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<SEC-DOCUMENT>0001003297-09-000203.txt : 20090917
<SEC-HEADER>0001003297-09-000203.hdr.sgml : 20090917
<ACCEPTANCE-DATETIME>20090917160403
ACCESSION NUMBER:		0001003297-09-000203
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20090630
FILED AS OF DATE:		20090917
DATE AS OF CHANGE:		20090917

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:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-14942
		FILM NUMBER:		091074641

	BUSINESS ADDRESS:	
		STREET 1:		2361 MCGAW AVENUE
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92614
		BUSINESS PHONE:		949-769-3200

	MAIL ADDRESS:	
		STREET 1:		2361 MCGAW AVENUE
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92614
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>espdex10k.htm
<TEXT>
<html>

<head>
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<title> PRO DEX INC Form 10-K</title>



</head>

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

<div style='page:Section1;'>

<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>

<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>

  <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;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><font style="font-size: 24.0pt">FORM
  10-K</font></p>
  <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>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.75in;text-indent:-.75in;text-autospace:
  none'><b>[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.</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:center;text-autospace:none'><b>For
  the fiscal year ended June 30, 2009</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>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.75in;text-indent:-.75in;text-autospace:
  none'><b>[&nbsp;
  ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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>
  <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;&nbsp;</b></p>
<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=721
 style='width:100%;border-collapse:collapse'>
 <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>
  <td valign=top style='width:1%;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: 10.0pt">&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>&nbsp;</b></p>
  </td>
  <td valign=top style='width:1%;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: 10.0pt">&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><font style="font-size: 24.0pt">PRO-DEX, INC.&nbsp;&nbsp;&nbsp; </font></b></p>
  </td>
  <td valign=top style='width:1%;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: 10.0pt">&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>
  <td valign=top style='width:1%;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: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="51%" 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 width="49%" 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>
  <td valign=top style='width:1%;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;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="51%" 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 width="49%" 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>
  <td valign=top style='width:1%;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: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="51%" 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 width="49%" 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>
  <td valign=top style='width:1%;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: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="51%" 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 width="49%" 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='width:1%;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;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="51%" 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 width="49%" 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>
  <td valign=top style='width:1%;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;</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><u>2361 McGaw Avenue, Irvine, California&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 92614</u></b></p>
  </td>
  <td valign=top style='width:1%;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: 10.0pt">&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>(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>
  <td valign=top style='width:1%;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: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="51%" 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 width="49%" 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>
  <td valign=top style='width:1%;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;</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>949) 769-3200 </u></b></p>
  </td>
  <td valign=top style='width:1%;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: 10.0pt">&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>&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>
  <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>
  <td valign=top style='width:1%;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: 10.0pt">&nbsp;</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'><font style="font-size: 10.0pt">&nbsp;</font></p>
<div align="center">
  <table class=MsoNormalTable border=0 cellpadding=0
   style='border-collapse:collapse' id="table1" width="50%">
   <tr>
    <td valign=top style='width:361px;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: 7.0pt">&nbsp;</font></b></p>
    </td>
    <td valign=top style='width:340px;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: 10.0pt">Name of each exchange </font></b></p>
    </td>
   </tr>
   <tr>
    <td valign=top style='width:361px;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><font style="font-size: 10.0pt">Title of each class </font></u></b></p>
    </td>
    <td valign=top style='width:340px;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><font style="font-size: 10.0pt">on which registered </font></u></b></p>
    </td>
   </tr>
   <tr>
    <td valign=top style='width:361px;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: 10.0pt">Common Stock, no par Value</font></b></p>
    </td>
    <td valign=top style='width:340px;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: 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'><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'>Check whether the issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act.&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&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";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
<font face="Wingdings">x&nbsp; </font>No&nbsp; <font face="Wingdings">o</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'><font style="font-size: 10.0pt">&nbsp;</font>Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (&sect; 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes <font face="Wingdings">o</font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
<font face="Wingdings">o</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: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'>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-K
or any amendment to this Form 10-K. <font face="Wingdings">x</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-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:3.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;
margin-bottom:.0001pt;text-indent:0.5in'>Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company (as
defined in Exchange Act Rule&nbsp;12b-2). </p>
<table border="0" style="border-collapse: collapse" width="100%" id="table2">
	<tr>
		<td width="25%"><font face="Times New Roman">Large accelerated filer</font>&nbsp;&nbsp;<font face="Wingdings">o</font>&nbsp;</td>
		<td width="25%"><font face="Times New Roman">Accelerated
filer</font>&nbsp;&nbsp;<font face="Wingdings">o</font>&nbsp;</td>
		<td width="25%"><font face="Times New Roman">Non-accelerated
filer</font>&nbsp;&nbsp;<font face="Wingdings">o</font></td>
		<td width="25%">

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:3.0pt;margin-right:0in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-align:left'>
<font face="Times New Roman">Smaller
reporting company</font>&nbsp;&nbsp;<font face="Wingdings">x</font> </p>

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

<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
<font face="Wingdings">o&nbsp;&nbsp; </font>No&nbsp; <font face="Wingdings">x</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'>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 December 31, 2008:<u> $2,856,336</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: 9,668,671 shares of Common Stock, no par value, as
of September 11, 2009. </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 2009 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'>&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-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-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-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-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-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-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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 1 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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>&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-align:center;text-autospace:none'><b>&nbsp;</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;
page-break-after:avoid; margin-left:0in; margin-right:0in; margin-top:0in'><b>PRO-DEX,
INC. </b></p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:4.5pt;margin-right:0in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid'><b>TABLE OF CONTENTS </b></p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:.0001pt;page-break-after:avoid; margin-left:0in; margin-right:0in; margin-top:0in'><font style="font-size: 9.0pt">&nbsp;</font></p>

<div align=center>

<table class=MsoNormalTable border=0 cellpadding=0
 style='border-collapse:collapse' width="98%">
 <tr>
  <td width=69 style='width:51.7pt;padding:0in 0in 0in 0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">&nbsp;</font></p>
  </td>
  <td style='width:1091px;padding:0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">&nbsp;</font></p>
  </td>
  <td style='padding:0in 0in 0in 0in'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">&nbsp;</font></p>
  </td>
  <td style='padding:0in 0in 0in 0in'>
  &nbsp;</td>
 </tr>
 <tr style='height:24.75pt'>
  <td valign=top style='padding:0in;
  '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><b><font size="2">PART&nbsp;I</font></b></p>
  </td>
  <td valign=bottom style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;line-height:2.0pt;font-size:4.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;line-height:2.0pt;font-size:4.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in'>
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  1</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><font size="2">
	<a href="#Business">Business</a></font></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">&nbsp;&nbsp; 3&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;1A</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a href="#Risk_Factors">
	<font size="2">Risk Factors</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">&nbsp;&nbsp; 8&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-3.0pt'><font size="2">&nbsp;Item
  1B</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a href="#Item_1B"><font size="2">Unresolved Staff Comments</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt;margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">&nbsp;&nbsp; 14</font></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  2</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a href="#Properties">
	<font size="2">Properties</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">14&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  3</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a href="#Legal_Proceedings">
	<font size="2">Legal Proceedings</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">14&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; ' height="19">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  4</font></p>
  </td>
  <td valign=bottom style='padding:0in; ' height="19">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a href="#Securities">
	<font size="2">Submission of Matters to a Vote of
  Security Holders</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right" height="19">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">15&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right" height="19">
  &nbsp;</td>
 </tr>
 <tr>
  <td style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'>&nbsp;</p>
  </td>
  <td style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'>&nbsp;</p>
  </td>
  <td style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
  </td>
  <td style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr style='height:22.5pt'>
  <td valign=top style='padding:0in;
  '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><b><font size="2">PART&nbsp;II</font></b></p>
  </td>
  <td valign=bottom style='padding: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: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='padding:0in;' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  5</font></p>
  </td>
  <td valign=top style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in'>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman"'><a href="#Item5_Market_for">
	<font size="2">Market For Common Stock, Related Shareholder Matters and
  Issuer Purchases of Equity Securities</font></a><font size="2"> </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">16&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  6</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a href="#Financial_Data">
	<font size="2">Selected Financial Data</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">17&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  7</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a href="#Financial_Data">
	<font size="2">Management&#146;s Discussion and Analysis of
  Financial Condition and Results of Operations</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">17&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr style='height:16.65pt'>
  <td valign=top style='padding:0in;
  '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-3.0pt'><font size="2">&nbsp;Item
  7A</font></p>
  </td>
  <td valign=top style='padding:0in;
  '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-indent:6.8pt; margin-left:0in; margin-right:0in; margin-top:0in'><a
  href="#Item_7A"><font size="2">Quantitative and Qualitative Disclosures About Market Risks</font></a></p>
  </td>
  <td valign=bottom style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">&nbsp;&nbsp;
  29</font></p>
  </td>
  <td valign=bottom style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  8</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a
  href="#FS_FinDisclosure_ControlProc"><font size="2">Financial
  Statements and Supplementary Data</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">29&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  9</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a
  href="#FS_FinDisclosure_ControlProc"><font size="2">Changes
  in and Disagreements with Accountants on Accounting and Financial Disclosure</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">30&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;9A</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a
  href="#FS_FinDisclosure_ControlProc"><font size="2">Controls
  and Procedures</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">30&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;9B</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><font size="2">
	<a href="#Item_9B.">Other
  Information</a></font></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">30&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'>&nbsp;</p>
  </td>
  <td style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'>&nbsp;</p>
  </td>
  <td style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
  </td>
  <td style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr style='height:23.4pt'>
  <td valign=top style='padding:0in;
  '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><b><font size="2">PART&nbsp;III</font></b></p>
  </td>
  <td valign=bottom style='padding: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: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='padding:0in;' align="right">
  &nbsp;</td>
 </tr>
 <tr style='height:.2in'>
  <td valign=top style='padding:0in;
  '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  10</font></p>
  </td>
  <td style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in'>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2"><a href="#PART_III_">Directors,
  Executive Officers and Corporate Governance</a></font></p>
  </td>
  <td valign=bottom style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">31&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  11</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><font size="2">
	<a href="#PART_III_">Executive
  Compensation</a></font></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">31&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  12</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:6.8pt;
  margin-bottom:.0001pt;text-indent:.4pt'><font size="2"><a href="#PART_III_">Security Ownership of Certain
  Beneficial Owners and Mgmt and Related Stockholder Matters</a> </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">31&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  13</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><font size="2">
	<a href="#PART_III_">Certain
  Relationships and Related Transactions, and Director Independence</a></font></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">31&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  14</font></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a
  href="#Page27_Relationships_Fees_Exh"><font size="2">Principal
  Accountant Fees and Services</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">31&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'>&nbsp;</p>
  </td>
  <td style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'>&nbsp;</p>
  </td>
  <td style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
  </td>
  <td style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr style='height:27.0pt'>
  <td valign=top style='padding:0in;
  '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><b><font size="2">PART&nbsp;IV</font></b></p>
  </td>
  <td valign=bottom style='padding: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: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='padding:0in;' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Item
  15</font></p>
  </td>
  <td valign=bottom style='padding-left:.1in; padding-right:0in; padding-top:0in; padding-bottom:0in'>
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'><a
  href="#Page27_Relationships_Fees_Exh"><font size="2">Exhibits
  and Financial Statement Schedules</font></a></p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  <p style='margin-right:0in;margin-left:0in;font-family:"Times New Roman";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">31&nbsp; </font> </p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in' align="right">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:12.0pt;
  margin-bottom:.0001pt;text-indent:-12.0pt'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:0in; '>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:19.45pt;
  margin-bottom:.0001pt;text-indent:-12.25pt'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:0in 0in 0in .1in'>
  &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: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-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-align:center;text-autospace:none'><b>&nbsp;</b></p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 2 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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;text-autospace:none'><b>&nbsp;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";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'>When used in this report on Form 10-K, 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, compliance with contractual obligations including, but not
limited to covenants in lending agreements, 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";'><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">&nbsp;</font></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; </font>
<a name="Business">Business</a></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'>Pro-Dex, Inc.
(&#147;Company,&#148; &#147;Pro-Dex&#148;, &#147;we,&#148; &#147;our,&#148;, &#147;us&#148;), with
operations in Irvine, California, Beaverton, Oregon and Carson City, Nevada, provides
a pathway to product solutions never envisioned by customers.&nbsp; A unique
blend of creativity and systemic discipline enables us to develop and
manufacture innovative designs that powerfully complete a customer&#146;s strategic
product offering. Pro-Dex leverages extraordinary human collaboration and
superior technical capability to power and control products used in medical,
aerospace, military, research and industrial applications requiring high
precision in harsh environments.&nbsp; With expertise in multi-axis motion
control, fractional horsepower motors and rotary drive systems, we identify and
create unexpected value for our 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'>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. 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;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 3 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'>Pro-Dex&#146;s principal headquarters are located at 2361 McGaw Avenue, Irvine, California 92614 and our phone number is 949-769-3200.&nbsp; Our Internet address is  www.pro-dex.com .&nbsp; Our annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments
to those reports and other SEC 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  www.sec.gov . </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";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";'><b>&nbsp;</b></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 types of private label rotary drive
systems for use in dental applications, and for cranial, spinal, arthroscopic
and orthopedic surgery.&nbsp; Other revenue sources include designing and
manufacturing miniature pneumatic motors, fractional horsepower DC motors and
motion control systems for industrial applications in the semi-conductor, 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'>Company-funded research and development supports the development of
generic rotary drive, motion control, and electric motor technology platforms.&nbsp;
Company-funded research and development projects are generally expected to
convert to customer-funded projects within six to eighteen months.&nbsp; Company
funded project costs not associated with signed contracts or purchase orders
are expensed as incurred.&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'>We seek customer-funded projects to customize generic rotary drive,
motion control, and electric motor technology platforms to specific customer
requirements.&nbsp; For customer-funded development projects, costs are capitalized
and recognized as a cost of sales when specific deliverables within the
development contracts are earned, matching the costs to the revenue.&nbsp; Revenue
related to these fees can vary greatly due to the timing of contract milestones
that prompt the revenue recognition.&nbsp; The results of customer-funded
development work are intended to provide long-term exclusive manufacturing
agreements and generally provide the customer with the retention of part of the
intellectual property developed.&nbsp; The identity of our customers is generally
protected by a non-disclosure agreement.&nbsp; &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";'>The fees earned are classified as revenue as opposed
to reimbursement against expense as part of the technology we are contracted to
produce is not retained by us, but rather transferred to the funding company
for future economic benefit.</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;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Contract revenue
for customer funded research and development is principally recognized based on the achievement of contractual milestones and the
Cost of Sales (COS) is recognized as the ratio of total actual incurred costs
to date to total estimated costs for each contract (cost-to-cost method) in
accordance with Statement of Position No.&nbsp;81-1, &#147;Accounting for
Performance of Construction-Type and Certain Production-Type Contracts.&#148;
Generally, we review cost performance and estimates to complete on our ongoing
contracts at least annually.&nbsp; The impact of revisions of profit estimates are
recognized on a cumulative catch-up basis in the period in which the revisions
are made.</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>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 4 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>Our estimates of contract costs are based on
expectations of costs to deliver the milestone. These estimates can change
based on unforeseen technology and integration issues, but known risk factors
and contract challenges are generally allowed for in the initial scope and cost
estimate of the program.&nbsp; Revisions in profit estimates are charged to income
in the period in which the facts that give rise to the revision become known.
In certain circumstances, specific contracts in which the Company cannot
reliably make estimates of total revenues and expenses are accounted for under
the completed contract method. Under the completed contract method, all revenue
and expenses attributable to the specific contract are deferred until the end
of the project. &nbsp;&nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=457
 style='width:50%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.7pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Customer-funded</p>
  </td>
  <td colspan=6 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Year&nbsp;Ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:14.75pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>development&nbsp;($'000)</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:14.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Revenue</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>390&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>470&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.75pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cost&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>476&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;
  background:white;padding:1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>119&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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.7pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit&nbsp;and&nbsp;Margin</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(86)</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(22%)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>351&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>75%&nbsp;</p>
  </td>
 </tr>
</table>

