete inventory that
amounted to $552,000 in addition to $487,000 in depreciation and amortization.&nbsp;
Management believes that our working capital needs over the next twelve months
can be adequately supported by current operations.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In November 2006,
we renewed our credit facility with Wells Fargo Bank N.A. (&#147;Wells Fargo&#148;) for
borrowings up to $2,000,000.&nbsp; Its terms require monthly interest payments
at either the prime rate of interest (8.25% at June 30, 2007), or LIBOR plus
2.50% (7.875% (one month) to 8.0% (three months) at June 30, 2007), at our
discretion, based on outstanding borrowings with no minimum interest
charge.&nbsp; The outstanding borrowings are secured by all of our assets
except the Carson City land and building.&nbsp; There was a $300,000 outstanding
balance under the terms of this credit facility as of June 30, 2007.&nbsp; The
total remaining eligible borrowing capacity at June 30, 2007 was $1,700,000.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In January 2006,
we extended the credit facility and entered into a four year term note with
Wells Fargo for $1,000,000.&nbsp; Its terms require monthly interest payments
at either the prime rate of interest (8.25% at June 30, 2007), or LIBOR plus
2.50% (7.875% (one month) to 8.0% (three months) at June 30, 2007), 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 our
assets.&nbsp; There was an outstanding balance of $645,833 under the terms of this
term note as of June 30, 2007.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In March 2006,
we entered into a ten 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%.&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 a $1,619,121 outstanding balance under the terms of this mortgage as
of June 30, 2007.&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;margin-left:0in; margin-right:0in; margin-top:0in'>-20-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:justify;text-indent:.5in'>There
are certain financial and non-financial covenants that we must meet to be in
compliance with the terms of the November 2006 Wells Fargo credit facility, as
amended, and the Union Bank mortgage.&nbsp; At June 30, 2007, we were in compliance
with all such covenants.&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:justify;text-indent:.5in'>At
June 30, 2007, we had cash and cash equivalents of $403,000.&nbsp; We believe
that our cash and cash equivalents on hand, together with cash flows from
operations, if any, and amounts available under the Well Fargo credit facility
will be sufficient to meet our working capital and capital expenditure
requirements for the next year.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:justify'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>Impact of Inflation and Changing Prices </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
industries in which we compete are labor intensive, often involving personnel
with high-level technical or sales skills. Wages and other expenses increase
during periods of inflation and when shortages in the marketplace occur. In
addition, suppliers pass along rising costs to us in the form of higher prices.
To some extent, we have been able to offset increases in operating costs by
increasing charges, expanding services and implementing cost control measures.
Nevertheless, our ability to increase prices is limited by market conditions,
including international competition in many of our markets.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;line-height:
normal'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>-21-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>Recent Accounting
Pronouncements</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;line-height:
normal'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;line-height:
normal'>In June 2006, the FASB issued FIN
No.&nbsp;48, <i>Accounting for Uncertainty in Income Taxes &#150; an interpretation
of FASB Statement No.&nbsp;109, </i>which clarifies the accounting for
uncertainty in income taxes recognized in an enterprise&#146;s financial statements
in accordance with FASB Statement No.&nbsp;109, <i>Accounting for Income Taxes.
</i>The interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN No.&nbsp;48
requires recognition of tax benefits that satisfy a greater than 50%
probability threshold. FIN No.&nbsp;48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition. FIN No.&nbsp;48 is effective for us beginning
July&nbsp;1, 2007. The Company does not expect the adoption of FIN No.&nbsp;48 will
have a material effect on its consolidated financial position, consolidated
results of operations, or liquidity.</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;line-height:
normal'>&nbsp;</p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>
<b>Item
7.&nbsp;&nbsp; Financial Statements</b></p>
<p style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;line-height:200%;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The financial statements and supplemental data of the Company may be found in
this Report on the pages indicated below.</p>
<div align=center>
	<table class=MsoNormalTable border=0 cellpadding=0
 style='border-collapse:collapse' width="75%">
		<tr>
			<td width=492 valign=top style='width:369.0pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<a href="#Report_of_Independent_Registered_Public_Accounting_Firm_">Report of Independent Registered Public Company
  Accounting Firm&nbsp; </a></p></td>
			<td width=42 valign=top style='width:31.5pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>24
  			</p></td>
		</tr>
		<tr>
			<td width=492 valign=top style='width:369.0pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<a href="#CONSOLIDATED_BALANCE_SHEETS_">Consolidated
  Balance Sheet &nbsp;</a></p></td>
			<td width=42 valign=top style='width:31.5pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>25
  			</p></td>
		</tr>
		<tr>
			<td width=492 valign=top style='width:369.0pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<a href="#CONSOLIDATED_STATEMENTS_OF_OPERATIONS_">Consolidated Statements of
  Operations</a></p></td>
			<td width=42 valign=top style='width:31.5pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>27<font style="font-size: 10.0pt">
			</font></p></td>
		</tr>
		<tr>
			<td width=492 valign=top style='width:369.0pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<a href="#CONSOLIDATED_STATEMENTS_OF_SHAREHOLDERS_EQUITY_">Consolidated Statements of Shareholders' Equity</a> &nbsp;</p></td>
			<td width=42 valign=top style='width:31.5pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>28
  			</p></td>
		</tr>
		<tr>
			<td width=492 valign=top style='width:369.0pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<a href="#CONSOLIDATED_STATEMENTS_OF_CASH_FLOWS_">Consolidated Statements of Cash Flows</a> &nbsp;</p></td>
			<td width=42 valign=top style='width:31.5pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>29
  			</p></td>
		</tr>
		<tr>
			<td width=492 valign=top style='width:369.0pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<a href="#NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMENTS__">Notes to Consolidated Financial Statements</a> &nbsp;</p></td>
			<td width=42 valign=top style='width:31.5pt;padding:0in 0in 0in 0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>30
  			</p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 8.&nbsp;&nbsp; Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure.
</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>None.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 8A.&nbsp;&nbsp; Controls
and Procedures.</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&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 &#147;disclosure controls and procedures&#148; (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (&#147;Exchange Act&#148;)). &nbsp;Based on that evaluation for the quarter ended June
30, 2007, the Chief Executive Officer and the Chief Financial Officer concluded
that the disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in the reports filed or
submitted by the Company under the Exchange Act is accumulated, recorded,
processed, summarized and reported to its management, including its principal
executive officer and its principal financial officer, as appropriate to allow
timely decisions regarding whether or not disclosure is required.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>During the
quarter ended June 30, 2007, there were no changes in the Company's 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, the Company's internal controls over financial reporting.</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;margin-left:0in; margin-right:0in; margin-top:0in'>-22-</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>PART
III</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 8B.&nbsp;&nbsp; Other Information.
</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>None.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 9.&nbsp;&nbsp; Directors,
Executive Officers, Promoters, Control Persons and Corporate Governance;
Compliance With Section 16(a) of the Exchange Act </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;&nbsp;
</b>&nbsp;&nbsp;&nbsp; Information concerning the Company's Directors and
Executive Officers is incorporated by reference from the information contained
in the Company's definitive Proxy Statement for the Company's 2007 Annual
Meeting of Shareholders to be filed with the SEC within 120 days after the end
of the fiscal year ended June 30, 2007 (the &quot;Proxy Statement&quot;). </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 10.&nbsp;&nbsp;
Executive Compensation </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;&nbsp;
</b>&nbsp;&nbsp;&nbsp; Information required by this Item is incorporated by
reference from the Proxy Statement. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 11.&nbsp;&nbsp; Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Information required
by this Item is incorporated by reference from the Proxy Statement. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 12.&nbsp;&nbsp; Certain
Relationships and Related Transactions, and Director Independence </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Information required
by this Item is incorporated by reference from the Proxy Statement. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 13.&nbsp;&nbsp; Exhibits
</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; See Exhibit Index.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 14.&nbsp;&nbsp;
Principal Accountant Fees and Services </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>Information required by this Item
is incorporated by reference from the Proxy Statement. </p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>
<font style="font-size: 7.5pt">&nbsp;</font></p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in' align="center">-23-</p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in' align="center">&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<b><a name="Report_of_Independent_Registered_Public_Accounting_Firm_">Report of
Independent Registered Public Accounting Firm</a></b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
<b>To the Stockholders and Board
of Directors of Pro-Dex, Inc.: </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We have audited
the accompanying consolidated balance sheets of Pro-Dex, Inc. and Subsidiaries
(the Company) as of June 30, 2007 and 2006 and the related consolidated
statements of operations, shareholders&#146; equity and cash flows for each of the
years in the two-year period ended June 30, 2007.&nbsp; These consolidated financial
statements are the responsibility of the Company&#146;s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We conducted our
audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting.&nbsp; Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In our opinion,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Pro-Dex, Inc. and Subsidiaries as
of June 30, 2007 and 2006, and the results of their operations and their cash
flows for each of the two years in the two-year period ended June 30, 2007 in
conformity with accounting principles generally accepted in the United States
of America. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:24.5pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>/s/&nbsp; Moss Adams LLP</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Moss Adams LLP
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Irvine, California
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>September 27, 2007</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">-24-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<b>&nbsp;</b></p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=604
 style='width:90%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:15.75pt'>
			<td nowrap colspan=3 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><font size="2">PRO-DEX, INC.
  and SUBSIDIARIES</font></b></p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap colspan=3 valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><a name="CONSOLIDATED_BALANCE_SHEETS_"><font size="2">CONSOLIDATED
  BALANCE SHEETS</font></a></b></p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<b>&nbsp;</b></p></td>
			<td nowrap valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='height:15.75pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:27.0pt'>
			<td nowrap valign=top style='height:27.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td valign=bottom style='border:1.0pt solid windowtext;
  height:27.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">30-Jun-07</font></i></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:27.0pt; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">30-Jun-06</font></i></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<b><font style="font-size: 10.0pt">ASSETS</font></b></p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Current assets:</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Cash and cash equivalents </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  403,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  358,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Accounts receivable, net of allowance for doubtful accounts</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  of $153,000 at June 30, 2007 and $40,000 at June 30, 2006</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,436,000
  			</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  3,841,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Inventories, net </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  4,622,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  3,980,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Prepaid expenses </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  205,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  91,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Income tax receivable</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  222,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Deferred income taxes</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,091,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  766,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current
  assets </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  9,757,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,258,000
  			</font></p></td>
		</tr>
		<tr style='height:6.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 6.0pt">&nbsp; </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">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 nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  3,778,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  3,726,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Other assets:</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Goodwill</font></p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,997,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,931,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Intangibles - Patents,
  net</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,321,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,417,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes</font></p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  229,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  378,000 </font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Other </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  25,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;44,000
  			</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other assets
  			</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  4,572,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  4,770,000 </font></p></td>
		</tr>
		<tr style='height:6.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Total assets</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  18,107,000 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17,754,000
  			</font></p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">
<i><font style="font-size: 9.0pt">See notes to consolidated financial statements.</font></i></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">-25-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br
clear=all style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>&nbsp;</b></p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=623
 style='width:90%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:15.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><font size="2">PRO-DEX, INC.
  and SUBSIDIARIES</font></b></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><a name="CONSOLIDATED_BALANCE_SHEETS_(cont)_"><font size="2">CONSOLIDATED
  BALANCE SHEETS (con't)</font></a></b></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<b>&nbsp;</b></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:27.0pt'>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">30-Jun-07</font></i></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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">30-Jun-06</font></i></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap 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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<b><font style="font-size: 10.0pt">LIABILITIES AND
  SHAREHOLDERS' EQUITY</font></b></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Current liabilities:</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Line of credit</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  300,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  900,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,110,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;952,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,183,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">971,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Income taxes payable
			</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  158,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Current portion of
  term note</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;250,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  250,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Current portion of
  real estate loan</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  26,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  27,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Current portion of
  patent deferred payable</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  82,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;71,000&nbsp;</font></p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current
  liabilities </font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  3,109,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  3,171,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Long-term liabilities:</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp; Term note</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  396,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  646,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp; Real estate loan</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,593,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,619,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp; Patent deferred payable</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:1px solid #000000; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  158,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:1px solid #000000; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  245,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total long-term
  liabilities </font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,147,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,510,000&nbsp;</font></p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Total liabilities</font></p></td>
			<td nowrap valign=top style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  5,256,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  5,681,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Commitments and
  contingencies </font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Shareholders' equity:</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Common shares; no par
  value; 50,000,000 shares authorized;</font></p></td>
			<td nowrap valign=bottom style='border-top:medium none windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-top:medium none windowtext; border-bottom:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,718,366 shares
  issued and outstanding June 30, 2007 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,539,792 shares
  issued and outstanding June 30, 2006 </font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  16,340,000&nbsp;</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  16,066,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit
			</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:1px solid #000000; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (3,489,000)</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3,993,000)</font></p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total shareholders&#146;
  equity</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  12,851,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  12,073,000&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:1px solid #000000; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:1px solid #000000; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:3px double #000000; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and
  shareholders&#146; equity</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:3px double #000000; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  18,107,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:3px double #000000;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17,754,000&nbsp;</font></p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">
<i><font style="font-size: 9.0pt">See notes to consolidated financial statements.</font></i></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">-26-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br
clear=all style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=560
 style='width:85%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:15.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><font size="2">PRO-DEX, INC.
  and SUBSIDIARIES</font></b></p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><font size="2"><a name="CONSOLIDATED_STATEMENTS_OF_OPERATIONS_">CONSOLIDATED
  STATEMENTS OF OPERATIONS</a></font></b></p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><font size="2">Years ended June
  30</font></b></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap colspan=2 valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">&nbsp;</font></i></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">2007</font></i></p></td>
			<td nowrap valign=top style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">2006</font></i></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Net sales </font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21,563,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17,061,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Cost of sales </font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  14,196,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  10,485,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Gross profit </font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  7,367,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  6,576,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Operating expenses: </font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Selling
			</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,353,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,191,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; General and
  administrative expenses </font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,698,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,230,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Research and
  development costs </font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,474,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,009,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Total operating expenses </font></p>
			</td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  6,525,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  5,430,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Income from operations </font></p>
			</td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  842,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,146,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Other: </font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Other (expense), net
			</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (4,000)</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (19,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Royalty income
			</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  38,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  51,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Interest income</font></p>
			</td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  53,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Interest (expense)</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (319,000)</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (78,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Total</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (267,000)</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="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;
  7,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Income before provision for
  income taxes</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  575,000&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,153,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:13.5pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Provision for Income taxes</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (69,000)</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (326,000)</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Net income</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 506,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 827,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
			</font></p></td>
			<td nowrap valign=top style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap 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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Net Income per share:</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Basic</font></p>
			</td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  0.05&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  0.09&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Diluted</font></p>
			</td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  0.05&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  0.08&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Weighted average shares
  outstanding - basic</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,579,055&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,502,652&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Weighted average shares
  outstanding - diluted</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,739,041&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,988,569&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<i><font style="font-size: 9.0pt">&nbsp;</font></i></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<i><font style="font-size: 9.0pt">See notes to consolidated financial statements.</font></i></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>-27-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br
clear=all style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=633
 style='width:90%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:15.75pt'>
			<td nowrap colspan=8 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:medium none;
  border-right:1px solid #000000;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><font size="2">PRO-DEX, INC.
  and SUBSIDIARIES</font></b></p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap colspan=8 valign=bottom style='border-right:1px solid #000000; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><font size="2">
			<a name="CONSOLIDATED_STATEMENTS_OF_SHAREHOLDERS_EQUITY_">CONSOLIDATED
  STATEMENTS OF SHAREHOLDERS' EQUITY</a></font></b></p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap colspan=8 valign=bottom style='border-right:1px solid #000000; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<b><font size="2">Years ended June
  30</font></b></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:13.5pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap colspan=3 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Common Shares</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Number </font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Accumulated</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">of Shares</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Amount</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Deficit</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Total</font></p></td>
		</tr>
		<tr style='height:13.5pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Balance
  2005</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">9,449,396 </font></p></td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;$&nbsp;
  15,933,000 </font></p></td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;$&nbsp; (4,822,000)</font></p></td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid #000000; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;$&nbsp;
  11,111,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Warrants
  exercised</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  50,000 </font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  107,000 </font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="center">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;
			</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  107,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:.95pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Options
  exercised</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  40,396 </font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  26,000 </font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="center">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in' align="right">
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;
			</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  26,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:.95pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Net
  Income</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  -&nbsp;&nbsp; </font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  -&nbsp;&nbsp; </font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 827,000&nbsp;</font></p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  827,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:.95pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Balance
  2006</font></p></td>
			<td nowrap valign=bottom style='border-bottom-style:none; border-bottom-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-top:1px solid #000000; border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">9,539,792 </font></p></td>
			<td nowrap valign=bottom style='border-top:1px solid #000000; border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-top:1px solid #000000; border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;$&nbsp;
  16,066,000 </font></p></td>
			<td nowrap valign=bottom style='border-top:1px solid #000000; border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;$&nbsp; (3,995,000)</font></p></td>
			<td nowrap valign=bottom style='border-top:1px solid #000000; border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-top:1px solid #000000; border-bottom:1px solid #000000; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;$&nbsp;
  12,071,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			&nbsp;</td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			&nbsp;</td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			&nbsp;</td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			&nbsp;</td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			&nbsp;</td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			&nbsp;</td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			&nbsp;</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			&nbsp;</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Options
  exercised</font></p></td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  93,574 </font></p></td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  32,000 </font></p></td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			&nbsp;</td>
			<td nowrap valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  32,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:.95pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Issuance
  of restricted shares and <br>Stock-Based compensation</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  85,000 </font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 242,000
			</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  242,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:.95pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Net
  Income</font></p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 506,000&nbsp;</font></p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  506,000&nbsp;</font></p></td>
		</tr>
		<tr style='height:.95pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid #000000; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:.95pt'>
			<td nowrap valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:1px solid #000000; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">Balance
  2007</font></p></td>
			<td nowrap valign=bottom style='border-bottom:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-bottom:3px double #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">9,718,366 </font></p></td>
			<td nowrap valign=bottom style='border-bottom:3px double #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-bottom:3px double #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;$&nbsp;
  16,340,000 </font></p></td>
			<td nowrap valign=bottom style='border-bottom:3px double #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;$&nbsp; (3,489,000)</font></p></td>
			<td nowrap valign=bottom style='border-bottom:3px double #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:3px double #000000; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
			<font size="2">&nbsp;$&nbsp;
  12,851,000&nbsp;</font></p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<i><font style="font-size: 9.0pt">See notes to consolidated financial statements.</font></i></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>-28-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
<i><font style="font-size: 9.0pt">&nbsp;</font></i></p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=629
 style='width:95%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<b><font style="font-size: 10.0pt">PRO-DEX, INC. and SUBSIDIARIES</font></b></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<b><font style="font-size: 10.0pt">
			<a name="CONSOLIDATED_STATEMENTS_OF_CASH_FLOWS_">CONSOLIDATED STATEMENTS OF CASH FLOWS</a></font></b></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<b><font style="font-size: 10.0pt">Years ended June 30</font></b></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">2007</font></i></p></td>
			<td nowrap valign=top style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">2006</font></i></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Cash Flows from Operating
  Activities: </font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Net Income</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 506,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 827,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile
  net income to net cash used in operating activities:</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and
  amortization </font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 487,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 356,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Recovery of)
  Provision for doubtful accounts</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 113,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (60,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reserve for
  obsolete inventory</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 198,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 502,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based
  compensation</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 242,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&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></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred taxes</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (177,000)</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (84,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in:</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease
  (Increase) in accounts receivable</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 292,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (259,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (Increase) in inventories</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (840,000)</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1,336,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&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 nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (114,000)</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (25,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease
  (Increase) in other assets</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (26,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase
  in accounts payable and accrued expenses</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 371,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 292,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&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 nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 379,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (139,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Net Cash provided by Operating
  Activities </font></p></td>
			<td nowrap 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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,480,000&nbsp;</font></p>
			</td>
			<td nowrap 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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 55,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:4.5pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Cash Flows From Investing
  Activities: </font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of
  Astromec, net of cash acquired</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (66,000)</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2,398,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from
  equipment sale</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&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></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Purchase of equipment
  and leasehold improvements</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (447,000)</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (642,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Purchase of Intangible
  Assets - Patents related to Intraflow</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2,000)</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1,167,000)</font></p>
			</td>
		</tr>
		<tr style='height:4.5pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Net Cash used in Investing
  Activities </font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (515,000)</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (4,206,000)</font></p>
			</td>
		</tr>
		<tr style='height:4.5pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Cash Flows from Financing
  Activities:</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Principal payments of Intraflow deferred payable</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (76,000)</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&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></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp; Net
  (Payments) Borrowing on Line of Credit</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (600,000)</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 900,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Proceeds from Term Note</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&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></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,000,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Principal payments on Term Note</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (250,000)</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(104,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Principal payments on Real Estate Loan</font></p></td>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (27,000)</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (4,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;
  Proceeds from option and warrant exercise</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 33,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 133,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:4.5pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Net Cash provided by (used
  in) Financing Activities</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (920,000)</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,925,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:4.5pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Net (decrease) increase&nbsp; in
  Cash and Cash Equivalents </font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 45,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2,226,000)</font></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Cash and Cash Equivalents,
  beginning of year </font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 358,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2,584,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:4.5pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Cash and Cash Equivalents,
  end of year</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 403,000&nbsp;</font></p>
			</td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 358,000&nbsp;</font></p>
			</td>
		</tr>
		<tr style='height:4.5pt'>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">Supplemental Information</font></i></p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Cash paid for interest</font></p>
			</td>
			<td nowrap valign=top 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 229,000
			</font></p></td>
			<td nowrap valign=top style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 68,000
			</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Cash paid for income taxes </font>
			</p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -
			</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 543,000
			</font></p></td>
		</tr>
		<tr style='height:4.5pt'>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td nowrap valign=top style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap colspan=3 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<i><font style="font-size: 10.0pt">Non-Cash Disclosure of Investing and Financing
  Activities</font></i></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Long term payable incurred
  in acquisition of intangible assets</font></p></td>
			<td nowrap 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; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -
			</font></p></td>
			<td nowrap valign=top style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 316,000
			</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Acquisition of building and
  land - real estate loan</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -
			</font></p></td>
			<td nowrap valign=top style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,650,000
			</font></p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=top style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">Intravantage deferred
  payable</font></p></td>
			<td nowrap valign=top style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -
			</font></p></td>
			<td nowrap valign=top style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 10.0pt">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 317,000
			</font></p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<i><font style="font-size: 9.0pt">See notes to consolidated financial statements.</font></i></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>-29-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br
clear=all style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>PRO-DEX,
INC. AND SUBSIDIARIES </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b><a name="NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMENTS__">NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS </a> </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>June
30, 2007 and 2006</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>NOTE 1 &#150; DESCRIPTION OF
BUSINESS </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 7.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Pro-Dex, Inc. 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.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Principles of Consolidation </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 7.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries, Pro-Dex Astromec, Inc. and Pro-Dex Management, Inc.&nbsp; Pro-Dex
Management, Inc. is a non-operating subsidiary.&nbsp; All significant inter-company
accounts and transactions have been eliminated.&nbsp;&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Basis of Presentation</b></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The accompanying consolidated financial statements have been prepared in
accordance with accounting principals generally accepted in the United States of America.