</div>

<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-align:center;text-indent:
0in'>&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";'>In fiscal year 2009, there was an $80,000 decrease
in revenue from customer-funded research and development compared to fiscal
year 2008 as engineering fee billings associated with customer projects have
been completed and the capitalized expenses related to the projects were
expensed.&nbsp; We recognized an $86,000 loss on our customer-funded research
and development compared to last year&#146;s $351,000 gain due to end-of project cost
overruns.</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";text-autospace:ideograph-numeric ideograph-other'>Our
revenue is derived from five main customer types.&nbsp; The proportion of total
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>

<table class=MsoNormalTable border=0 cellpadding=0 width=703
 style='width:100%;border-collapse:collapse'>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt'>
  <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">Sales&nbsp;by&nbsp;customer&nbsp;type&nbsp;($'000)</font></p>
  </td>
  <td colspan=3 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2009</font></p>
  </td>
  <td colspan=3 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2008</font></p>
  </td>
  <td colspan=3 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2007</font></p>
  </td>
  <td colspan=3 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="center">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2006</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <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; background:white; padding:1.1pt; height:10pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Dental</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; background:white; padding:1.1pt; height:10pt' 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">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">2,620</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">12%</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; background:white; padding:1.1pt; height:10pt' 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">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' align="right">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">3,290</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' align="right">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">13%</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">3,476</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">16%</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; background:white; padding:1.1pt; height:10pt' 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">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">3,789</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">22%</font></p>
  </td>
 </tr>
 <tr style='height:12.05pt'>
  <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; background:#CBDBD1; padding:1.1pt; height:10pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Medical</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' 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">11,107</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' 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">53%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' 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">14,121</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' 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">56%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' 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">10,275</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' 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">48%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' 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">6,447</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' 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">38%</font></p>
  </td>
 </tr>
 <tr style='height:24.0pt'>
  <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; background:white; padding:1.1pt; height:10pt'>
  <font size="2">Industrial</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' align="right">
  <font size="2">2,448</font></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;
  background:white;padding:1.1pt; height:10pt' align="right">
  <font size="2">12%</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' align="right">
  <font size="2">3,279</font></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;
  background:white;padding:1.1pt; height:10pt' align="right">
  <font size="2">13%</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' align="right">
  <font size="2">3,317</font></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;
  background:white;padding:1.1pt; height:10pt' align="right">
  <font size="2">15%</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' align="right">
  <font size="2">3,753</font></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;
  background:white;padding:1.1pt; height:10pt' align="right">
  <font size="2">22%</font></td>
 </tr>
 <tr style='height:24.0pt'>
  <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; background:#CBDBD1; padding:1.1pt; height:10pt'>
  <font size="2">Aerospace</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">2,624</font></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;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">12%</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">2,382</font></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;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">9%</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">2,445</font></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;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">11%</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">1,194</font></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;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">7%</font></td>
 </tr>
 <tr style='height:24.0pt'>
  <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; background:white; padding:1.1pt; height:10pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Repairs,&nbsp;Government&nbsp;and&nbsp;other</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">2,324</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">11%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">2,054</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">8%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">2,050</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">10%</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">1,878</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:10pt' 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">11%</font></p>
  </td>
 </tr>
 <tr style='height:24.0pt'>
  <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; background:#CBDBD1; padding:1.1pt; height:10pt'>
  <font size="2">Total&nbsp;Sales</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">$ 21,122</font></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;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">100%</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">$&nbsp;25,126</font></td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">100%</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">$&nbsp;21,563</font></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;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">100%</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">$&nbsp;17,061</font></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;
  background:#CBDBD1;padding:1.1pt; height:10pt' align="right">
  <font size="2">100%</font></td>
 </tr>
</table>

<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";margin-left:.5in;text-align:justify;text-indent:.5in;
text-autospace:none'>&nbsp;</p>

<table class=MsoNormalTable border=0 cellpadding=0 width=666
 style='width:100%;border-collapse:collapse'>
 <tr style='height:36.05pt'>
  <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; background:#CBDBD1; padding:1.1pt; height:10pt'>
  <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">Sales&nbsp;by&nbsp;location&nbsp;($'000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; height:10pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">
	<font size="2">2009</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; height:10pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">
	<font size="2">2008</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; height:10pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">
	<font size="2">2007</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; height:10pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center">
	<font size="2">2006</font></p>
  </td>
 </tr>
 <tr style='height:48.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;height:10pt'>
  <font size="2">Irvine</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">$&nbsp;&nbsp;15,637&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">74%</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">$&nbsp;18,268&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">73%&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">$&nbsp;13,852</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">64%</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">$&nbsp;10,823</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">63%</font></td>
 </tr>
 <tr style='height:48.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;height:10pt'>
  <font size="2">Beaverton</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">2,241&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">11%&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">3,443&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">14%&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">4,121</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">19%</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">4,585&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">27%</font></td>
 </tr>
 <tr style='height:48.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;height:10pt'>
  <font size="2">Carson&nbsp;City*</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">3,429&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">16%&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <font size="2">3,453&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <font size="2">14%&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <font size="2">3,590</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <font size="2">17%</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <font size="2">1,653</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <font size="2">10%</font></td>
 </tr>
 <tr style='height:48.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;height:10pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Interlocation&nbsp;sales</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <p align="right"><font size="2">(185)</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <font size="2">(1%)</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <font size="2">(38)</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <font size="2">-</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <font size="2">-&nbsp;</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <font size="2">-</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <font size="2">-</font></td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:10pt' align="right">
  <font size="2">-</font></td>
 </tr>
 <tr style='height:48.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;height:10pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Total&nbsp;Sales</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' 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">$&nbsp;&nbsp;21,122&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' 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">100%&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' 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">$&nbsp;25,126&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">100%&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' align="right">
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$&nbsp;21,563</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' 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">100%&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' 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">$&nbsp;17,061</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:10pt' 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">100%</font></p>
  </td>
 </tr>
</table>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:left;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>
<font size="2">*2006&nbsp;for&nbsp;Carson&nbsp;City&nbsp;represents&nbsp;6&nbsp;months&nbsp;of&nbsp;sales&nbsp;from&nbsp;time&nbsp;of&nbsp;asset&nbsp;acquisition&nbsp;completion</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: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 the Irvine based sales include medical products that
utilize proprietary designs developed by us under exclusive design and supply
agreements.&nbsp; Our dental products are primarily sold to original equipment
manufacturers and dental product distributors.&nbsp; In Beaverton, we 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; Our Carson City products include high reliability fractional horsepower DC motors designed for
harsh environments, primarily for the aerospace and medical markets.</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 2009, the top 20 customers accounted for 86% of our sales, compared to
81% in 2008.&nbsp; In 2009, our two largest customers accounted for 60% of such
sales with the largest customer accounting for over 31% of our sales.&nbsp; This
compares to 2008 when our two largest customers accounted for 50% of our sales
with the largest customer accounting for 32% of such sales.&nbsp; Some of our
larger customers include Smith and Nephew, Medtronic, Sullivan Schein, Thermo
Fisher Scientific and Monogram.&nbsp; In many cases, including our two largest
customers, disclosure of 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 nor do we have knowledge
of any plans by such customers to discontinue their relationships with us. </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>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 5 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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;text-indent:.5in;text-autospace:
none'>The majority of the raw materials used to manufacture our products is
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 have no exclusive arrangements with any of
our suppliers, but in several instances only one supplier is used for certain
high-value purchased components.&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 us.&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'>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, 2009,
we had a backlog, including orders for delivery beyond 60 days, of $9.8 million
compared with a backlog of $10.4 million at June 30, 2008.&nbsp; We expect to ship
most of our backlog in fiscal year 2010 and the remainder in fiscal year 2011.&nbsp;
The decrease from June 2008 is due to normal fluctuations in the timing of
receipt and shipment of orders. &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-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: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";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>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. &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:0.2in;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:0.2in;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:0.2in;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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 6 -</p>
  </td>
 </tr>
</table>

</div>

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<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>

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<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'>We may share research and development costs with our customers by billing
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-indent:.5in;text-autospace:
none'>In the year ended June 30, 2009, $2,790,000 was expensed for
company-funded research and development; an increase of $58,000 from the
$2,732,000 expensed in the year ended June 30, 2008.&nbsp; The increase was
attributable to small motor product development, improvement and validation.&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, 2009, we had 127 full-time employees compared to 145 full-time
employees at June 30, 2008.&nbsp; At June 30, 2009, there were 89 persons employed
at the Irvine location, 29 persons employed at the Carson City location and 9 persons
employed at the Beaverton location.&nbsp; &nbsp;At June 30, 2008, there were 104 persons
employed at the Irvine location, 30 persons employed at the Carson City
location and 11 persons employed at the Beaverton location.&nbsp; </p>

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<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 our
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: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-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 believe that our business is conducted in a manner consistent with
Environmental Protection Agency (&#147;EPA&#148;) and other agency regulations governing
disposition of industrial waste materials.&nbsp; While we are 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>

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<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-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 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 do not
infringe upon the intellectual property of any third party. nor are we aware of
any infringement of such rights by any third party, except for one instance in
which the Intraflow patents owned by us may have been infringed by a third
party. &nbsp;We are taking actions to protect our rights under those patents.&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 products, including OMS-EZ&trade;,
and The Company in Motion&trade;.&nbsp; We have filed for federal trademark protection for
Pro-Dex, OMS, and Intraflow. </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'><a
name="Risk_Factors"></a><b>Item 1A.&nbsp;&nbsp; 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>&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>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: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; acceleration
or 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;</p>

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<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 fluctuations 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Due
to all of the foregoing factors, it is possible that in some future quarter(s),
our operating results may be below the expectations of public market analysts
and investors. In such event, the price of our Common Stock would likely be
materially adversely affected.</p>

<p style='margin: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 medical
device, motion control and small motor products and related 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 related
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";margin-top:12.0pt;text-align:justify'><b>We have recently
violated certain credit facility covenants (and risk violating additional
credit facility covenants in the future), which resulted in an event of default
under our credit facilities and could have resulted in the acceleration of all
amounts owing under all of our credit facilities, the loss of one or more of
credit facilities and the need for us to seek alternative financing.</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;text-align:justify;text-indent:
..5in'>Our credit facilities with our banks contain certain covenants concerning
our financial performance.&nbsp; The failure to comply with any one or more of
these covenants can result in an event of default, the acceleration of all
amounts due, and the termination of each such credit facility.&nbsp; In
addition, each of our credit facilities with Wells Fargo and Union Bank contain
cross-default provisions that result in a default under one facility causing an
immediate default under the other facility.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;text-align:justify;text-indent:
..5in'>Historically, on those occasions on which we have failed to comply with
our credit facility covenants, we have been granted waivers of the applicable
covenants by our banks.&nbsp; Most recently, Wells Fargo Bank first agreed to
forbear, and ultimately waived exercising its rights in connection with a
default resulting from our violation of profitability covenants for the quarter
ended March 31, 2009.&nbsp; Union Bank waived our violation of cash flow coverage
covenant under the Union Bank credit facility for the year ended June 30, 2009.
&nbsp;</p>

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<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:12.0pt;text-align:justify;text-indent:
..5in'>The Wells Fargo forbearance was accompanied by a reduction by Wells Fargo
in our line of credit from $4 million to $1 million during the forbearance
period.&nbsp; A forbearance is not a waiver and Wells Fargo reserved its rights
with respect to the default caused by the covenant violations during the
forbearance period.&nbsp; During the forbearance period, Wells Fargo conducted
a collateral audit and an analysis of our fixed assets to determine whether,
and under what conditions, it might be willing to waive the then-existing
covenant violations.&nbsp; All defaults under the credit facility for the
quarter ended March 31, 2009 were ultimately waived and the credit facility was
amended to maintain the availability of the line of credit at $1 million.&nbsp; The
terms of the line of credit were amended to include converting the availability
to a borrowing amount based on eligible accounts receivable and inventory if
the amounts borrowed exceeded $500,000. &nbsp;Prior to the waiver, Wells Fargo had the
right to exercise all of its rights and remedies under the credit facility,
including its option to declare all amounts outstanding under the credit
facility (which as of September 11, 2009 consists of approximately $1,667,000
under the term loan component of the facility) immediately due and payable and,
if not timely paid in full, foreclosing on substantially all of our assets in
such amounts to satisfy the amount owing to them.&nbsp; We did not believe that
we possessed sufficient cash on hand that would enable us to pay all amounts
outstanding under the Wells Fargo facility should it exercise its right to
declare all such amounts immediately due and payable.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:12.0pt;text-align:justify;text-indent:
..5in'>The March 31, 2009 default under the Wells Fargo facility resulted in a
cross-default under our Union Bank credit facility. We have received a waiver
of this instance of the March 31, 2009 cross-default and a waiver of the June
30, 2009 cash flow coverage covenant violation from Union Bank &nbsp;Either default,
if not waived, could have caused the entire amount owing under the Union Bank
facility (approximately $1,552.000 as of September 11, 2009) to become
immediately due and payable.&nbsp; As of September 11, 2009, There are no
remaining un-waived covenant violations under either credit facility. </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";background:white'><b>The effects of the recent global
economic crisis may impact our business, operating results or
financial&nbsp;condition.</b> </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify;text-indent:.5in'>The
recent global economic crisis has caused a general tightening in the credit
markets, lower levels of liquidity, increases in the rates of default and
bankruptcy, and extreme volatility in credit, equity and fixed income markets.
These macroeconomic developments could negatively affect our business,
operating results or financial condition in a number of ways. For example,
current or potential customers may be unable to fund&nbsp;purchases of our
products, which could cause them to delay, decrease or cancel purchases of our
products and services or to not pay us or to delay paying us for previously
purchased products and services. In addition, financial institution failures
may cause us to incur increased expenses or make it more difficult either to
utilize our existing debt capacity or otherwise obtain financing for our
operations, investing activities (including the financing of any future
acquisitions), or financing activities (including the timing and amount of any
repurchases of our common stock or debt we may make in the future).&nbsp;
Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially and adversely affect our
business, financial condition or operating results.</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>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-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>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-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-bottom:6.0pt;text-align:justify; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>
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";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'>&nbsp;</p>

<div>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 10 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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;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; </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; Due
to the location of our facilities as well as our business activities, we may
face the risk of litigation related to environmental remediation claims.&nbsp; 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 &#150;
even if we are ultimately found to be without fault.</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: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";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>

<div>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 11 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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
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<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>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 us. </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'><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
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 us for a significant period of time.&nbsp; We maintain term key man life
insurance policies for the CEO, the Executive Vice President who holds primary
responsibility for Business Development, and the head of the Beaverton
operations.&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'><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 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 will
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-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>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>

<div>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 12 -</p>
  </td>
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</table>

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<div style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>

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</div>

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

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<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'>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-K for the
fiscal year ending June 30, 2009. &nbsp;In the future, 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, 2010. &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-align:justify'><b>Our business and 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,
and subsequently our per share price.&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, per share price,
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";'><b>The failure to raise the market price of our common stock
may affect our ability to remain a publicly-traded company.</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";text-align:justify;text-indent:.5in'>The minimum bid
price for our publicly traded common stock has remained below $1.00 for a
significant period of time during late 2008 and throughout 2009.&nbsp; Although
Nasdaq had suspended its minimum bid requirement in October 2008, Nasdaq lifted
that suspension on August 3, 2009 and we again face a delisting deadline date
of January 7, 2010.&nbsp;&nbsp; If the minimum bid price for our stock does not
rise above $1.00 for the requisite number of days prior to such deadline or if
we fail to meet any <a name=HIT1>other listing requirement of the Nasdaq
Capital Market, our common stock may be</a> <a name=HIT2>delisted from the Nasdaq
Capital Market, which could negatively affect the value</a> of our common
stock.&nbsp; On January 9, 2009, our shareholders authorized us to engage in a
reverse split of our Common Stock which may, as a result of increasing our per
share price above $1.00, provide us the means to avoid delisting.&nbsp; As the
delisting deadline approaches and if the market price of our shares remains
below $1.00, our Board of Directors will continue its review of the
advisability of proceeding with a reverse split of our Common Stock or other appropriate
actions.</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-indent:31.5pt;text-autospace:
none'>&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 performance,
including 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-indent:31.5pt;text-autospace:
none'>&nbsp;</p>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 13 -</p>
  </td>
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</div>

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

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<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>A substantial portion of our
revenue is derived from a small number of customers such that if we were to
lose one, it could have a material and adverse effect on our business,
financial condition and results of operations.</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'><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b>We have few
significant customers that contribute a significant portion of our revenue.&nbsp;
Our loss of one or more of such customers could severely impact us, including 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-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'>
<a name="Item_1B"></a><b>Item
1B.&nbsp; Unresolved Staff Comments</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>None</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><a name=Properties></a><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 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 Irvine manufacturing facility are located at 2361 McGaw Avenue, Irvine, California 92614.&nbsp; We lease the 28,000 square foot facility from
an unrelated third party at a base monthly lease rate of $36,000 through April 2018,
with an option to terminate early in April 2015.&nbsp; The building is a one-story
stand-alone building of concrete tilt-up construction, approximately 25 years
old and in good condition.&nbsp; This facility was occupied in April, 2008 at the
lease termination of the prior 18,000 square foot facility at 151 East Columbine Avenue, Santa Ana, California 92707.</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 Beaverton office and manufacturing facility is located at 15201 N.W. Greenbrier Parkway, B-1 Ridgeview, Beaverton, Oregon 97006.&nbsp; The Company leases
the 7,500 square foot facility from an unrelated third party, at a base monthly
lease rate of $6,300 through April 2014.&nbsp; The building is a one-story suite in
a 20-year-old industrial office complex and in good condition.&nbsp; This facility
was occupied in January, 2008 at the lease termination of the prior 11,000
square foot facility at 1800 N.W. 169<sup>th</sup> Place, Building C100, Beaverton Oregon 97006.</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 Carson City office and manufacturing facility is located at 2950 Arrowhead Drive, Carson City , Nevada 89708.&nbsp; We purchased 4.4 acres of real property and a 20,000 square
foot industrial building and related improvements at this location for
$2,200,000 in March 2006.&nbsp; The building is a two-story building of concrete
block construction 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, whereby we borrowed $1,650,000.&nbsp; This loan is secured by the land and
building in Carson City, Nevada.</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'>&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.&nbsp; The
current facilities are believed to be adequate for our expected needs.&nbsp; We
believe there is full compliance with applicable state and EPA and other agency
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>&nbsp;</b></p>