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Revenue Recognition </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 7.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>Revenue on product sales is
recognized upon shipment to the customer based on its terms of FOB shipping
point, where the risk of loss and title transfer to the customer.&nbsp; We record
sales in accordance with SEC Staff Accounting Bulletin No. 104, <i>Revenue
Recognition</i>.&nbsp; Under these guidelines, revenue is recognized when all of the
following exist: persuasive evidence that a sale arrangement exists, delivery
of the product has occurred, the price is fixed or determinable, and payment is
reasonably assured.&nbsp; We sell some of our products with a warranty that provides
for repairs or replacement of any defective parts for a period after the sale.
At the time of the sale, the Company accrues an estimate of the cost of
providing the warranty based on prior experience.&nbsp; The Company recognizes
revenue under research and development agreements as certain deliverables are
met as specified in each development contract. </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>&nbsp;The Company recognized shipping
revenue as net sales of $111,000 and $141,000 for the years ended June 30, 2007
and 2006, respectively.&nbsp; The Company recognizes shipping costs in cost of sales
as incurred.&nbsp; The Company incurred shipping charges of approximately $77,000
and $118,000 for the years ended June 30, 2007 and 2006, respectively.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Cash and Cash Equivalents </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 7.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>The Company considers all highly
liquid investments with an original maturity of ninety days or less to be cash
equivalents.</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Accounts Receivable </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in' align="justify">Trade receivables are carried at original invoice amount less an estimate
made for doubtful accounts based on a review of all outstanding amounts on a
monthly basis.&nbsp; Management determines the allowance for doubtful accounts by
identifying troubled accounts and using historical experience applied to an
aging of accounts.&nbsp; Trade receivables are written off when deemed
uncollectible.&nbsp; Recoveries of trade receivables previously written off are
offset against the allowance when received. Changes in reserve for allowance
for doubtful accounts are as follows for the years ended June 30, 2007 and 2006:</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in' align="justify">&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in' align="center">
- -30-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 7.0pt">&nbsp;</font></p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=500
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance
  at the beginning of the year</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$40,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$100,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Increase
  (Decrease) in doubtful accounts</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  114,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (58,000)</p></td>
		</tr>
		<tr style='height:31.5pt'>
			<td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Recoveries
  of bad debt</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (1,000)</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (2,000)</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance
  at the end of the year</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$153,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$40,000&nbsp;</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>I</b><b>nventories</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories are stated at the lower of cost (the first-in, first-out method) or
market and consist of the following at June 30, 2007 and 2006:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=475
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Raw
  Materials</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$2,474,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$1,694,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Work in
  process</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  594,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  495,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Development
  costs under contract</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  141,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  341,000&nbsp;</p></td>
		</tr>
		<tr style='height:15.0pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Finished
  goods</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,403,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2,242,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp; Total</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$5,612,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$4,772,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Reserve
  for slow moving and obsolete items</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (990,000)</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (792,000)</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp; Total
  inventories, net</p></td>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$4,622,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$3,980,000&nbsp;</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>Changes in reserve
for slow moving and obsolete inventory for the years ended June 30, 2007 and
2006 were as follows:</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=449
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance
  at the beginning of the year</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$792,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$290,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Increased
  reserve</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">261,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">502,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Inventory
  disposed</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">(63,000)</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;-&nbsp;&nbsp;
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance
  at the end of the year</p></td>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$990,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$792,000&nbsp;</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>Inventory disposed was
associated with development and older production contracts that were exited or
had remaining inventory that was determined to have no value during the year.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Warranties</b></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The warranty accrual is based on historical costs of warranty repairs and
expected future identifiable warranty expenses.&nbsp; Warranty expenses are
reflected in the financial statements as Cost of Sales (&#147;COS&#148;).&nbsp; The warranty
accrual and expenses for the years ended June 30, 2007 and 2006 are presented
below:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=512
 style='width:75%;margin-left:4.65pt;border-collapse:collapse' id="table9">
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Year Ended June 30,</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Beginning Balance</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  309,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  40,000&nbsp;</p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp; Charged to Expense</p>
			</td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (819,000)</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (440,000)</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp; Additional accrual</p>
			</td>
			<td nowrap valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  979,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  709,000&nbsp;</p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Ending Balance</p>
			</td>
			<td nowrap valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  469,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  309,000&nbsp;</p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>-31-</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Property, Plant &amp;
Equipment</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and
equipment is recorded at cost and consist of the following as of June 30, 2007
and 2006: </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=455
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Land</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$757,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$757,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Building</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,470,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,470,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Leasehold
  Improvements</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  490,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  455,000&nbsp;</p></td>
		</tr>
		<tr style='height:15.0pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Equipment</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  4,597,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  4,980,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp; Total</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$7,314,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$7,662,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Accumulated
  Depreciation</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (3,536,000)</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;
  (3,936,000)</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp; Total
  property, plant &amp; equipment, net</p></td>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$3,778,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$3,726,000&nbsp;</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>Depreciation is
provided using the straight-line method over the estimated useful lives of the
assets as follows: Building &#150; 39 years, equipment -- 3-10 years; and leasehold
improvements are depreciated over the shorter of the term of the lease or their
estimated useful lives.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Goodwill and Intangible Assets </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The Company
accounts for Goodwill and Intangible Assets in accordance with SFAS No. 142
&#147;Goodwill and Other Intangible Assets.&#148;&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.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We performed
impairment tests and recorded no impairment charges in fiscal years ended June
30, 2007 or 2006.&nbsp; We prepare our annual impairment testing on April 1 of each
year and did additional testing as of June 30, 2007.&nbsp; We have compared the
estimated carrying value with the estimated fair value of the reporting unit and
determined that the goodwill was not impaired.&nbsp; Additionally, during the
quarter ended June 30, 2007, management determined that there were no events or
circumstances which have occurred, that would indicate an impairment of the
goodwill had occurred.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=455
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Goodwill
  Associated With Micro Motors</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$1,110,000
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$1,110,000
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Goodwill
  Associated With Astromec</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,887,000 </p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,821,000 </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp; Total
  goodwill</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$2,997,000
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$2,931,000
			</p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Intangible
assets include the patents associated with Oregon Micro Systems purchase in 1995
and with the October, 2005 Intravantage asset
purchase.&nbsp; The Oregon Micro Systems patents were fully amortized as of
2001. The Intravantage asset purchase patents are amortized over a 15 year life.&nbsp; Total amortization
expense in 2007 and 2006 was $99,000 and $66,000, respectively.&nbsp; Intangible
assets consist of the following as of June 30, 2007 and 2006:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=487
 style='border-width:0px; width:365.3pt;border-collapse:collapse;border-collapse:collapse !msorm' id="table12">
 <tr style='height:12.5pt' style='height:12.5pt !msorm'>
  <td valign=bottom style='border-left:medium none msorm; border-right:medium none msorm; border-top:medium none msorm; width:223px;border-bottom:1px solid #000000;height:12.5pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">&nbsp;</p>
  </td>
  <td width=113 valign=bottom style='width:84.65pt;border:1px solid #000000;height:12.5pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">2007</p>
  </td>
  <td width=97 valign=bottom style='border-left:medium none msorm; border-right:1px solid #000000; border-top:1px solid #000000; width:72.6pt;border-bottom:1px solid #000000;height:12.5pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">2006</p>
  </td>
 </tr>
 <tr style='height:12.5pt' style='height:12.5pt !msorm'>
  <td valign=bottom style='border-left:1px solid #000000; width:223px;height:12.5pt; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp; Intangible
  assets- Patents</p>
  </td>
  <td valign=bottom style='border-left:1px solid #000000; border-right:1px solid #000000; width:113px;height:12.5pt; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$4,178,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-right:1px solid #000000; width:97px;height:12.5pt; border-left-style:none; border-left-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$4,175,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.5pt' style='height:12.5pt !msorm'>
  <td valign=bottom style='border-left:1px solid #000000; width:223px;height:12.5pt; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp; Accumulated
  amortization</p>
  </td>
  <td valign=bottom style='border-left:1px solid #000000; border-right:1px solid #000000; border-top:medium none msorm; width:113px;border-bottom:1px solid #000000;height:12.5pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,857,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none msorm; border-right:1px solid #000000; border-top:medium none msorm; width:97px;border-bottom:1px solid #000000;
  height:12.5pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,758,000)</p>
  </td>
 </tr>
 <tr style='height:12.5pt' style='height:12.5pt !msorm'>
  <td valign=bottom style='border-left:1px solid #000000; border-right:medium none msorm; border-top:medium none msorm; width:223px;border-bottom:3px double #000000;height:12.5pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp; Total
  Intangible Assets</p>
  </td>
  <td valign=bottom style='border-left:1px solid #000000; border-right:1px solid #000000; border-top:medium none msorm; width:113px;border-bottom:3px double #000000;height:12.5pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$1,321,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none msorm; border-right:1px solid #000000; border-top:medium none msorm; width:97px;border-bottom:3px double #000000;
  height:12.5pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$1,417,000&nbsp;</p>
  </td>
 </tr>
</table>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>
Future amortization expense for the fiscal years ending June 30 is:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=157
 style='width:118.0pt;margin-left:4.65pt;border-collapse:collapse' id="table10">
		<tr style='height:12.75pt'>
			<td width=51 nowrap valign=bottom style='width:38.0pt;border-top:solid windowtext 1.0pt;
  border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2008</p>
			</td>
			<td width=107 nowrap valign=bottom style='width:80.0pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$99,000
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=51 nowrap valign=bottom style='width:38.0pt;border:none;border-left:
  solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2009</p>
			</td>
			<td width=107 nowrap valign=bottom style='width:80.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  99,000 </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=51 nowrap valign=bottom style='width:38.0pt;border:none;border-left:
  solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2010</p>
			</td>
			<td width=107 nowrap valign=bottom style='width:80.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  99,000 </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=51 nowrap valign=bottom style='width:38.0pt;border:none;border-left:
  solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2011</p>
			</td>
			<td width=107 nowrap valign=bottom style='width:80.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  99,000 </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=51 nowrap valign=bottom style='width:38.0pt;border:none;border-left:
  solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2012</p>
			</td>
			<td width=107 nowrap valign=bottom style='width:80.0pt;border:none;
  border-right:solid windowtext 1.0pt;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  99,000 </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td width=51 valign=bottom style='width:38.0pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:solid windowtext 1.0pt;border-right:
  none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
			</td>
			<td width=107 nowrap valign=bottom style='width:80.0pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in .85pt 0in .85pt;height:12.75pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$495,000
			</p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;margin-left:0in; margin-right:0in; margin-top:0in'>-32-</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br
clear=all style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;page-break-after:avoid;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";font-weight:bold;text-autospace:ideograph-numeric ideograph-other'>Stock Repurchase Plan</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In September
2002, the Company's Board of Directors authorized the repurchase on the open
market of up to 500,000 shares of the Company's outstanding Common Stock,
subject to compliance with applicable laws and regulations.&nbsp; There is no
requirement that the Company repurchase all or any portion of such
shares.&nbsp; The maximum total value of the repurchase is not to exceed
$500,000.&nbsp; The maximum price per share that can be paid is $1.25.&nbsp;
The repurchase is to be financed with cash generated by operations.&nbsp; From the
inception of the repurchase authorization through the year-end date of June 30,
2003, the Company repurchased 75,700 shares of Common Stock for $43,741, at an
average price of $0.58 per share.&nbsp; No additional shares were repurchased
in the twelve months ended June 30, 2007 and 2006.&nbsp; The stock repurchase plan
has been reaffirmed as active, but has not been used as the market value per
common share remained above $1.25 for the majority of 2007.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;page-break-after:avoid;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman Bold";font-weight:bold;'>Income Taxes</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences, operating losses, and tax credit carry forwards.
Deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of
assets and liabilities and their tax bases. 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. </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><b>Shipping
and Handling</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><b>&nbsp;</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>The Company
includes payments from its customers for shipping and handling in its net
revenues line item in accordance with Emerging Issues Task Force (&#147;EITF&#148;)
00-1-, <i>Accounting for Shipping and Handling Fees and Costs.&nbsp; </i>Shipping
expenses, which consist primarily of payments made to freight companies, are
reported in cost of goods sold.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><b>&nbsp;</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><b>Concentration
of Credit Risk</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><b>&nbsp;</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>Financial
instruments that potentially subject the Company to credit risk consist
principally of cash and trade receivables.&nbsp; The Company places its cash with
major financial institutions.&nbsp; At June 30, 2007 and 2006 and at various times
throughout 2007 and 2006 the Company had deposits in excess of federally
insured limits.&nbsp; Credit sales are made to resellers located throughout the
United States and Europe, and account for a substantial portion of trade
receivables.&nbsp; We determine collateral is not required for such receivables
by monitoring the customers financial position and payment history.&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>Stock Options and Warrants</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>In 2006, we accounted for stock-based employee compensation under the
requirements of Accounting Principles Board (APB) Opinion No. 25, which does
not require compensation to be recorded if the consideration to be received is
at least equal to the market price of the underlying stock at the measurement
date.&nbsp; Nonemployee stock-based transactions were accounted for under the
requirements of the Financial Accounting Standards Board&#146;s Statement of
Financial Accounting Standards (SFAS) No. 123, <i>Accounting for Stock-Based
Compensation</i>, which requires compensation to be recorded based on the fair
value of the securities issued or the services received, whichever is more
reliably measurable.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We are subject to the revised requirements of the Statement of Financial
Accounting Standards (&#147;SFAS&#148;) No. 123 (R) <i>Accounting for Stock-Based
Compensation</i> as revised December 2004.&nbsp; This standard establishes the
accounting standards for equity compensation, and will apply to us in the
recognition of the cost of stock options awarded based on the grant-date fair
value of those awards.&nbsp; As a small business issuer, the statement was effective
for us at the beginning of the first fiscal year that begins after December 15,
2005, which was our fiscal year ended June 30, 2007. Accordingly we began to
report the expense of vested stock options in our financial statements for the
quarter ended September 30, 2006 and had an earnings effect similar to that
currently described in the Note Two of the consolidated financial statements.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>-33-</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>SFAS No. 123 and SFAS No. 148 require the disclosure of pro forma net
income and earnings per share had the Company adopted the fair value method.&nbsp;
Under SFAS No. 123, the fair value of stock-based awards to employees is
calculated through the use of option pricing models, even though such models
were developed to estimate the fair value of freely tradable, fully
transferable options with vesting restrictions which significantly differ from
the Company&#146;s stock option awards.&nbsp; These models require subjective
assumptions, including future stock price volatility and expected time to
exercise, which greatly affect the calculated value.&nbsp; The Company&#146;s
calculations for the options granted were made using the Black-Scholes
option-pricing model.&nbsp; The calculations are based on a single-option valuation
approach and forfeitures are recognized as they occur.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The fair value and
associated compensation cost 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 58% to 63% in
2007, of 35% to 42% in 2006; risk-free interest rates of approximately 4.4% to 5.1%
in 2007 and 3.8% to 4.5% in 2006; and expected lives of five to eight years.&nbsp;
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following table illustrates the effect on net income and earnings per
share had compensation cost for employee stock-based compensation been
determined based on the grant date fair values of awards for the year ended
June 30, 2006.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=525
 style='width:80%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border:1.0pt solid windowtext;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net
  Income as reported</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$827,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:38.25pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Add
  stock-based compensation expense included in reported net income, net of
  related tax effects</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  -&nbsp;&nbsp; </p></td>
		</tr>
		<tr style='height:57.75pt'>
			<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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(Deduct)
  total stock-based employee compensation expense determined under fair value
  based method for all awards, net of related tax effects</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (99,000)</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Pro-forma
  net income</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$728,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic
  earnings per share</p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>As reported</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$0.09&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Pro-forma</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$0.08&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted
  earnings per share</p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>As
  reported</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$0.08&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Pro-forma</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$0.07&nbsp;</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Use of Estimates</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>The preparation of financial
statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>The Company's operations are
affected by numerous factors including market acceptance, changes in
technologies and new laws and government regulations and policies. The Company
cannot predict what impact, if any, the occurrence of these or other events
might have on the Company's operations. Significant estimates and assumptions
made by management include, but are not limited to: revenue recognition, the
allowance for doubtful accounts, the warranty reserve, the reserve for slow
moving or obsolete inventories, the carrying value of long-lived and intangible
assets impairment of goodwill, and the recovery of deferred income tax assets.</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>&nbsp;</p>
<p style='margin-bottom:.0001pt;text-align:center;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>-34-</p>
<p style='margin-bottom:.0001pt;text-align:center;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>Significant management judgment
is required to determine our provision for income taxes and the recoverability
of the deferred tax asset.&nbsp; It is based on estimates of future taxable
income by jurisdiction in which the Company operates and the period over which
the deferred tax assets will be recoverable.&nbsp; In the event that actual
results differ from these estimates or we adjust these estimates in future
periods, a valuation allowance may need to be established which could result in
a tax provision equal to the carrying value of the deferred tax assets.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Earnings per Share</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman"; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;Basic
earnings per common share data has been computed on the basis of the
weighted-average number of common shares outstanding during each period
presented.&nbsp; Diluted per share amounts assume the conversion, exercise or
issuance of all potential common stock instruments unless the effect is to
increase the income or decrease the loss per common share from continuing
operations. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Fair Value of Financial
Instruments</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 7.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The method and assumptions used to estimate
the fair value of notes payable, if any, which approximates the carrying value,
is based on interest rates for instruments with similar terms and remaining
maturities. </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Research and Development </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>Company-funded research and development supports the
development of generic rotary drive, motion control and electric motor
technology platforms.&nbsp; We 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 research and
development costs not associated with contracts or purchase orders are expensed
as incurred.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>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 year ended June 30, 2007, $124,000 was recognized as cost of sales,
compared to $54,000 recognized as cost of sales in the year ended June 30,
2006, reflecting the completion of various development contracts during the
year. </p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>The disclosure of&nbsp;
terms of the customer agreements, customer names,
project status and economic impact of projects that are fundamental to the
Company&#146;s business strategy is prohibited in many cases by confidentiality
agreements.</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>NOTE 3 - BANK DEBT </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In November
2006, we renewed our credit facility with Wells Fargo Bank N.A. (&#147;Wells Fargo&#148;)
for borrowings up to $2,000,000.&nbsp; The credit facility terms require
monthly interest payments at either the prime rate of interest (8.25% at June
30, 2007), or LIBOR plus 2.50% (7.875% (one month) to 8.0% (three months) at
June 30, 2007), at our discretion, based on outstanding borrowings with no
minimum interest charge.&nbsp; The outstanding borrowings are secured by all
assets of the Company except the Carson City land and building.&nbsp; There was an outstanding
balance of $300,000 under the terms of this credit facility as of June 30,
2007.&nbsp; The total remaining eligible borrowing capacity at June 30, 2007 was
$1,700,000.</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin-bottom:.0001pt;text-align:center;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>-35-</p>
<p style='margin-bottom:.0001pt;text-align:center;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In March 2006,
we entered into a ten year real estate note 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 real estate 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 an outstanding balance
of $1,619,121 under the terms of this real estate note as of June 30,
2007.&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In January 2006,
we extended the credit facility and entered into a four year term note with
Wells Fargo for $1,000,000.&nbsp; Its terms require monthly interest payments
at either the prime rate of interest (8.25% at June 30, 2007), or LIBOR plus
2.50% (7.875% (one month) to 8.0% (three months) at June 30, 2007), 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 an outstanding balance of $645,833 under the
term note as of June 30, 2007.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:justify;text-indent:.5in'>There
are certain financial and non-financial covenants that we must meet to be in
compliance with the terms of the November 2006 Wells Fargo credit facility, as
amended, and the Union Bank mortgage.&nbsp; At June 30, 2007, we were in compliance
with all such covenants.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>NOTE 4 - COMMITMENTS AND
CONTINGENCIES </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>The Company leases its existing
office and warehouse facilities in Santa Ana, California and Beaverton, Oregon.&nbsp; The Santa Ana lease expired in June 2007 and the Beaverton lease expires in
October 2007.&nbsp; The Santa Ana lease includes two one year consecutive options to
extend the lease that were not exercised.&nbsp; The Beaverton facility has an option
to renew for either a three or five year term. &nbsp;These leases require the
Company to pay insurance, taxes, and other expenses related to the leased
space.&nbsp; Total rent expense in 2007 and 2006 was $310,000 and $333,000,
respectively.&nbsp; Future minimum lease payments for the fiscal year ending June 30,
2008 are: </p>
<div align="center">
	<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0
 style='margin-left:0pt;border-collapse:collapse;border:none'>
		<tr>
			<td width=96 valign=top style='width:1.0in;border:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>2008</p>
			</td>
			<td width=90 valign=top style='width:67.5pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";margin-right:-.95in'>&nbsp;
			<u>&nbsp;&nbsp;&nbsp;38,000</u></p></td>
		</tr>
		<tr>
			<td width=96 valign=top style='width:1.0in;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
			</td>
			<td width=90 valign=top style='width:67.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>
			<u>&nbsp;&nbsp; $38,000</u></p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our manufacture and distribution of certain products involves a risk of
legal action, and, from time to time, we are named as defendants in lawsuits. It
is not reasonably possible to estimate the awards or damages, or the range of
awards or damages, if any, we might incur in connection with such litigation.&nbsp;
Management is not aware of any material actual, pending or threatened
litigation at this time.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none' align="center">-36-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none' align="center">&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>NOTE 5 - Income Taxes </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>The provisions
for income taxes for the years ended June 30, 2007 and 2006 are as follows: </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=380
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:15.75pt'>
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			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap colspan=2 valign=bottom style='border-top:
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			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year ended
  June 30, </p></td>
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		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Current:</p>
			</td>
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			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Federal</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 201,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp; 421,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 45,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (10,000)</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Deferred:</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Federal</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (111,000)</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (91,000)</p>
			</td>
		</tr>
		<tr style='height:16.5pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (66,000)</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Provision for Income taxes</p>
			</td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.5pt double windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 69,000&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.5pt double windowtext;
  border-right:1.0pt solid windowtext;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp; 326,000&nbsp;</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
text-autospace:none'><b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:0in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>A reconciliation of the expected tax to the amount
computed by applying the federal statutory income tax rates to income before
income taxes is as follows: </p>
<p style="text-indent: .5in; text-autospace: none; font-size: 12.0pt; font-family: Times New Roman; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=523
 style='width:75%;margin-left:5.4pt;border-collapse:collapse'>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year ended
  June 30, </p></td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Federal income tax at the statutory rate</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 195,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp; 392,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State Income taxes, net of federal tax benefit</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 58,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 95,000&nbsp;</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Tax Incentives</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (195,000)</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (141,000)</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Tax effect of non-deductible items</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;(5,000)</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (4,000)</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Other</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (16,000)</p>
			</td>
		</tr>
		<tr style='height:15.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Provision for Income taxes</p>
			</td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.5pt double windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 69,000&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.5pt double windowtext;
  border-right:1.0pt solid windowtext;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp; 326,000&nbsp;</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>Deferred income
tax assets and liabilities in the accompanying consolidated balance sheet at
June 30, 2007 and 2006 are as follows: </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=449
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap colspan=2 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Current
  Deferred income tax assets </p></td>
			<td nowrap 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;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year ended June 30,
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Deferred
  tax assets</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Accrued
  expenses</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  389,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  231,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Inventories</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  535,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  440,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income tax
  credit carry forwards</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  202,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  124,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total
  deferred tax assets</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,126,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  795,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Deferred
  tax liabilities</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State
  taxes</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (35,000)</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (29,000)</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total
  deferred tax liabilities</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(35,000)</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (29,000)</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net
  Current Deferred tax assets</p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.5pt double windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,091,000&nbsp;</p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.5pt double windowtext;
  border-right:1.0pt solid windowtext;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  766,000&nbsp;</p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
text-autospace:none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>
- -37-</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br
clear=all style='page-break-before:always'>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=488
 style='width:75%;margin-left:4.65pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap colspan=2 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Long Term
  Deferred income tax assets </p></td>
			<td nowrap 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;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal Year ended June 30,
			</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap colspan=2 valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			&nbsp;</td>
			<td nowrap valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:1px solid #000000;
  border-right:1.0pt solid black;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p align="center">2007</td>
			<td nowrap valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:1.0pt solid windowtext;border-bottom:1px solid #000000;
  border-right:1.0pt solid black;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p align="center">2006</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Deferred
  tax assets</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Intangible
  assets</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;450,000&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  594,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Non cash
  stock based compensation</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  65,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  -&nbsp;&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total
  deferred tax assets</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  515,000&nbsp;</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  594,000&nbsp;</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Deferred
  tax liabilities</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State
  taxes</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (97,000)</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (94,000)</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Depreciation</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (189,000)</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (122,000)</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total
  deferred tax liabilities</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (285,000)</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (216,000)</p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net
  Deferred tax assets</p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.5pt double windowtext;
  border-right:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  229,000&nbsp;</p></td>
			<td nowrap valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:1.5pt double windowtext;
  border-right:1.0pt solid windowtext;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  378,000&nbsp;</p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The Company has state tax credits of $201,000 and $124,000 for June 30,
2007 and 2006, respectively that can be carried forward indefinitely until
fully utilized.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The Company is currently undergoing an examination by the Internal
Revenue Service (IRS) of the Federal income tax returns filed for the fiscal
years ending June 30, 2004, June 30, 2005 and June 30, 2006.&nbsp; Preliminary
findings of the examination indicate that there may have been differences in
the timing of our quarterly tax payments due to the treatment of overhead
expenditures. &nbsp;The company anticipates that these timing differences will
result in $68,000 of interest and $14,000 of additional tax payments due to the
IRS.&nbsp; These amounts have been accrued and are included in accrued expenses and
interest as of June 30, 2007. &nbsp;Management does not believe there will be any
material adjustments resulting from the examination beyond those described
above.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The Company&#146;s policy to record tax expense, interest expense and
associated penalties, if any, is to follow FAS 5 and record these potential
liabilities when it is a more likely than not that the additional expense will
be realized. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>NOTE 6 - SHAREHOLDERS' EQUITY
</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Stock Options </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The Board of Directors and the shareholders of the Company have approved
and adopted two equity compensation plans, pursuant to which options to
purchase or restricted shares may be granted in an aggregate of 2,500,000
shares of common stock that may be granted to officers, directors, and
employees of the Company.&nbsp;&nbsp; The employee stock option plan had 2,000,000
options to purchase shares and the directors&#146; plan had 500,000 options to
purchase shares. &nbsp;There are 352,045 options to purchase shares remaining under
the employee option plan, and 195,000 options to purchase shares remaining
under the directors option plan for a total of 547,045 shares remaining under
both option plans at June 30, 2007 that are available to grant in future years.
&nbsp;The aggregate amount of shares available option plan available to employees was
increased by 500,000 to the current level of shares available at the 2006
annual shareholders meeting. &nbsp;New shares are created as such options are
exercised or restricted shares are granted.&nbsp; Share-based compensation expense
reduced the company&#146;s results of operations as shown:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>-38-</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:
none; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=467
 style='width:65%;border-collapse:collapse' id="table14">
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-left:1px solid; border-right:medium none; border-top:1px solid; border-bottom:1.0pt solid windowtext; height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' bordercolor="#000000" width="11%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:1px solid; border-bottom:1.0pt solid windowtext; height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' bordercolor="#000000" width="64%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:1px solid; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">2007</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td colspan=2 valign=bottom style='border-left:1px solid; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Share-based
  compensation expense recognized:</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="2%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="18%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-left-style:solid; border-left-width:1px' width="11%" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="64%" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General
  and administrative, options</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="2%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="18%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>86,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-left-style:solid; border-left-width:1px' width="11%" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="64%" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General
  and administrative, restricted stock</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="2%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="18%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>156,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-left:1px solid; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="11%" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="64%" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Related
  deferred tax benefit</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="2%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="18%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(62,000)</p>
  </td>
 </tr>
 <tr style='height:14.85pt'>
  <td colspan=2 valign=bottom style='border-left:1px solid; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; height:14.85pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease
  in net income</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="2%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' width="18%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$180,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:25.25pt'>
  <td colspan=2 valign=bottom style='height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-left-style:solid; border-left-width:1px; border-bottom-style:none; border-bottom-width:medium' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease
  in basic earnings per share</p>
  </td>
  <td valign=bottom style='border-right:medium none #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-bottom-style:none; border-bottom-width:medium' width="2%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-right:1px solid #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-bottom-style:none; border-bottom-width:medium' width="18%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$0.02&nbsp;</p>
  </td>
 </tr>
 <tr style='height:25.25pt'>
  <td colspan=2 valign=bottom style='height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-left-style:solid; border-left-width:1px; border-bottom-style:double; border-bottom-width:3px' bordercolor="#000000">
  Decrease
  in diluted earnings per share</td>
  <td valign=bottom style='border-right:medium none #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-bottom-style:double; border-bottom-width:3px' width="2%" bordercolor="#000000">
  &nbsp;</td>
  <td valign=bottom style='border-right:1px solid #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-bottom-style:double; border-bottom-width:3px' width="18%" bordercolor="#000000">
  <p align="right">$0.02&nbsp;</td>
 </tr>
</table>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>&nbsp;</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>As of June 30, 2007, there was $140,510 of total unrecognized
compensation cost related to 157,250 non vested outstanding stock options with
a per share weighted average value of $0.98.&nbsp; The unrecognized expense is
anticipated to be recognized on a straight-line basis over a weighted average
period of 1.3 years.&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following is a summary of stock option activity:</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<div align="center">
	<table class=MsoNormalTable border=0 cellpadding=0 width=656
 style='width:95%;margin-left:0pt;border-collapse:collapse'>
		<tr style='height:12.75pt'>
			<td nowrap valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap colspan=2 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap colspan=2 valign=bottom style='border-top:
  1.0pt solid windowtext;border-left:medium none;border-bottom:1.0pt solid windowtext;
  border-right:1px solid #000000;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
			</td>
		</tr>
		<tr style='height:25.5pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-Average</p>
			</td>
			<td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:medium none #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td valign=bottom style='border-right:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-Average</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fixed Options</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise Price</p>
			</td>
			<td valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</p>
			</td>
			<td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise Price</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding
  at beginning of year</p></td>
			<td valign=bottom style='border:medium none;padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,204,316&nbsp;</p></td>
			<td nowrap valign=bottom style='border:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1.68 </p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; border-bottom:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,046,816&nbsp;</p></td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  -&nbsp;&nbsp; </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;
  Granted</p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  166,000&nbsp;</p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1.49 </p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:medium none #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  230,000&nbsp;</p></td>
			<td nowrap valign=bottom style='border-right:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2.82 </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;
  Exercised</p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (106,816)</p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  0.45 </p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:medium none #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (50,000)</p></td>
			<td nowrap valign=bottom style='border-right:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  0.81 </p></td>
		</tr>
		<tr style='height:15.0pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;
  Forfeited</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (225,000)</p></td>
			<td nowrap 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:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  2.52 </p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  (22,500)</p></td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1.92 </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding
  at end of year</p></td>
			<td nowrap valign=bottom style='border:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,038,500&nbsp;</p></td>
			<td nowrap valign=bottom style='border:medium none;
  padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1.60 </p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; border-bottom:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1,204,316&nbsp;</p></td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:medium none; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1.68 </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:medium none #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Exercisable
  at end of year</p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  881,250&nbsp;</p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1.56 </p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:medium none #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  900,566&nbsp;</p></td>
			<td nowrap valign=bottom style='border-right:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  1.43 </p></td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:medium none #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Weighted-average
  fair value per</p></td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:medium none #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-right:1px solid #000000; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr style='height:12.75pt'>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;
  Option granted during the year</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$0.94
			</p></td>
			<td nowrap 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:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td nowrap valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:.85pt; padding-right:.85pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$1.08
			</p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>The following
table summarizes information regarding options outstanding and options
exercisable at June 30, 2007: </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>&nbsp;</p>
<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=685
 style='width:100%;border-collapse:collapse' id="table16">