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 14 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'>On June 23, 2008,
the Orange County Water District (&#147;OCWD&#148;) filed a complaint in the Superior
Court of the State of California in the County of Orange concerning remediation
of alleged ground water contamination in the Orange County Groundwater South
Basin; <u>Orange County Water District v. Sabic Innovative Plastics U.S. LLC, et
al.</u>, Case No. 00078246.&nbsp; The South Basin underlies parts of Santa Ana, California and adjacent cities.&nbsp; The complaint identifies 17 named defendants,
including Pro-Dex, and also designates 400 unnamed Doe defendants.&nbsp; We moved
out of this Santa Ana site in April, 2008 and have no remaining operations
there.</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'>The complaint
alleges that the defendants contaminated the South Basin with volatile organic
chemicals (&#147;VOCs&#148;) and perchlorate through various activities at properties
each defendant now controls or has controlled in the past.&nbsp; Through its
lawsuit, the OCWD seeks compensatory relief for all its own remedial
activities, and injunctive relief to compel the defendants to undertake
remedial activities in general.&nbsp; The complaint does not, however, specify any
remedial activities that the OCWD has undertaken to date or any remedial
activities that it seeks any particular defendants to undertake.&nbsp; Moreover,
from our investigation of OCWD&#146;s remedial activities to date, we have
determined that the OCWD is in the early stages of its remedial investigation
for the South Basin groundwater contamination.</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 noted above,
16 other entities are named defendants in this case along with Pro-Dex.&nbsp; While
some are small businesses, others are larger corporations or their subsidiaries.&nbsp;
Further, as this case progresses, the OCWD is likely to add at least a few more
named defendants to the case from the 400 Doe defendants it has designated in
the current complaint.&nbsp; In the indeterminable event that we would be held
liable in the case, OCWD&#146;s total recovery probably would be allocated among
several defendants, each of which would pay only a proportionate share of that
total recovery.</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'>One of our past
insurers has committed to pay most of our defense costs for the lawsuit, while
reserving its rights as to whether it will cover any damages awarded against us,
or any settlement payment to which Pro-Dex agrees to resolve the lawsuit, under
past policies issued to us for a three-year period, March 31, 1983 to March 31,
1986.&nbsp; The policies for these three years have occurrence payment limits
of $500,000 for each annual term.&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'>Overall, the
OCWD complaint remains vague, the OCWD is in an early stage of its remedial
activities in the South Basin, the lawsuit is in the early stages of discovery,
one of our insurers has committed to pay most defense costs and has reserved
rights under one&nbsp;three-year set of&nbsp;policies and is continuing to
consider extending coverage to us under other past policies, and any recovery
the OCWD may gain through the lawsuit is likely to be allocated among several
defendants.&nbsp; Therefore, our liabilities, as well as our costs of
defending, monitoring and concluding our involvement in this case are
uncertain, and those costs cannot now be estimated.</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'>In general, we are from time to time a party to various legal proceedings
incidental to our business, other than the above, none of which we consider may
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-autospace:none'><a name=Securities></a><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, 2009.&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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 15 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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>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'><a name="Item5_Market_for"></a><b>Item
5.&nbsp;&nbsp; Market For Common Stock, Related Shareholder Matters and 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 11, 2009, the last
sale price of our common stock as reported by NASDAQ was $0.48 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>

<div align="center">

<table class=MsoNormalTable cellpadding=0 width=298
 style='border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000; width:40%;border-collapse:collapse'>
 <tr style='height:15.9pt'>
  <td width=168 valign=bottom style='border-top:1px solid windowtext;
  border-left:medium none;border-bottom:1px solid windowtext;border-right:medium none windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>Quarter&nbsp;Ended</b></p>
  </td>
  <td valign=bottom style='border-top:1px solid windowtext;
  border-bottom:1px solid windowtext;background:#CBDBD1;padding:1.1pt;border-left-style:solid; border-left-width:1px; border-right-style:solid; border-right-width:1px' bordercolor="#000000">
  <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=bottom style='border-right:medium none windowtext; border-top:1px solid windowtext; border-bottom:1px solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <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:15.95pt'>
  <td width=168 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:white; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>September&nbsp;30,&nbsp;2007</p>
  </td>
  <td valign=bottom style='border-top:medium none; border-bottom:1px solid; background:white; padding:1.1pt; border-left-style:solid; border-left-width:1px; border-right-style:solid; border-right-width:1px' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	1.94</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:white; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	1.36</p>
  </td>
 </tr>
 <tr style='height:15.9pt'>
  <td width=168 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:#CBDBD1; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>December&nbsp;31,&nbsp;2007</p>
  </td>
  <td valign=bottom style='border-top:medium none; border-bottom:1px solid; background:#CBDBD1; padding:1.1pt; border-left-style:solid; border-left-width:1px; border-right-style:solid; border-right-width:1px' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	1.55</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:#CBDBD1; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	1.32</p>
  </td>
 </tr>
 <tr style='height:15.95pt'>
  <td width=168 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:white; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>March&nbsp;31,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-top:medium none; border-bottom:1px solid; background:white; padding:1.1pt; border-left-style:solid; border-left-width:1px; border-right-style:solid; border-right-width:1px' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	1.71</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:white; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	1.43</p>
  </td>
 </tr>
 <tr style='height:15.9pt'>
  <td width=168 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:#CBDBD1; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>June&nbsp;30,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-top:medium none; border-bottom:1px solid; background:#CBDBD1; padding:1.1pt; border-left-style:solid; border-left-width:1px; border-right-style:solid; border-right-width:1px' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	1.70</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:#CBDBD1; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	1.01</p>
  </td>
 </tr>
 <tr style='height:15.95pt'>
  <td width=168 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:white; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>September&nbsp;30,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-top:medium none; border-bottom:1px solid; background:white; padding:1.1pt; border-left-style:solid; border-left-width:1px; border-right-style:solid; border-right-width:1px' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>1.13</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:white; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	0.80</p>
  </td>
 </tr>
 <tr style='height:15.9pt'>
  <td width=168 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:#CBDBD1; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>December&nbsp;31,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-top:medium none; border-bottom:1px solid; background:#CBDBD1; padding:1.1pt; border-left-style:solid; border-left-width:1px; border-right-style:solid; border-right-width:1px' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	0.95</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:#CBDBD1; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	0.35</p>
  </td>
 </tr>
 <tr style='height:15.95pt'>
  <td width=168 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:white; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>March&nbsp;31,&nbsp;2009</p>
  </td>
  <td valign=bottom style='border-top:medium none; border-bottom:1px solid; background:white; padding:1.1pt; border-left-style:solid; border-left-width:1px; border-right-style:solid; border-right-width:1px' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	0.50</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:white; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	0.27</p>
  </td>
 </tr>
 <tr style='height:15.9pt'>
  <td width=168 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:#CBDBD1; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>June&nbsp;30,&nbsp;2009</p>
  </td>
  <td valign=bottom style='border-top:medium none; border-bottom:1px solid; background:#CBDBD1; padding:1.1pt; border-left-style:solid; border-left-width:1px; border-right-style:solid; border-right-width:1px' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>0.50</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid; border-right:medium none windowtext; background:#CBDBD1; padding:1.1pt; ' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>0.35</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, 2009, there were approximately 253 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 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-autospace:none'>As of June 30, 2009</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 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: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;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 <br>
	be Issued Upon Exercise of <br>
	Outstanding Options, <br>
	Warrants and
  Rights</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: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;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 <br>
	Exercise Price of <br>
	Outstanding Options, <br>
	Warrants and Rights</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: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;text-autospace:none'>Number
  of Securities <br>
	Available for Issuance <br>
	Under Equity <br>
	Compensation Plans
  <br>
	(excluding securities <br>
	reflected in column (a))</p>
  </td>
 </tr>
 <tr>
  <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: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-autospace:none'>&nbsp;</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: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;text-autospace:none'>(a)</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: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;text-autospace:none'>(b)</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: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;text-autospace:none'>(c)</p>
  </td>
 </tr>
 <tr>
  <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: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-autospace:none'>Plans Approved by Stockholders</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: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;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'>1,018,500</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: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;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'>$1.42</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: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;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'>552,545</p>
  </td>
 </tr>
 <tr>
  <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: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-autospace:none'>&nbsp;</p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>Total</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: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;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'>1,018,500</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: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;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'>$1.42</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: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;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'>552,545</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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 16 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'>
In September 2002, our Board of Directors authorized the repurchase on the open
market of up to 500,000 shares of our outstanding Common Stock at a share price
no greater than $1.25, subject to compliance with applicable laws and
regulations.&nbsp; There is no requirement that we repurchase all or any portion
of such shares.&nbsp; The maximum total value of the repurchase is not to exceed
$500,000.&nbsp; From the inception of the repurchase authorization through the
fiscal year-end date of June 30, 2003, we repurchased 75,700 shares of Common
Stock for $43,741, at an average price of $0.58 per share.&nbsp; No additional
shares were repurchased in fiscal years 2004 through 2008.&nbsp; During fiscal
year 2009, we repurchased 219,695 shares of common stock for $133,472, at an
average price of $0.61 per share. Since the initiation of the buyback program in
2002 through June 30, 2009, we have repurchased 295,395 shares for $177,213 at
an average price of $0.60 per share. &nbsp;Our Board suspended the buyback
authorization in May 2009 and has not set a reinitiation date for the purchase of our shares pursuant to this
program.</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'><a name="Financial_Data"></a><b>Item
6. Selected Financial Data</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'>Not 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>&nbsp;</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>Item 7. Management&#146;s Discussion
and Analysis of Financial Condition and Results of Operations</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, 2009 and 2008, respectively.&nbsp; This discussion should be
read in conjunction with the Consolidated Financial Statements and the Notes
thereto included elsewhere in this Report. This Report contains certain forward-looking
statements and information. The cautionary statements included herein should be
read as being applicable to all related forward-looking statements wherever
they may appear.&nbsp; Our actual future results could differ materially from those
discussed herein.&nbsp; </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>&nbsp;</b></p>

<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.&nbsp;&nbsp; We determine a reduced market value of our inventory based on the age
of inventory on hand.&nbsp; We define &#147;aging of inventory&#148; as inventory that exceeds
an estimated 12 months of usage and exceeds orders on hand. &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:justify; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>We determine the reserve for our accounts receivable by examining the
aging of the receivables.&nbsp; We define &#147;aging of receivables&#148; as time passed
since the sale was completed, revenue was recognized and the receivable was
established.&nbsp; If the receivable is aged over 90 days old, or has a known
collection risk, it is reserved from 10% of its value up to 100%.&nbsp; The actual
amount reserved may vary depending on account credit and collection history. </p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 17 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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 warranty accrual is determined by reviewing the return rates and
warranty repair costs for warranty-eligible products.&nbsp; We accrue an amount of
expected repair cost based on these factors projected for the remaining applicable
warranty period.&nbsp; If actual return rates or repair costs differ from our
estimates, warranty expense could vary from the projected accrual.&nbsp; The repair
return rates and cost assumptions are reviewed quarterly.&nbsp; The potential return
amount is based on historical return and repair cost data.&nbsp;&nbsp; At June 30, 2009
we had $518,000 in accrued warranty reserves, as compared to $861,000 in
accrued warranty reserves at June 30, 2008.&nbsp; The decrease is due to lower
shipment levels in the warranty-eligible product line in 2009 as compared to 2008,
coupled with lower assumed return rates and lower assumed costs to repair
returned product.</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;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In accordance with Statement of Financial Accounting
Standards (&#147;SFAS&#148;), SFAS&nbsp;No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal for Long-Lived Assets&#148; (&#147;SFAS&nbsp;144&#148;) long-lived assets and
intangible assets with definite lives are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Impairment indicators include, among other
conditions, cash flow deficits, historic or anticipated declines in revenue or
operating profit and adverse legal or regulatory developments. If it is
determined that such indicators are present and the review indicates that the
assets will not be fully recoverable, based on undiscounted estimated cash flow
over the remaining amortization periods, their carrying values are reduced to
estimated fair market value. Estimated fair market value is determined
primarily using the anticipated cash flow discounted at a rate commensurate
with the risk involved. For the purposes of identifying and measuring
impairment, long-lived assets are grouped with other assets and liabilities at
the lowest level for which identifiable cash flow are largely independent of
the cash flow of other assets and liabilities.&#148;&nbsp; The triggering event is
explained in further detail in note 10 of the Notes to the Financial Statements.&nbsp;
Our standard annual impairment testing is done April 1 of each year.</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 monitor
current market conditions and review for potential triggering events quarterly
to determine if there is a need for interim impairment testing. We did not
determine that a triggering event for the Astromec and Micro Motors goodwill
occurred in the past 12 months. We did however; determine that a triggering
event occurred with the patent intangible asset. &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 determining
if a triggering event has occurred, we consider not only expectations for
growth in the entire US economy, but also expectations for regional growth
specific to our sales markets and specific to our industry and product lines. &nbsp;While
our operating units are influenced by changes in the general economic outlook
of the United States, they are most heavily influenced by changes specific to
the medical device industry.&nbsp; Furthermore, the magnitude of economic changes within
the industry is viewed alongside the outlooks and forecasts specific to the
reporting units to obtain a better sense of the likelihood that goodwill may be
impaired.&nbsp; Declines within the industry&#146;s outlook are reflected in the unit&#146;s
revenue projections. &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 identify two
reporting units for purposes of our annual goodwill impairment testing arising
from its acquisitions of Micro Motors and Astromec. &nbsp;In accordance with SFAS
No.&nbsp;142, goodwill is not amortized and is assessed annually for impairment
(as of April 1) or whenever events or changes in circumstances indicate that
the carrying value of such assets may not be recoverable. &nbsp;Our Carson City
reporting unit corresponds to the operations resulting from the Astromec
acquisition, while our Irvine reporting unit corresponds to the operations
resulting from the Micro Motors acquisition.&nbsp; Our intangible asset is related
to the interosseous patents associated with the &#147;Intraflow&#148; acquisition.</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'>Goodwill and
Intangible assets are tested for impairment using a discounted cash flow
analysis. The discounted cash flow analysis relies upon estimates of the
entity&#146;s future revenue and expenses to ultimately project the future cash
flows resulting from the business activity of each entity. The projected future
cash flows are discounted to present value at an appropriate discount rate.&nbsp; An
appropriate discount rate is reached by calculating the weighted average cost
of capital &#147;WACC,&#148; which is determined by the assumptions underlying the
Capital Asset Pricing Model &#147;CAPM&#148; and is considered to reflect the view of
&#147;Market Participants,&#148; as required under SFAS 157. The inputs used in
calculating the WACC are described below.&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>

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<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-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The assumed capital structure is based upon the Company&#146;s actual capital
structure and debt to equity ratio at the time of analysis.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of debt is based on the Company&#146;s actual contracted rates.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of equity is equal to the risk free rate represented by the 10
year Treasury note, plus the Company&#146;s historical correlation to market movement
&#147;beta&#148; times the historical equity risk premium, plus an additional small stock
premium.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In valuing the Company&#146;s patents, an additional risk premium is added to
reflect the increased risk inherent in intangible assets.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also in valuing the patents, an expected value calculation was performed
that weighted the values of different scenarios based on their expected
probability of occurrence.</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
separate calculations to determine the sensitivity of our intangible asset
impairment conclusions to increases in the assumed discount rates. In the case
of Astromec, the goodwill impairment test is not failed until the discount rate
is increased to 33 percent.&nbsp; In the case of Micro Motors, the goodwill impairment
test is not failed until the discount rate is increased to 240 percent. </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'>Additionally, <a
name="OLE_LINK2">the material assumptions relied upon in the discounted cash
flow analysis used to value the Company&#146;s Intraflow patents are shown below.</a></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";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The patent is valued from the perspective of &#147;Market Participants,&#148;
which are believed to possess sales and marketing expertise in the dental and
medical device field.&nbsp; Management&#146;s financial analysis of the intangible asset
was performed from the perspective of a potential acquirer and estimates what a
Market Participant would be willing to pay for the asset.&nbsp; This methodology is
consistent with FAS 157 requirements for Fair Value estimates to be estimates
of the price that would be received to sell an asset, or an &#147;Exit Price.&#148; In
these scenarios, the patents&#146; value is based on the assumed greater
distribution capabilities and lower incremental costs that would be held by
Market Participants.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The patent was also valued as a ongoing product line without any
additional distribution partner or &#147;Market Participant&#148; value.&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A premium for the increased riskiness of intangible assets was included
in the asset&#146;s discount rate.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We performed separate calculations to determine the sensitivity of the
asset&#146;s impairment conclusion to variances in sales growth, gross margin, and
discount rate. Sales growth forecasts ranged from growth of 6 times to 12 times
2008 levels.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were transaction and/or start-up costs associated with the Market
Participants valuation.</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 material
assumptions relied upon in the discounted cash flow analysis used to value the
goodwill held in the Carson City reporting unit are shown below.</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";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill resulting from the Company&#146;s acquisition of Astromec is tested
for impairment under its Carson City motor manufacturing operations.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Motor sales of existing products are assumed to decline as products age,
but are more than replaced by revenue growth from new products and increased
intercompany sales for medical hand piece products. </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The existing fixed cost structure of the motor manufacturing operations
will be better absorbed by the higher forecasted volume of production,
resulting in increased profit margins. </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>&nbsp;</p>

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<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-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In addition to the value of the goodwill held in the Carson City
reporting unit as if it stands alone, an additional analysis is performed to
estimate a value to Pro-Dex of having an in-house motor manufacturer for the
medical device product line.&nbsp; This captive capability enables development speed
and focus, which produces revenue in other operating units.&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The value of the Carson City manufacturing operation is added to the
value of the additional capability provided to Pro-Dex for the total value of
the goodwill. </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'>&nbsp;The material
assumptions relied upon in the discounted cash flow analysis used to value the
goodwill held in the Micro Motors reporting unit are shown below.</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";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill resulting from the Company&#146;s acquisition of Micro Motors is
tested for impairment under its Irvine reporting unit, which houses the
operations resulting from the base technology acquired from Micro Motors.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales to existing customers are assumed to decline, but are more than
replaced by revenue growth from new customers.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;punctuation-wrap:simple;
text-autospace:none;vertical-align:baseline'>&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 existing
fixed cost structure of the Irvine operations will be better absorbed by the
higher forecasted volume of medical products, resulting in increased profit
margins.</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'>Given the
company&#146;s lack of a direct dental distribution channel, it has stopped actively
promoting the product based on the intangible asset resulting from the purchase
of certain assets from IntraVantage, Inc. in October 2005.&nbsp; Any
substantial future value therefore stems from the possibility that a company
with a direct dental distribution channel (a &#147;Market Participant&#148;) might be
interested in access to the technology through product purchases, licenses,
acquisition, joint venture, or other means.&nbsp; Given the current economic
environment, the general lack of investment in new products, the limited number
of Market Participants to whom this technology relates, the time and expense
necessary to consummate a transaction, and other factors considered by management,
there is also a significant possibility that no distribution partner will be
found, resulting in effectively no value of the asset.&nbsp; Given this change
in circumstance, in accordance with FAS 144 &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets,&#148; management tested the carrying amount of the
intangible asset for recoverability as of March 31, 2009.&nbsp; The result of
management&#146;s analysis based on several scenarios (with varying probability of
occurring) was that the asset&#146;s expected value at that date was $150,000 and,
accordingly a charge of $997,280 was taken in the fiscal 2009 third quarter.&nbsp;
The asset continued to amortize its remaining value over the remaining patent&#146;s
life.&nbsp; As to June 30, 2009, the patent&#146;s intangible carrying value was
$147,000. &nbsp;Management remains committed to optimizing the value of this
technology for our shareholders, and will continue to pursue any opportunity to
accomplish that end.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";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'>For the Astromec
reporting unit&#146;s impairment testing there was an assumption of decreased
external sales growth compared to 2008, which was more than offset by an
increased sales growth rate of motors for internal (Pro-Dex) use.&nbsp; In addition
to the value of the reporting unit as an internal supplier and stand alone
business, the unit has additional strategic value by enabling Pro-Dex to gain
additional customers under other reporting units that is considered in the
valuation. It should be noted that the unit passes its goodwill impairment test
without the inclusion of this additional &#147;enablement&#148; value.&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'>For the Micro
Motors reporting unit&#146;s impairment testing, there was an assumption of a slower
than historical sales growth rate than in the previous valuation.&nbsp; The total 5
year growth rate in the 2008 valuation was equal to the historical 5 year
growth rate of the Company, but the growth rate was reduced by 50% for the 2009
valuation. The reason for the reduced sales growth is the current and forecast
near and medium term market conditions.&nbsp; The effect of this sales growth decrease
was to decrease the unit&#146;s calculated value, but not to an extent that it fails
the goodwill impairment test.&nbsp; The computed reporting unit value exceeds the
carrying value of the unit by more than 100 percent.</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 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 applies to us in the
recognition of the cost of stock options awarded based on the grant-date fair
value of those awards </p>