 <tr style='height:11.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; border-top:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:1px solid #000000; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' colspan="5">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Options Outstanding</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:1px solid #000000; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:1px solid #000000; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=6 valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:1px solid #000000; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Options Exercisable</font></p>
  </td>
 </tr>
 <tr style='height:11.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  &nbsp;</td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Weighted-</font></p>
  </td>
  <td colspan=2 valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Weighted-</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-right:medium none #000000; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  &nbsp;</td>
  <td valign=bottom style='border-right:medium none #000000; border-left-style:none; border-left-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-right:medium none #000000; border-left-style:none; border-left-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Weighted-</font></p>
  </td>
  <td valign=bottom style='border-right:medium none #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-right:1px solid #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Average</font></p>
  </td>
  <td colspan=2 valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Average</font></p>
  </td>
  <td colspan=2 valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Aggregate</font></p>
  </td>
  <td valign=bottom style='border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-right:medium none #000000; border-left-style:none; border-left-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='border-right:medium none #000000; border-left-style:none; border-left-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-right:medium none #000000; border-left-style:none; border-left-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Average</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1px solid #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Aggregate</font></p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-left:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Range of</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Number</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Remaining</font></p>
  </td>
  <td colspan=2 valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Exercise</font></p>
  </td>
  <td colspan=2 valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Intrinsic</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Number</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top-style:none; border-top-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Exercise</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Intrinsic</font></p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-bottom:1px solid #000000; border-left:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Exercise Price</font></p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Outstanding</font></p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Contractual Life</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Price</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Value</font></p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Outstanding</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Price</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-bottom:1px solid #000000; border-right:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Value</font></p>
  </td>
 </tr>
 <tr style='height:11.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$0.35
  to $0.81</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">260,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">4.7
  years</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">0.70&nbsp;</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">218,800&nbsp;</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  &nbsp;</td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">260,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">0.70&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-right:medium none #000000; border-left-style:none; border-left-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-right:1px solid #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">218,800&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-left:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$1.08
  to $1.52</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">341,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">6.6
  years</font></p>
  </td>
  <td valign=bottom style='border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.34&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">69,190&nbsp;</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  &nbsp;</td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">240,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.29&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-right:medium none #000000; border-left-style:none; border-left-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-right:1px solid #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">61,050&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-left:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$1.77
  to $2.18</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">262,500&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">4.4
  years</font></p>
  </td>
  <td valign=bottom style='border-style:none; border-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2.04&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-style:none; border-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td valign=bottom style='padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  &nbsp;</td>
  <td valign=bottom style='border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">248,750&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-style:none; border-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2.05&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-right:medium none #000000; border-left-style:none; border-left-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-right:1px solid #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">-&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-left:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$2.44
  to $3.30</font></p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">175,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-bottom:medium none #000000; border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</td>
  <td valign=bottom style='border-bottom:1px solid #000000; border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">8.0
  years</font></p>
  </td>
  <td valign=bottom style='border-bottom:medium none #000000; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2.77&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-bottom:medium none #000000; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-bottom:medium none #000000; border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  &nbsp;</td>
  <td valign=bottom style='border-bottom:1px solid #000000; border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">132,500&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-bottom:medium none #000000; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2.83&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-right:medium none #000000; border-bottom:medium none #000000; border-left-style:none; border-left-width:medium; border-top-style:none; border-top-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-right:1px solid #000000; border-bottom:1px solid #000000; border-left-style:none; border-left-width:medium; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">-&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:16.35pt'>
  <td valign=bottom style='border-left:1px solid #000000; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Total</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:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1,038,500&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:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  &nbsp;</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:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">5.8
  years</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:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</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:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.60&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:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">287,990&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">881,250&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</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:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.56&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">279,850&nbsp;</font></p>
  </td>
 </tr>
</table>

</div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>The option plans are
substantially similar, call for vesting as approved by the Board of Directors
of six months for directors and up to five years for employees, and allow for
the options to be outstanding for a period of up to ten years but are forfeited 30 days after
the holder ceases to be an employee or director<font style="font-size: 9.5pt">.&nbsp;
</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Restricted Stock</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>In connection with the employment agreement with our Chief Executive
Officer, a restricted stock grant of 340,000 shares of common stock was made in
February 2007. &nbsp;These shares vest in four equal installments after the initial
vesting of 25% or 85,000 per year over an additional 3 years.&nbsp; The common stock
price at the date of the grant was $1.38.&nbsp; New shares are issued with the
issuance of each installment of restricted stock.&nbsp; The fair value of the grant
is calculated as the number of shares multiplied by the grant price.&nbsp; The
compensation expense is recognized over the vesting period of the grant.&nbsp;
Approximately $156,000 in compensation expense for the restricted stock was recognized
in fiscal year 2007.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
- -39-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
		<hr size=2 width="100%" noshade color=navy align=center></div>
	<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
	<br clear=all
style='page-break-before:always'></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following is a summary of restricted share activity:</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=649
 style='width:85%;border-collapse:collapse' id="table15">
 <tr style='height:12.65pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; border-right:medium none; border-top:1pt solid #000000; width:169.1pt;border-bottom:
  1.0pt solid windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-left:medium none; border-right:medium none; border-top:1pt solid #000000; border-bottom:1.0pt solid windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2007</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:1pt solid #000000; border-bottom:
  1.0pt solid windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-left:medium none; border-right:1pt solid #000000; border-top:1pt solid #000000; border-bottom:1.0pt solid windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2006</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; width:169.1pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=81 valign=bottom style='width:60.95pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=118 colspan=2 valign=bottom style='width:88.6pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  </td>
  <td width=26 valign=bottom style='width:19.55pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=82 valign=bottom style='width:61.75pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=115 colspan=2 valign=bottom style='border-right:1px solid #000000; width:86.2pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; width:169.1pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=81 valign=bottom style='width:60.95pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=118 colspan=2 valign=bottom style='width:88.6pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Average</p>
  </td>
  <td width=26 valign=bottom style='width:19.55pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=82 valign=bottom style='width:61.75pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=115 colspan=2 valign=bottom style='border-right:1px solid #000000; width:86.2pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Average</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; width:169.1pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Restricted
  shares</p>
  </td>
  <td width=81 valign=bottom style='width:60.95pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</p>
  </td>
  <td width=118 colspan=2 valign=bottom style='width:88.6pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise Price</p>
  </td>
  <td width=26 valign=bottom style='width:19.55pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=82 valign=bottom style='width:61.75pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</p>
  </td>
  <td width=115 colspan=2 valign=bottom style='border-right:1px solid #000000; width:86.2pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise Price</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; width:169.1pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding
  at beginning of year</p>
  </td>
  <td width=81 valign=bottom style='width:60.95pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='width:7.35pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=108 valign=bottom style='width:81.25pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=26 valign=bottom style='width:19.55pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=82 valign=bottom style='width:61.75pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='border-right:medium none #000000; width:7.35pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=105 valign=bottom style='border-right:1px solid #000000; width:78.85pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; width:169.1pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Granted</p>
  </td>
  <td width=81 valign=bottom style='width:60.95pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>340,000&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='width:7.35pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=108 valign=bottom style='width:81.25pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.38&nbsp;</p>
  </td>
  <td width=26 valign=bottom style='width:19.55pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=82 valign=bottom style='width:61.75pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='border-right:medium none #000000; width:7.35pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=105 valign=bottom style='border-right:1px solid #000000; width:78.85pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; width:169.1pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Exercised</p>
  </td>
  <td width=81 valign=bottom style='width:60.95pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(85,000)</p>
  </td>
  <td width=10 valign=bottom style='width:7.35pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=108 valign=bottom style='width:81.25pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.38&nbsp;</p>
  </td>
  <td width=26 valign=bottom style='width:19.55pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=82 valign=bottom style='width:61.75pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='border-right:medium none #000000; width:7.35pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=105 valign=bottom style='border-right:1px solid #000000; width:78.85pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; width:169.1pt;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Forfeited</p>
  </td>
  <td width=81 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; width:60.95pt;border-bottom:
  3px double windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; width:7.35pt;border-bottom:
  3px double windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=108 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; width:81.25pt;border-bottom:
  3px double windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=26 valign=bottom style='width:19.55pt;padding:0in 1.45pt 0in 1.45pt;
  height:12.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=82 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; width:61.75pt;border-bottom:
  3px double windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; width:7.35pt;border-bottom:
  3px double windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=105 valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; width:78.85pt;border-bottom:
  3px double windowtext;height:12.65pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.85pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; width:169.1pt;height:14.85pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding
  at end of year</p>
  </td>
  <td width=81 valign=bottom style='width:60.95pt;padding:0in 1.45pt 0in 1.45pt;
  height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>255,000&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='width:7.35pt;padding:0in 1.45pt 0in 1.45pt;
  height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=108 valign=bottom style='width:81.25pt;padding:0in 1.45pt 0in 1.45pt;
  height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.38&nbsp;</p>
  </td>
  <td width=26 valign=bottom style='width:19.55pt;padding:0in 1.45pt 0in 1.45pt;
  height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=82 valign=bottom style='width:61.75pt;padding:0in 1.45pt 0in 1.45pt;
  height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='border-right:medium none #000000; width:7.35pt;height:14.85pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=105 valign=bottom style='border-right:1px solid #000000; width:78.85pt;height:14.85pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in; border-left-style:none; border-left-width:medium'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:25.25pt'>
  <td width=225 valign=bottom style='border-left:1px solid #000000; border-right:medium none; border-top:medium none; width:169.1pt;border-bottom:
  3px double windowtext;height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Exercisable
  at end of year</p>
  </td>
  <td width=81 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; width:60.95pt;border-bottom:
  3px double windowtext;height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; width:7.35pt;border-bottom:
  3px double windowtext;height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=108 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; width:81.25pt;border-bottom:
  3px double windowtext;height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=26 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; width:19.55pt;border-bottom:
  3px double windowtext;height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=82 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; width:61.75pt;border-bottom:
  3px double windowtext;height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; width:7.35pt;border-bottom:
  3px double windowtext;height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=105 valign=bottom style='border-left:medium none; border-right:1px solid #000000; border-top:medium none; width:78.85pt;border-bottom:
  3px double windowtext;height:25.25pt; padding-left:1.45pt; padding-right:1.45pt; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
</table>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>As of June 30, 2007, there was $313,000 of total unrecognized
compensation cost related to 226,667 non vested outstanding restricted shares
with a per share weighted average value of $1.38.&nbsp; The unrecognized expense is
anticipated to be recognized on a straight-line basis over a weighted average
period of 2.7 years.&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Stock Warrants </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>At June 30, 2007, warrants to acquire 100,000 shares of common stock were
outstanding. These warrants are fully vested, have a weighted-average exercise
price of $1.25 and a weighted-average remaining life of 2.0 years.&nbsp; In July
2005, warrants to purchase 13,000 common shares expired unexercised.&nbsp; In
October 2005, warrants to purchase 50,000 common shares were exercised at a
price of $2.13 for total proceeds of $106,500.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
<b>NOTE 7 - NET INCOME PER SHARE </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
following table reconciles the weighted average shares outstanding for basic
and diluted net income per share for the years ended June 30 as indicated.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:justify'>&nbsp;</p>
<div align=center>
	<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0 width=630
 style='width:80%;margin-left:18.9pt;border-collapse:collapse;border:medium none; '>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 12.0pt">&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; padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<u>2007</u></p></td>
			<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; padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<u>2006</u></p></td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>Net
  income</p></td>
			<td width=129 valign=top style='width:96.6pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 12.0pt">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 506,000</font></p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 12.0pt">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 833,000</font></p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic net income per common share:</p>
			</td>
			<td width=129 valign=top style='width:96.6pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp; Weighted average of common shares outstanding
			</p></td>
			<td width=129 valign=top style='width:96.6pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,579,055</p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,502,652</p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic net income per common share
			</p></td>
			<td width=129 valign=top style='width:96.6pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.05</p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.09</p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width=129 valign=top style='width:96.6pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>
			<font style="font-size: 12.0pt">Diluted net income
  per share:</font></p></td>
			<td width=129 valign=top style='width:96.6pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp; Weighted average of common shares outstanding
			</p></td>
			<td width=129 valign=top style='width:96.6pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,579,055</p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,502,652</p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of potentially dilutive securities (options)
			</p></td>
			<td width=129 valign=top style='width:96.6pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;152,434</p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;454,553</p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of potentially dilutive securities (warrants)
			</p></td>
			<td width=129 valign=top style='width:96.6pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; 7,552</p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;31,264</p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Weighted average number of common shares outstanding -
  Diluted</p></td>
			<td width=129 valign=bottom style='width:96.6pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,739,041</p>
			</td>
			<td width=126 valign=bottom style='width:94.5pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,988,569</p>
			</td>
		</tr>
		<tr>
			<td width=375 valign=top style='width:281.4pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted net income per common share
			</p></td>
			<td width=129 valign=top style='width:96.6pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.05</p>
			</td>
			<td width=126 valign=top style='width:94.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt' align="right">
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.08</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none' align="center">
- -40-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none' align="center">&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
<b>NOTE 8 - MAJOR CUSTOMERS</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The Company had two Major Customers (defined as a customer that
represents greater than 10% of the Company&#146;s total revenues) in the year ended
June 30, 2007 and in the year ended June 30, 2006.&nbsp; The Major Customers in 2007
were the same as in 2006.&nbsp;&nbsp; Net sales to the two Major Customers in 2007
amounted to $8,701,000 and at June 30, 2007 the accounts receivable included a balance
of $1,089,000 due from these two Major Customers.&nbsp; Net sales to the two Major
Customers in 2006 amounted to $5,696,000 and at June 30, 2006 the accounts
receivable included a balance of $1,100,000 due from these two Major
Customers.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>NOTE 9 </b><b>- SUBSEQUENT
EVENT</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>On August 17, 2007, we entered into a lease agreement for a new engineering,
manufacturing and corporate headquarters facility in Irvine, California. &nbsp;The lease
is for approximately 28,180 square feet of office and industrial space located at
  2361 McGaw Avenue, Irvine, California. &nbsp;The original term of the lease is ten
(10) years. The monthly base rental rate is $30,998 per month, with annual
increase in monthly base rent of $1,409, plus initial common area expenses
estimated to be approximately $3,736 per month.&nbsp; The Company may terminate the lease
after the 72nd month of its term upon 270 days prior notice to the landlord and
the payment of $125,000. &nbsp;The Company plans to transition from its current
facility in Santa Ana to the new facility in approximately&nbsp;
January 2008.&nbsp; We expect to spend approximately $1,500,000 in capitalized
leasehold improvements and other associated costs to prepare and move into the
new facility.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none' align="center">
- -41-</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none' align="center">&nbsp;</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Part III</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>&nbsp;</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<b>Item 1.&nbsp; Index to Exhibits</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<div align="left">
	<table class=MsoNormalTable border=0 cellpadding=0 width=726
 style='width:95%;border-collapse:collapse'>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<b>Exhibit
  No. </b></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<b>Document
  </b></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">&nbsp;</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">3.1</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Articles
  of Incorporation (incorporated herein by reference to Exhibit 3.1 to the
  Company&#146;s Form 8-K filed April 23, 2007). </font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">3.2</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Bylaws
  (incorporated herein by reference to Exhibit 3.2 to the Company&#146;s Form 8-K
  filed April 23, 2007). </font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.1*</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">1994
  Employees Stock Option Plan, as amended (incorporated herein by reference to
  Exhibit 10.22 to the Company&#146;s Registration Statement on Form S-4 filed April
  13, 1994).&nbsp;&nbsp; </font></p></td>
		</tr>
		<tr style='height:30.15pt'>
			<td valign=top style='padding:0in;
  ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.2*<sup>&nbsp; </sup></font></p>
			</td>
			<td width=800 valign=top style='padding:0in;
  '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">1994
  Directors Stock Option Plan as amended (incorporated herein by reference to
  Exhibit 10.22 to the Company&#146;s Registration Statement on Form S-4 filed April
  13, 1994). </font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.3*</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">First
  Amended and Restated 2004 Stock Option Plan (incorporated herein by reference
  to Exhibit 4.0 to the Company&#146;s Form S-8 filed March 9, 2007 ).</font></p>
			</td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.4*</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">2004
  Directors Stock Option Plan (incorporated herein by reference to Exhibit 4.2
  to the Company&#146;s Form S-8 filed January 23, 2004).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.5</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Audit
  Committee Charter (incorporated herein by reference to Exhibit 10.26 to the
  Company&#146;s Form 10-KSB filed October 1, 2002).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.6*<sup> </sup></font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Employment
  agreement as amended with Patrick Johnson dated April 3, 2000, amended
  September 6, 2002 (incorporated herein by reference to Exhibit 10.33 of the
  Company&#146;s Form 10-KSB filed September 28, 2004).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.7</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Asset
  Purchase Agreement, dated October 31, 2005 between IntraVantage, Inc.
  (incorporated herein by reference to Exhibit 10.1 to the Company&#146;s Form 8-K
  filed November 2, 2005).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.8</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Exclusive
  License Agreement, dated October 31, 2005, between Pro-Dex, Inc. and IntraVantage,
  Inc. (incorporated herein by reference to Exhibit 10.2 to the Company&#146;s Form
  8-K filed November 2, 2005).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.9&nbsp; </font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">&nbsp;</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Royalty
  Agreement, dated October 31, 2005, between Pro-Dex, Inc. and IntraVantage,
  Inc. (incorporated herein by reference to Exhibit&nbsp; 10.3 to the Company&#146;s Form
  8-K filed November 2, 2005).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.10*<sup> </sup></font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Employment
  agreement with Patrick Johnson dated November 22, 2005&nbsp; (incorporated herein
  by reference to Exhibit 10.0 to the Company&#146;s Form 8-K filed November 28,
  2005).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.11</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Asset
  Purchase Agreement, dated January 5, 2006 between Pro-Dex, Astromec, Inc.,
  Astromec, Inc., M.D. Glover, Inc., Malcolm D. Glover, Jr., and Malcolm D.
  Glover, Sr. (incorporated herein by reference to Exhibit 10.1 to the
  Company&#146;s Form 8-K filed January 6, 2006).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.12</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Purchase
  and Sale Agreement and Escrow Instructions, dated January 3, 2006, between
  Pro-Dex, Inc. and M.D. Glover, Inc. (incorporated herein by reference to Exhibit
  10.2 to the Company&#146;s Form 8-K filed January 6, 2006).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.13</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Term
  Note, dated January 4, 2006, by Pro-Dex, Inc. and Wells Fargo Bank, National
  Association&nbsp; (incorporated herein by reference to Exhibit 10.3 to the
  Company&#146;s Form 8-K filed January 6, 2006).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.14</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Loan
  Agreement, dated January 4, 2006, between Pro-Dex, Inc. and Wells Fargo Bank,
  National Association (incorporated herein by reference to Exhibit 10.4 to the
  Company&#146;s Form 8-K filed January 6, 2006).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.15</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Promissory
  Note, dated March 4, 2006, effective March 30, 2006, by Pro-Dex, Inc. in
  favor of Union Bank of California, National Association&nbsp; (incorporated herein
  by reference to Exhibit 10.1 to the Company&#146;s Form 8-K filed April 3, 2006).</font></p>
			</td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.16</font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Loan
  Agreement, dated March 4, 2006, effective March 30, 2006, by Pro-Dex, Inc. in
  favor of Union Bank of California, National Association (incorporated herein
  by reference to Exhibit 10.2 to the Company&#146;s Form 8-K filed April 3, 2006).</font></p>
			</td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.17*<sup> </sup></font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Employment
  Agreement with Mark Murphy dated August 14, 2006 (incorporated herein by
  reference to Exhibit 10.44 to the Company&#146;s Form 10-KSB filed September
			28, 2006).</font></p>
			</td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.18<sup> </sup></font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Lease
  agreement with Irvine Business Properties, dated August 17, 2007&nbsp;
  (incorporated herein by reference to Exhibit 10.1 to the Company&#146;s Form 8-K
  filed August 23, 2007).</font></p></td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">10.19* </font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">Letter
  Agreement with Patrick Johnson dated October 18, 2006 (incorporated herein by
  reference to Exhibit 10.1 to the Company&#146;s Form 8-K filed October 24, 2006).</font></p>
			</td>
		</tr>
		<tr>
			<td valign=top style='padding:0in; ' nowrap>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
			<font style="font-size: 11.0pt">21.1<sup>xx </sup></font></p></td>
			<td width=800 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 11.0pt">List
  of Subsidiaries</font></p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Courier New";text-align:center'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
- -42-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<br clear=all
style='page-break-before:always'>
<table class=MsoNormalTable border=0 cellpadding=0 width=726
 style='width:95%;border-collapse:collapse' id="table11">
	<tr>
		<td valign=top style='padding:0in; ' nowrap>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<font style="font-size: 11.0pt">23.1<sup> xx</sup></font></p></td>
		<td width=800 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<font style="font-size: 11.0pt">Consent
  Letter of Moss Adams LLP.</font></p></td>
	</tr>
	<tr>
		<td valign=top style='padding:0in; ' nowrap>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<font style="font-size: 11.0pt">31.1<sup> xx</sup></font></p></td>
		<td width=800 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<font style="font-size: 11.0pt">Certification
  of the 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 valign=top style='padding:0in; ' nowrap>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<font style="font-size: 11.0pt">31.2<sup> xx</sup></font></p></td>
		<td width=800 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<font style="font-size: 11.0pt">Certification
  of the 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 valign=top style='padding:0in; ' nowrap>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<font style="font-size: 11.0pt">32<sup> xx</sup></font></p></td>
		<td width=800 valign=top style='padding:0in; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
		<font style="font-size: 11.0pt">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>
</table>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 11.0pt">*
Denotes management contract or compensatory arrangement required to be filed as
an exhibit to the Form 10-KSB. </font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt;text-autospace:none'>
<sup>xx</sup> <font style="font-size: 11.0pt">Filed Herewith</font><b> </b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">
- -43-</p>
<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
	<hr size=2 width="100%" noshade color=navy align=center></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>SIGNATURES
</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
<div align="left">
	<table class=MsoNormalTable border=0 cellpadding=0
 style='border-collapse:collapse' width="65%">
		<tr>
			<td valign=top style='width:305px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>PRO-DEX INC.