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<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-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'>&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, inventory reserves and net operating loss carry forwards.&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant
management judgment is required in determining our provision for income taxes
and the recoverability of our deferred tax asset.&nbsp; Such determination is based primarily
on our historical taxable income, with some consideration given to our
estimates of future taxable income by jurisdictions in which we operate and the
period over which our deferred tax assets will be recoverable.&nbsp; Due to cumulative
taxable losses during the past three years, we recorded $2,241,000 valuation
allowance against our deferred tax assets in the year ended June 30, 2009.&nbsp;
This reduction in deferred tax assets is adjusted through income tax expense.&nbsp; &nbsp;</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";text-align:justify;text-indent:.5in;text-autospace:
none'>As a company with a very small market capitalization and a limited
shareholder base, our market capitalization has been negatively affected by the
very unusual economic and market environment of late.&nbsp; We believe our market
capitalization may not reflect the true value of the Company and or be
indicative of the true economic value of our assets.&nbsp; Some of the indications
of disproportionate effect on our company include studies that show a strong
difference in the valuations of the companies based on total market
capitalization, with the small caps being most adversely affected. One recent
study [The Bi-Weekly Fusion:&nbsp; Orthopedic Company Update by SMH Capital, for the
two weeks ended February 13, 2009] examined valuation metrics for orthopedic
and medical device companies.&nbsp; The companies classified as &#147;Large Cap&#148; are
trading at 70% of their 52 week high, 2.4 times revenues and 7.9 times EBITDA.&nbsp;
The 15 companies classified as &#147;Mid-Caps&#148; were as expected, in the middle of
the trading multiple, trading at 54% of their 52 week high, 1.5 times revenues
and 8.2 times EBITDA, &#147;Small Cap&#148; companies are trading at 29% of their 52 week
high, 1.5 times revenues and 11.4 times EBIDTA.&nbsp; The EBITDA multiple can be
misleading for the small caps as of the 15 companies in the sample size, only four
had a positive EBITDA, of which Pro-Dex was one.&nbsp; Of the large caps, all seven
companies exhibited a positive EBITDA. &nbsp;In an updated study [The Bi-Weekly
Fusion:&nbsp; Orthopedic Company Update by SMH Capital, for the two weeks ended June
19, 2009], Large-Caps and Mid-Caps were trading at 64% of their 52 week high
and Small-Caps were trading at 40% of their all time high. We feel these analyses
confirm that the current market environment exhibits a significant
disproportionately unfavorable effect against small public companies in general,
including Pro-Dex.&nbsp; </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-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman"; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in' align="justify">Fiscal year 2009
was a difficult year for the world&#146;s economy and Pro-Dex was not immune to its
effects.&nbsp; Our consolidated sales for 2009 declined by 16% as compared to 2008,
and approximately even with 2007 sales levels.&nbsp; Over the longer term, we
maintained a cumulative average growth rate of almost 10%/year since fiscal
year 2003.&nbsp; The motion control business was particularly adversely affected as
our high margin products associated with this business are used by capital
equipment providers, and these orders came to a sudden standstill in our third
quarter (Jan-March 2009).&nbsp; This part of the business remained low in the
subsequent quarter, and there are no indications yet for a strong structural
resumption of business to previous levels.&nbsp; In response to the adverse
environment for these products, we sensed an opportunity to gain market share
and added additional sales resources in January to aggressively pursue new
customers and new sales channels.&nbsp; The medical products also had a
year-over-year decline, as the 2008 sales were high due to two major product
launches that were not repeated in 2009.&nbsp; As the economy stalled, so did our
customers' appetite for new projects.&nbsp; We continued the work on two of the
major development projects initiated last year, and expect to see new revenue
from them in fiscal year 2010 and beyond.&nbsp; In spite of the sales decline, our
backlog of orders remains relatively flat, down by 6% compared to the end of
last year.&nbsp; </p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman"; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in' align="justify">&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 21 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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";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:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We initiated
strong responses to the top-line sales decline, and reduced our associate
headcount by 10% since the end of fiscal year 2008.&nbsp; Our efforts to improve our
product quality began to show benefits in fiscal year 2009 and warranty cost
was reduced by over 50% from $1.3 million in fiscal year 2008 to $664 thousand
in fiscal year 2009.&nbsp; Our operating costs in fiscal year 2009 (including a
non-cash impairment expense of $997,000) were $8.2 million up 6% over the prior
year&#146;s expenses of $7.8 million. &nbsp;In addition, we consolidated the management
and business development efforts of our Carson City operations with those at Irvine.&nbsp; The cost savings introduced by this move allowed for additional investment in
developing new motor technology and accelerate the improvements in this part of
the business.&nbsp; There were one-time costs associated with these transitional actions,
and the actions were phased through the year, but our basic cost structure was
improved to better match the lower sales levels.&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'>The new
facilities for both our Beaverton and the Southern California operations have
met our expectations.&nbsp; They are providing for more conducive facilities for
engineering, development, and production efforts and contributing to
efficiencies gained through collaborative workspaces.&nbsp; The Irvine space has
allowed us to in-source much of our previously outsourced machining work, which
in addition to providing better utilization of the facility, has proven to add
to our competitive advantage in responding quickly to our customer&#146;s needs.</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'>Combined with
the lower sales levels, our net income was negatively affected by two large
non-cash charges realized in our third quarter that resulted in a large loss
for the year.&nbsp; First, due to our inability to find a distribution partner for
our Intraflow products, we realized a $997 thousand pre-tax impairment loss
from writing down the value of the associated patent.&nbsp; We are not actively
marketing the product, but continue the search for a distribution partner to
help realize the product&#146;s full potential.&nbsp; The second charge was a $2 million
tax allowance reducing the book value of our deferred tax assets.&nbsp; We decided
to take this allowance as the recent history of the Company&#146;s taxable income,
especially in consideration of the intangible write-off, made the near&#150;term
realization of the deferred tax assets less assured.&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 maintained
the Company&#146;s strong financial position by generating over $1.7 million in
operating cash for the 2009 fiscal year, in addition to the $2.0 million
generated the prior year.&nbsp; Our net debt was reduced by over 33% to $2.2 million
from $3.5 million at the end of 2008.&nbsp; Due to the reported GAAP losses, the
terms of our credit facility were reduced to allow for $1 million of borrowing
on our credit line.&nbsp; This is a significant reduction in availability, but we
have not had any amounts borrowed under the facility since early in calendar
2009 and ended the year with over $1.1 million in cash on hand, so the
reduction has had no effect on operations to date. </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'>
Entering 2010, we have a lower cost structure, greatly improved legacy product
performance, two major product launches in the pipeline and a stable backlog.&nbsp;
We remain committed to return the Company to profitable operations and providing
a higher level of earnings in the coming years.&nbsp; We continue to drive costs
out of the business and reliably design products that exceed our customers&#146;
expectations. As the economy becomes stronger, we anticipate that more customers
will be launching new products again and we will participate in some of those
launches.&nbsp; We also look forward to the markets for capital equipment
products improving and our motion control top line returning to more normal
levels.&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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 22 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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;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, 2009, Compared to Fiscal Year Ended June 30, 2008 </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=620
 style='width:85%;border-collapse:collapse'>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(In&nbsp;Thousands)</p>
  </td>
  <td colspan=6 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;sales:</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>21,122&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>25,126&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&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:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cost&nbsp;of&nbsp;sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>14,374&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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>68%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>16,917&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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>67%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,748&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>32%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8,209&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>33%&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:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling,&nbsp;general&nbsp;and&nbsp;administrative&nbsp;expenses</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4,452&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>21%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,021&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>20%&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:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Intangible&nbsp;Impairment</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>997&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research&nbsp;and&nbsp;development&nbsp;costs</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,791&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,732&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%&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:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;(Loss)&nbsp;from&nbsp;Operations</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(1,492)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(7%)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>456&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2%&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:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;interest&nbsp;(expense)&nbsp;and&nbsp;net&nbsp;other&nbsp;income</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>212&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>138&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(Benefit)&nbsp;/&nbsp;Provision&nbsp;for&nbsp;Income&nbsp;Taxes</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(1,100)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(5%)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0%&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:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Allowance&nbsp;for&nbsp;deferred&nbsp;tax&nbsp;asset</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,241&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Income&nbsp;(Loss)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,845)</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(13%)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>317&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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1%&nbsp;</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>Net Sales.</b>&nbsp;&nbsp; Consolidated sales decreased 16% or $4,004,000 to $21,122,000
from $25,126,000 for 2009 as compared to 2008.&nbsp; Medical sales were lower
by $3,014,000 or 21%, due to lower sales to our two largest customers by $1,742,000
driven by a return to stable shipping levels to these two customers after their
previous year&#146;s inventory build.&nbsp; Shipments to dental customers decreased by $670,000
or 20% as we strategically reduced sales of certain low profit products.&nbsp; Sales
to industrial customers decreased by $169,000 or 25% reflecting a slowdown in
our motion control business.&nbsp; Sales related to government research related
products and product repairs were up with a year over year increase of $270,000
due primarily to an increase in repair and upgrade work for products that were
not warranty eligible which offset the decline in government agency related
work.&nbsp; Aerospace sales were up $242,000 or 10% due to higher commercial aircraft
motor shipments.</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-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 amount of Pro-Dex total sales to each customer type and the
year-to-year change is noted in the table below:</p>
<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=512
 style='width:60%;border-collapse:collapse' id="table3">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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:12.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Sales&nbsp;by&nbsp;customer&nbsp;type&nbsp;($'000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(Decrease)</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Dental</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,620&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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,290&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(20%)</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Medical</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11,107&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>14,121&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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(21%)</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Industrial</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,448&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,279&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(25%)</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Aerospace</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,624&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,382&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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Government&nbsp;research&nbsp;and&nbsp;other</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,324&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,054&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;Sales</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>21,122&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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>25,126&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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(16%)</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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 23 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'><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>Gross Profit and Gross Profit Percentage of Sales. &nbsp;</b>Our
consolidated gross profit for 2009 decreased $1,461,000 or 18% compared to the
gross profit in the previous year due to the lower medical, dental and
industrial product sales volume. &nbsp;Gross profit as a percentage of sales decreased
to 32% for the year ended June 30, 2009 compared to 33% for the year ended June
30, 2008.&nbsp; Gross margin as a percentage of sales was negatively impacted as a
less favorable sales mix that included a lower amount of high margin industrial
motion control and medical products that did not completely offset the
favorable effect of reduced warranty costs. Gross profit and gross profit as a
percentage of sales 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=547
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.55pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</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;
  background:white;padding:1.1pt;'>
  <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:12.55pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,748,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8,209,000&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(18%)</p>
  </td>
 </tr>
 <tr style='height:12.55pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>32%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>33%&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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;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 (including a $997,000 intangible impairment charge) increased 9%
to $5,449,000 for the year ended June 30, 2009 from $5,021,000 for year ended June
30, 2008.&nbsp; We had a 13% decrease in selling expense mainly due to reduced labor
expenditures, advertising and tradeshow activity.&nbsp; General and administrative
costs were lower by 11% due to labor cost reductions associated with reduced
headcount.&nbsp; The increase in total G &amp; A costs was due to the impairment cost
of the patent related intangible ($997,000).&nbsp; The impairment loss is more fully
described in Note 9 of the accompanying Consolidated Financial Statements.&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 a percentage of sales, S, G&amp;A costs, this in 2009 included
$997,000 in asset impairment expense, increased to 26% from 20% for the year
ended June 30, 2009 and 2008, respectively.&nbsp; S, G&amp;A costs were as follows:</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=640
 style='width:80%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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:12.3pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</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;
  background:white;padding:1.1pt;'>
  <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:12.3pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,295,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,482,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(13%)</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,157,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,539,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(11%)</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment&nbsp;of&nbsp;intangible&nbsp;asset</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>997,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>N/A&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;Selling,&nbsp;General&nbsp;&amp;&nbsp;Administrative&nbsp;cost</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,449,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,021,000&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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling,&nbsp;General&nbsp;&amp;&nbsp;Administrative&nbsp;cost&nbsp;as&nbsp;a</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>26%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>20%&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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;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'><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>Research and Development Costs</b>.&nbsp; Company-funded research and
development expenses increased $59,000 to $2,791,000 for the year ended June 30,
2009 from $2,732,000 for the year ended June 30, 2008, an increase of 2%. &nbsp;The
increase was primarily due to increased motor development and labor costs.&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=660
 style='width:80%;border-collapse:collapse' id="table4">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.55pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</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;
  background:white;padding:1.1pt;'>
  <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:12.55pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research&nbsp;and&nbsp;Development&nbsp;(R&amp;D)&nbsp;Costs</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,791,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,732,000&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.55pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research&nbsp;and&nbsp;Development&nbsp;costs&nbsp;as&nbsp;a&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>
&nbsp;<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 (loss) and Operating Profit (loss) as a Percentage of Sales</b>.&nbsp;
Our consolidated operating loss for the year ended June 30, 2009 was $1,492,000
compared to an operating profit of $456,000 for the year ended June 30, 2008.&nbsp; Operating
profit as a percentage of sales decreased to -7% for the year ended June 30, 2009
compared to 2% for the year ended June 30, 2008.&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'><b>&nbsp;</b></p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=631
 style='width:80%;border-collapse:collapse' id="table5">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;</b></p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <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 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.8pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</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;
  background:white;padding:1.1pt;'>
  <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 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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating&nbsp;Profit&nbsp;(Loss)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(1,492,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>456,000&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>N/A&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.8pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating&nbsp;Profit&nbsp;(Loss)&nbsp;as&nbsp;a&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(7%)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2%&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-autospace:none'><b>&nbsp;</b></p>

<p align="center">- 24 -</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'><b>Royalties and Other Income. </b>&nbsp;We earned and received $14,000 in
royalty payments in fiscal year 2009, compared to $35,000 in royalty payments
in 2008.&nbsp; We had no &#147;other&#148; expense during the year ended June 30, 2009
compared to $9,000 in other expense for asset abandonment associated with the
move during the year ended June 30, 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'><b>Net Interest Income/Expense. </b>&nbsp;Net interest expense was $226,000 in
the year ended June 30, 2009, which included $228,000 in interest expense
offset by $2,000 in interest income, compared to $164,000 which included $181,000
in interest expense offset by $17,000 in interest income, in the prior year. </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 increase in interest expense is due to higher borrowing requirements,
due to a full year of interest expense associated with the Irvine facility
tenant improvement loan.&nbsp; Included in the $164,000 in 2008 is $15,000 in
accrued interest relating to the completed IRS examination for the tax years
ending June 30, 2004, 2005 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;text-autospace:
none'>&nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=575
 style='width:80%;border-collapse:collapse'>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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:12.65pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</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;
  background:white;padding:1.1pt;'>
  <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:12.65pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Debt&nbsp;related&nbsp;interest&nbsp;expense</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>228,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>166,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>37%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>IRS&nbsp;exam&nbsp;related&nbsp;interest</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>15,000&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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(100%)</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;interest&nbsp;expense</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>228,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>181,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>26%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Interest&nbsp;income</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(17,000)</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(88%)</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;interest&nbsp;expense</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>226,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>164,000&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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>38%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Interest&nbsp;expense&nbsp;as&nbsp;a&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1%&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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: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 estimated effective combined federal
and state tax rate on loss from operations for the year ended June 30, 2009
resulted in a 67% provision of the loss before tax compared to a 0.1% provision
of earnings before tax for the year ended June 30, 2008.&nbsp; The difference in the
2009 rate is due to a $2,241,000 valuation allowance against our current and
long term deferred tax assets. The deferred tax valuation allowance is more
fully described in Note 5 of the accompanying 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:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>During the year ended June 30, 2009, the Internal Revenue Service settled
its audit of our federal income tax returns for the fiscal years ended June 30,
2004 through June 30, 2006.&nbsp; This settlement resulted in the reversal of
$41,000 of unrecognized tax benefits associated with Section 263A costs we previously
reported, which reduced our tax expense by $6,000.&nbsp; During the year ended June
30 2009, we filed amended state returns for the fiscal years ended June 30,
2004 through June 30, 2006 to report the related changes to the Section 263A
costs.&nbsp; The filing of the amended state tax returns resulted in the reversal of
$9,000 of unrecognized tax benefits associated with the Section 263A costs we
reported, which reduced our tax expense by $1,000.&nbsp; Our remaining liability for
uncertain tax positions, related to the fiscal years ended June 30, 2005 through
June 30, 2009, is $54,000 as of June 30, 2009.&nbsp; We have not identified any new
unrecognized tax benefits.</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-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>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 25 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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;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'>Significant management judgment is required in determining our provision
for income taxes and the recoverability of our deferred tax asset.&nbsp; Such
determination is based primarily on our historical taxable income, with some
consideration given to our estimates of future taxable income by jurisdictions
in which we operate and the period over which our deferred tax assets will be
recoverable.&nbsp; Due to cumulative losses during the past three years, we established
a $2,241,000 valuation allowance against our deferred tax assets in the year ended
June 30, 2009.&nbsp; The valuation allowance is recorded through income tax expense
and included in the tax provision in the statement 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;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Net
(Loss) Income.&nbsp; </b>We had a net loss of $2,845,000 or $0.29 per share, basic for
the year ended June 30, 2009 compared to net income of $317,000 or $0.03 per
share, basic, and $0.03 per share, diluted, for the year ended June 30, 2008.&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>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>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:4.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;line-height:4.0pt'>&nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=534
 style='width:80%;border-collapse:collapse'>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:medium none; background:#CBDBD1; padding:1.1pt; ' width="61%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>As&nbsp;of</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; ' width="61%">
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June&nbsp;30,&nbsp;2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June&nbsp;30,&nbsp;2008</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:#CBDBD1; padding:1.1pt; ' width="61%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;and&nbsp;cash&nbsp;equivalents</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="9%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,124,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="8%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>517,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; ' width="61%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Working&nbsp;Capital&#185;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="9%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4,548,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="8%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4,586,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:#CBDBD1; padding:1.1pt; ' width="61%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Credit&nbsp;Line&nbsp;outstanding&nbsp;balance</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="9%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="8%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,000,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; ' width="61%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Tangible&nbsp;book&nbsp;value/common&nbsp;share&#178;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="9%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.75&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="8%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.93&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:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;' width="61%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Number&nbsp;of&nbsp;days&nbsp;of&nbsp;sales&nbsp;outstanding&nbsp;(DSO)&nbsp;in</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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 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; background:white; padding:1.1pt; ' width="61%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>accounts&nbsp;receivable&nbsp;at&nbsp;end&nbsp;of&nbsp;quarter&#179;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>41&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>48&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:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;' width="61%">
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;' width="61%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Year&nbsp;ended</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:#CBDBD1; padding:1.1pt; ' width="61%">
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June&nbsp;30,&nbsp;2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June&nbsp;30,&nbsp;2008</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; ' width="61%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;cash&nbsp;provided&nbsp;by&nbsp;operations</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="9%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,718,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="8%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,018,000&nbsp;</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:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><sup>&nbsp;</sup></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'><sup>1</sup> Working Capital = Ending Current Assets balance &#150; Ending
Current liabilities balance</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";margin-left:.5in;text-align:justify;text-autospace:
none'><sup>2</sup> Tangible book value/common share<sup> </sup>= {(Total
shareholders&#146; equity &#150; Net intangible asset (patents) &#150; Goodwill)}/(basic
outstanding shares)</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'><sup>&nbsp;</sup></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'><sup>3</sup> DSO = Ending Net Accounts Receivable balance/(Previous
Quarter Sales/91)</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 working capital at June 30, 2009 decreased $38,000 (1%) to
approximately $4.5 million compared to approximately $4.6 million at June 30, 2008.&nbsp;
The reduced working capital is due to normal fluctuations.. &nbsp;Cash flow provided by
operations was $1,718,000 for the year ended June 30, 2009 compared to $2,018,000
for the year ended June 30, 2008.&nbsp; Fiscal year 2009 cash was provided largely
through a decrease in inventory ($1,515,000), reduction in accounts receivable
($609,000) and a recovery of state and federal tax payments from prior years
($647,000) offset by a reduction in accounts payable ($909,000) that occurred
in the first part of the fiscal year.&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'>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'><i><u>Issues
Related to Credit Facilities</u></i></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 of June 30,
2009, the Wells Fargo credit facility had two components:&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>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 26 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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-autospace:none'>&nbsp;</p>

<ul>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.2in;text-align:justify;margin-right:0in; margin-top:0in'>a revolving Credit Line Note (&#147;line of credit&#148;) of up to $1,000,000
in borrowing availability, and</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.2in;text-align:justify;margin-right:0in; margin-top:0in'>a Five year Term Note (the &#147;TI Loan&#148;) with an initial balance of&nbsp;
$2,000,000, of which $1,766,667 was outstanding as of June 30, 2009. </p></li>
</ul>