			</p></td>
			<td valign=top style='width:3px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td valign=top style='width:305px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">/
  s / Mark P. Murphy&nbsp;</font></p></td>
			<td valign=top style='width:3px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td valign=top style='width:305px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">---------------------------------&nbsp;
  			</font></p></td>
			<td valign=top style='width:3px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td valign=top style='width:305px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Mark
  P. Murphy&nbsp;</font></p></td>
			<td valign=top style='width:3px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td valign=top style='width:305px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">President,
  Chief Executive Officer and Director</font></p></td>
			<td valign=top style='width:3px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td valign=top style='width:305px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">(Principal
  Executive Officer)</font></p></td>
			<td valign=top style='width:3px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>In accordance
with the Exchange Act, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.</p>
<div align="left">
	<table class=MsoNormalTable border=0 cellpadding=0
 style='width:90%;margin-left:-1.8pt;border-collapse:collapse'>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">/
  s / Mark P. Murphy&nbsp;</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">September
  27, 2007</font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">---------------------------------&nbsp;
  			</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;------------------------------------
  			</font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Mark
  P. Murphy&nbsp;</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Date
  </font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">President,
  Chief Executive Officer and Director</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
			<td style='border:none;padding:0in 0in 0in 0in' width=24>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">(Principal
  Executive Officer)</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
			<td style='border:none;padding:0in 0in 0in 0in' width=24>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;&nbsp;
			</p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;&nbsp;
			</p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
			</td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">/
  s / Jeffrey J. Ritchey&nbsp; </font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">September
  27, 2007</font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">---------------------------------&nbsp;
  			</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;-------------------------------------
  			</font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Jeffrey
  J. Ritchey&nbsp;</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Date
  </font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Treasurer,
  Chief Financial Officer &amp; Secretary</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
			<td style='border:none;padding:0in 0in 0in 0in' width=24>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">(Principal
  Financial and Accounting Officer) </font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
			<td style='border:none;padding:0in 0in 0in 0in' width=24>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;&nbsp;
			</p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;&nbsp;
			</p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
			</td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">/
  s / George J. Isaac&nbsp; </font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">September
  27, 2007</font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">----------------------------------&nbsp;&nbsp;
  			</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">----------------------------------------
  			</font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">George
  J. Isaac&nbsp;</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;Date
  </font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Director</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">/
  s / Michael Mesenbrink&nbsp;</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">September
  27, 2007</font></p></td>
			<td style='border:none;padding:0in 0in 0in 0in' width=24>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">---------------------------------&nbsp;
  			</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">----------------------------------------</font></p>
			</td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
			</td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Michael
  Mesenbrink&nbsp;</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Date</font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Director</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">/
  s / Valerio Giannini&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">---------------------------------&nbsp;</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Valerio
  Gianinni&nbsp;</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">September
  27, 2007</font></p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">----------------------------------------</font></p>
			</td>
			<td valign=top style='width:24px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 8.5pt">&nbsp;</font></p></td>
		</tr>
		<tr>
			<td style='border:none;padding:0in 0in 0in 0in' width=4>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
			<td valign=top style='width:423px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">Director</font></p></td>
			<td valign=top style='width:295px;padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
			<font style="font-size: 10.0pt">&nbsp;Date</font></p></td>
			<td style='border:none;padding:0in 0in 0in 0in' width=24>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style="font-size: 12.0pt; font-family: Times New Roman; line-height: 1.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</p>
<p style="font-size: 12.0pt; font-family: Times New Roman; line-height: 1.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</p>
<p style="font-size: 12.0pt; font-family: Times New Roman; line-height: 1.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</p>
<p style="font-size: 12.0pt; font-family: Times New Roman; line-height: 1.0pt; margin-left: 0in; margin-right: 0in">&nbsp;</p>
<p style="font-family: Times New Roman; line-height: 1.0pt; margin-left: 0in; margin-right: 0in" align="center">
<b><font size="5">End Of Filing</font></b></p>
<p style="font-family: Times New Roman; line-height: 1.0pt; margin-left: 0in; margin-right: 0in" align="center">&nbsp;</p>
<p style="font-size: 12.0pt; font-family: Times New Roman; line-height: 1.0pt; margin-left: 0in; margin-right: 0in" align="center">
- -44-</p>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>2
<FILENAME>ex21-1.htm
<TEXT>
<html>

<head>
<title>EXHIBIT 21.1</title>
</head>

<body>

&nbsp;<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";text-align:left'><b>EXHIBIT 21.1</b></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";text-align:left'><b>LIST OF SUBSIDIARIES</b></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";text-align:left'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";text-align:left'>Pro-Dex Astromec, Inc, a Nevada corporation</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";text-align:left'>Pro-Dex Management, Inc.,
a California corporation&nbsp; </p>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>3
<FILENAME>ex23-1.htm
<TEXT>
<html>

<head>
<title>EXHIBIT 23.1</title>
</head>

<body>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";text-align:left'>&nbsp;</p>
<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";text-align:left'>&nbsp;</p>
<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";text-align:left'>
<b>EXHIBIT 23.1</b></p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:.0001pt;text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><b>Consent of Independent Registered Public
Accounting Firm</b></p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:.0001pt;text-align:justify; margin-left:0in; margin-right:0in; margin-top:0in'>We consent to the incorporation by
reference in the Registration Statements (Form S-8 Nos. 333-112133, 333-141178)
pertaining to the Pro-Dex, Inc. 2004 Stock Option Plan and the Pro-Dex, Inc.
2004 Directors&#146; Stock Option Plan, Inc., of our report dated September 27, 2007
with respect to the consolidated financial statements of Pro-Dex, Inc. and
Subsidiaries included in the Annual Report (Form 10-KSB) for the year ended
June 30, 2007.</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>/s/
Moss Adams LLP</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>Irvine, California</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>September
27, 2007</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";text-align:left'>&nbsp;</p>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>4
<FILENAME>ex31-1.htm
<TEXT>
<html>

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

<body>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-family:"Times New Roman"'>
<b><font size="2">&nbsp;&nbsp;&nbsp;
</font></b></p>
<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-family:"Times New Roman"'>
<b><font size="2">EXHIBIT 31.1</font></b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">I, Mark P. Murphy, certify
that:</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<table border="0" style="border-collapse: collapse" width="100%" id="table1">
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">1.</font></td>
		<td colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">I have reviewed this Form 10-KSB of
Pro-Dex, Inc.;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">2.</font></td>
		<td colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Based on my knowledge, this annual
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 report; </font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">3.</font></td>
		<td width="95%" colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">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 small business issuer as of, and for, the periods
presented in this report; </font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">4.</font></td>
		<td width="95%" colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">The small business issuer&#146;s other
certifying officer(s) and I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f)) for the small business issuer and have:</font></p>
		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">a)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">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 small business issuer , 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="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font size="2">b)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Designed such internal control
over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">c)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Evaluated the effectiveness
of the small business issuer&#146;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="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">d)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Disclosed in this report
any change in the small business issuer&#146;s internal control over financial
reporting that occurred during the small business issuer&#146;s&nbsp; most recent fiscal
quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant&#146;s internal control over financial reporting;&nbsp; and</font></p>
		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">5.</font></td>
		<td width="95%" colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">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 small business issuer&#146;s auditors
and the audit committee of small business issuer&#146;s board of directors (or
persons performing the equivalent functions):</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">a)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">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 small business issuer&#146;s&nbsp; ability to record, process, summarize and
report financial information; and </font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">b)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Any fraud, whether or not
material, that involves management or other employees who have a significant
role in the small business issuer&#146;s&nbsp; internal control over financial reporting.</font></p>
		</td>
	</tr>
</table>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">Date: </font><font size="2">September 27,
2007&nbsp;&nbsp;&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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><u><font size="2">/s/
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mark P. Murphy</font></u><font style="font-size: 10.0pt"> _______</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mark
P. Murphy</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief
Executive Officer</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>5
<FILENAME>ex31-2.htm
<TEXT>
<html>

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

<body>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
<b><font size="2">EXHIBIT 31.2</font></b></p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
<b><font size="2">&nbsp;</font></b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">I, Jeffrey J. Ritchey,
certify that: </font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<table border="0" style="border-collapse: collapse" width="100%" id="table2">
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">1.</font></td>
		<td colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">I have reviewed this Form 10-KSB of
Pro-Dex, Inc.;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">2.</font></td>
		<td colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Based on my knowledge, this annual
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 report; </font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">3.</font></td>
		<td width="95%" colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">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 small business issuer as of, and for, the periods
presented in this report; </font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">4.</font></td>
		<td width="95%" colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">The small business issuer&#146;s other
certifying officer(s) and I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f)) for the small business issuer and have:</font></p>
		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">a)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">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 small business issuer , 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="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font size="2">b)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Designed such internal control
over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">c)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Evaluated the effectiveness
of the small business issuer&#146;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="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">d)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Disclosed in this report
any change in the small business issuer&#146;s internal control over financial
reporting that occurred during the small business issuer&#146;s&nbsp; most recent fiscal
quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant&#146;s internal control over financial reporting;&nbsp; and</font></p>
		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top"><font style="font-size: 10.0pt">5.</font></td>
		<td width="95%" colspan="2" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">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 small business issuer&#146;s auditors
and the audit committee of small business issuer&#146;s board of directors (or
persons performing the equivalent functions):</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">a)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">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 small business issuer&#146;s&nbsp; ability to record, process, summarize and
report financial information; and </font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">&nbsp;</font></p></td>
	</tr>
	<tr>
		<td width="4%" valign="top">&nbsp;</td>
		<td width="6%" valign="top"><font style="font-size: 10.0pt">b)</font></td>
		<td width="89%" valign="top">
		<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-right:0in; margin-top:0in'>
		<font style="font-size: 10.0pt">Any fraud, whether or not
material, that involves management or other employees who have a significant
role in the small business issuer&#146;s&nbsp; internal control over financial reporting.</font></p>
		</td>
	</tr>
</table>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">Date: </font><font size="2">September 27,
2007&nbsp;&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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><u><font size="2">/s/
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; JEFFREY J. RITCHEY</font></u><font style="font-size: 10.0pt"> _______</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jeffrey
J. Ritchey</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief
Financial Officer</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
<font style="font-size: 10.0pt">&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>6
<FILENAME>ex32.htm
<TEXT>
<html>

<head>

<title>EXHIBIT 32</title>
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<b><font size="2">EXHIBIT 32</font></b></p>
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margin-left:3.0in;margin-bottom:.0001pt;text-indent:-3.0in'>&nbsp;</p>
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margin-bottom:0in;margin-left:3.0in;margin-bottom:.0001pt;text-align:center;
text-indent:-3.0in'>&nbsp;</p>
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<b><font size="2">CERTIFICATIONS
OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER</font></b></p>
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<b><font size="2">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>
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<b><font size="2">&nbsp;</font></b></p>
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<b><font size="2">Certifications
of Chief Executive Officer and Chief Financial Officer</font></b></p>
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<font size="2">In connection with the
annual report on Form 10-KSB of Pro-Dex Inc. (the &#147;Company&#148;) for the annual
period ended June 30, 2007 (the &#147;Report&#148;), the undersigned hereby certify in
their capacities as Chief Executive Officer and Chief Financial Officer of the
Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:</font></p>
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<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>
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<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>
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		<td><font size="2">Dated: September 27, 2007 </font></td>
		<td width="637">
		<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
		<font size="2">By:</font><u><font size="2"> /s/&nbsp;&nbsp;&nbsp; MARK P. MURPHY&nbsp;&nbsp;&nbsp;&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></u></p></td>
	</tr>
	<tr>
		<td>&nbsp;</td>
		<td width="637">
		<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
		<font size="2">Mark
P. Murphy</font></p></td>
	</tr>
	<tr>
		<td>&nbsp;</td>
		<td width="637">
		<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
		<font size="2">Chief
Executive Officer and President</font><u><font size="2"><br></font></u></p></td>
	</tr>
	<tr>
		<td>&nbsp;</td>
		<td width="637">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Courier New";text-align:justify'>&nbsp;</p>
		</td>
	</tr>
	<tr>
		<td><font size="2">Dated: September 27, 2007</font></td>
		<td width="637">
		<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
		<font size="2">By:</font><u><font size="2">
/s/ &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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></u></p></td>
	</tr>
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		<td>&nbsp;</td>
		<td width="637">
		<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
		<font size="2">Jeffrey
J. Ritchey</font></p></td>
	</tr>
	<tr>
		<td>&nbsp;</td>
		<td width="637">
		<p style='margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
		<font size="2">Chief Financial Officer</font></p></td>
	</tr>
</table>
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<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></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
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