<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 line of
credit borrowing availability is a maximum of $1,000,000.&nbsp; If borrowings
under the Credit Line exceed $500,000, the maximum amount of borrowing would be
limited to 70% of the eligible accounts receivable plus 40% of the eligible
inventory. &nbsp;Its terms require monthly interest payments at either (i) the prime
rate of interest (3.25% at June 30, 2009) plus 1.50%, or (ii) three month LIBOR
(.60% at June 30, 2009) plus 2.50%, at our discretion, based on outstanding
borrowings.&nbsp; The credit facility expires on November 1, 2009.&nbsp;
&nbsp;We are charged an unused credit line fee of 0.25% per annum payable
quarterly on the average balance of the line of credit that is not used.&nbsp;
There was no outstanding balance under the credit line as of June 30, 2009 and
there continues to be no borrowing under such credit line as of September 11,
2009.&nbsp; Therefore, the total eligible additional borrowing capacity under
the line of credit as of June 30, 2009 and as of September 11, 2009 was $1,000,000.</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'>The TI Loan had
an initial balance of $2,000,000.&nbsp; The borrowings from this term
commitment were used for construction of tenant improvements for our Irvine, California facility.&nbsp; Its terms require monthly principal and interest
payments over the 60 month life of the loan, based on outstanding
borrowings.&nbsp; The interest rate is fixed at 5.72% over the life of the
loan.&nbsp; There was a $1,766,667 outstanding balance under the TI Loan as of June
30, 2009.&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'>All assets of
the Company except our Carson City land and building secure the outstanding
borrowings under the Wells Fargo credit facility.</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'>In March 2006, we entered into a ten year mortgage with Union Bank for
$1,650,000.&nbsp; The principal balance of the mortgage bears interest at a
fixed annual rate of 6.73%.&nbsp; Payments on the mortgage are $11,379 per
month (based on a 25 year amortization), with the balance of $1,291,666 in
principal due on April&nbsp;1, 2016.&nbsp; The mortgage is secured by our Carson City land and building.&nbsp; There was $1,558,000 in principal outstanding under
the mortgage as of June 30, 2009.</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'>There are
certain financial and non-financial covenants that the Company must meet to be
in compliance with the terms of the Wells Fargo credit facility and mortgage
with Union Bank.&nbsp; As of the year ended June 30, 2009, we were in compliance
with the Wells Fargo covenants, however, we were in violation of the cash flow
coverage covenant with Union Bank, with the violation resulting in an event of
default under the facility.&nbsp; On August 25, 2009, we entered into a letter
agreement with Union Bank pursuant to which Union Bank agreed to waive the
covenant violation.&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'>At June 30, 2009,
we had cash and cash equivalents of $1,124,000.&nbsp; We believe that our cash
and cash equivalents on hand, together with cash flows from operations, if any,
and amounts available under the credit facilities will be sufficient to meet
our working capital and capital expenditure requirements for this and the next
year. &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;text-autospace:
none'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 27 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>
In September 2002, our Board of Directors authorized the repurchase on the open
market of up to 500,000 shares of our outstanding Common Stock at a share price
no greater than $1.25, subject to compliance with applicable laws and
regulations.&nbsp; There is no requirement that we repurchase all or any portion
of such shares.&nbsp; The maximum total value of the repurchase is not to exceed
$500,000.&nbsp; From the inception of the repurchase authorization through the
fiscal year-end date of June 30, 2003, we repurchased 75,700 shares of Common
Stock for $43,741, at an average price of $0.58 per share.&nbsp; No additional
shares were repurchased in fiscal years 2004 through 2008.&nbsp; During the 2009
fiscal year, we repurchased 219,695 shares of common stock for $133,472, at an
average price of $0.61 per share. Since the initiation of the buyback program in
2002 through June 30, 2009, we have repurchased 295,395 shares for $177,213 at
an average price of $0.60 per share. &nbsp;Our Board suspended the buyback
authorization in May 2009 and has not set a reinitiation date for the purchase of our shares pursuant to this
program.</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>Impact of Possible NASDAQ Delisting</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";margin-top:6.0pt;text-align:justify;text-indent:.5in'>The
minimum bid price for our publicly traded common stock has remained below $1.00
for a significant period of time during late 2008 and throughout 2009.&nbsp;
Although Nasdaq had suspended its minimum bid requirement in October 2008,
Nasdaq lifted that suspension on August 3, 2009 and we again face a delisting
deadline date of January 7, 2010.&nbsp;&nbsp; If the minimum bid price for our
stock does not rise above $1.00 for the requisite number of days prior to such
deadline or if we fail to meet any other listing requirement of the Nasdaq
Capital Market, our common stock may be delisted from the Nasdaq Capital
Market, which could negatively affect the value of our common stock.&nbsp; On
January 9, 2009, our shareholders authorized us to engage in a reverse split of
our Common Stock which may, as a result of increasing our per share price above
$1.00, provide us the means to avoid delisting.&nbsp; As the delisting deadline
approaches and if the market price of our shares remains below $1.00, our Board
of Directors will continue to review the advisability of proceeding with a
reverse split of our Common Stock or other actions.</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'><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'><b>Recent Accounting
Pronouncements</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-align:justify; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>The FASB has issued FASB
Statement No. 165, <i>Subsequent Events.&nbsp;&nbsp; </i>The objective of SFAS 165 is to
establish general standards of accounting for; and disclosure of events that
occur after the balance sheet date but before financial statements are issued
or are available to be issued. In particular, SFAS 165 sets forth:</p>

<ul>
	<li>
	<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";margin-left:0.2in;text-align:justify;line-height:normal'>The period after the balance sheet date
during which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements. </p></li>
	<li>
	<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";margin-left:0.2in;text-align:justify;line-height:normal'>The circumstances under which an entity
should recognize events or transactions occurring after the balance sheet date
in its financial statements. </p></li>
	<li>
	<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";margin-left:0.2in;text-align:justify;line-height:normal'>The disclosures that an entity should
make about events or transactions that occurred after the balance sheet date.
	</p></li>
</ul>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>On April 9, 2009, FASB issued FSP FAS 157-4, Determining
Fair Value When the Volume and Level of Activity for the Asset or Liability
Have Significantly Decreased and Identifying Transactions That Are Not Orderly.&nbsp;
The purpose of this FSP is to provide additional guidance in the application of
FASB Statement No. 157; it supersedes FSP FAS 157-3, Determining the Fair Value
of a Financial Asset When the Market for That Asset Is Not Active. </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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 28 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>Among
other points, the FSP:</p>

<ul style='margin-bottom:0in;'>
 <li style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";color:black;text-align:justify'>
	<p style="margin-left: 0.3in">affirms that the
     objective of fair value when the market for an asset is not active is the
     price that would be received to sell the asset in an orderly transaction
     (that is, not a forced liquidation or distressed sale) between market
     participants at the measurement date under current market conditions (that
     is, in the inactive market);</li>
</ul>

<ul style='margin-bottom:0in;'>
 <li style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";color:black;text-align:justify'>
	<p style="margin-left: 0.3in">clarifies and
     includes additional factors for determining whether there has been a
     significant decrease in market activity for an asset when the market for
     that asset is not active;</li>
</ul>

<ul style='margin-bottom:0in;'>
 <li style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";color:black;text-align:justify'>
	<p style="margin-left: 0.3in">eliminates the
     proposed presumption that all transactions are distressed (not orderly)
     unless proven otherwise. The FSP will instead require an entity to base
     its conclusion about whether a transaction was not orderly on the weight
     of the evidence;</li>
</ul>

<ul style='margin-bottom:0in;'>
 <li style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";color:black;text-align:justify'>
	<p style="margin-left: 0.3in">includes an example
     that provides additional explanation on estimating fair value when the
     market activity for an asset has declined significantly;</li>
</ul>

<ul style='margin-bottom:0in;'>
 <li style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";color:black;text-align:justify'>
	<p style="margin-left: 0.3in">requires an entity
     to disclose a change in valuation technique (and the related inputs)
     resulting from the application of the FSP and to quantify its effects, if
     practicable, by major category; and</li>
</ul>

<ul style='margin-bottom:0in;'>
 <li style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>
	<p style="margin-left: 0.3in">applies
     to all fair value measurements when appropriate.</li>
</ul>

<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 FASB has
issued FASB Statement No. 168, The &#147;FASB Accounting Standards Codification<sup>TM</sup>&#148;
and the Hierarchy of Generally Accepted Accounting Principles. Statement 168
establishes the FASB Accounting Standards Codification<sup>TM</sup>(Codification)
as the single source of authoritative U.S. generally accepted accounting
principles (U.S. GAAP) recognized by the FASB to be applied by nongovernmental
entities. Rules and interpretive releases of the SEC under authority of federal
securities laws are also sources of authoritative U.S. GAAP for SEC
registrants. Statement 168 and the Codification are effective for financial
statements issued for interim and annual periods ending after September 15,
2009.</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'>When effective,
the Codification will supersede all existing non-SEC accounting and reporting
standards. All other non-&#147;grandfathered&#148; non-SEC accounting literature not
included in the Codification will become non-authoritative. Following Statement
168, the FASB will not issue new standards in the form of Statements, FASB
Staff Positions, or Emerging Issues Task Force Abstracts. Instead, the FASB
will issue Accounting Standards Updates, which will serve only to: (a) update
the Codification; (b) provide background information about the guidance; and (c)
provide the bases for conclusions on the change(s) in the Codification.</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-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'><a
name="FS_FinDisclosure_ControlProc"></a><a name="Item_7A"></a><b>Item 7A.&nbsp; Quantitative
and Qualitative Disclosures About Market Risks&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; Not
applicable.</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>Item 8.&nbsp;&nbsp;
Financial Statements and Supplementary Data</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 cellspacing=0 cellpadding=0
 style='border-collapse:collapse' id="table6">
 <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";'><u>
	<a href="#Report_of_Independent_Registered_Public_Accounting_Firm_">Report of Independent Registered Public Company
  Accounting Firm</a>&nbsp; </u></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'>32</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&nbsp;BALANCE&nbsp;SHEETS_">Consolidated
  Balance Sheet </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'>33
  </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'><u>
	<a href="#CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;OPERATIONS_">Consolidated Statements of
  Operations</a></u></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'>34<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&nbsp;STATEMENTS&nbsp;OF&nbsp;SHAREHOLDERS&nbsp;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'>35</p>
  </td>
 </tr>
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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
	<a href="#CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;CASH&nbsp;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'>36
  </p>
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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>
	<a href="#prodex10q_htm_notes_to_consolidated_fina">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'>37</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-align:justify'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
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  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 29 -</p>
  </td>
 </tr>
</table>

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<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-autospace:none'><b>Item 9.&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>&nbsp;</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>Item 9A(T).&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, 2009, the Chief Executive Officer and the Chief Financial Officer concluded
that the disclosure controls and procedures are effective.</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'><a name="_DV_C16">Our
management is responsible for establishing and maintaining adequate &#147;internal
control over financial reporting</a><a name="_DV_C17"></a><a name="_DV_X26">&#148;
(as defined in Rule 13a-15(f) under the Exchange Act)</a><a name="_DV_C18">.
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we conducted
an evaluation of the effectiveness of our internal control over financial
reporting based on the framework set forth in <i>Internal Control &#151; Integrated
Framework </i>issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, our management concluded that
our internal control over financial reporting was effective as of June 30, 2009.</a></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'><a name="_DV_C19">Our
internal control over financial reporting is supported by written policies and
procedures, that:</a></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'><a name="_DV_C20">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets; </a></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><a name="_DV_C21">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of our company are
being made only in accordance with authorizations of our management and
directors; and </a></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><a name="_DV_C22">(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect
on the financial statements. </a></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'><a name="_DV_C23">Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risks that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate. </a></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'>This annual
report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.&nbsp;
Management&#146;s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to
provide only management&#146;s attestation in this annual report.</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, 2009, 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:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>

<div>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 30 -</p>
  </td>
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</div>

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

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<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>
<a name="Item_9B.">Item 9B.</a>&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'>The minimum bid
price for our publicly traded common stock has remained below $1.00 for a
significant period of time during late 2008 and throughout 2009.&nbsp; Although
Nasdaq had suspended its minimum bid requirement in October 2008, Nasdaq lifted
that suspension on August 3, 2009 and we again face a delisting deadline date
of January 7, 2010.&nbsp;&nbsp; If the minimum bid price for our stock does not
rise above $1.00 for the requisite number of days prior to such deadline or if
we fail to meet any other listing requirement of the Nasdaq Capital Market, our
common stock may be delisted from the Nasdaq Capital Market, which could
negatively affect the value of our common stock.&nbsp; On January 9, 2009, our
shareholders authorized us to engage in a reverse split of our Common Stock
which may, as a result of increasing our per share price above $1.00, provide
us the means to avoid delisting.&nbsp; As the delisting deadline approaches and
if the market price of our shares remains below $1.00, our Board of Directors
will continue to review the advisability of proceeding with a reverse split of
our Common Stock or other actions..</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: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>
<a name="PART_III_">PART
III</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'>&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>Item 10.&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-indent:.5in;text-autospace:
none'>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 2009 Annual Meeting of
Shareholders to be filed with the SEC within 120 days after the end of the
fiscal year ended June 30, 2009 (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 11.&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'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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; 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;&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;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>Item 13.&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;&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 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: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:center;text-autospace:none'><b>PART
IV</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 15.&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'>&nbsp;</p>

<div>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><a name="Page27_Relationships_Fees_Exh"></a>- 31 -</p>
  </td>
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</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
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<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: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;text-justify:inter-ideograph'>&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-justify:inter-ideograph'><b>The
Stockholders and Board of Directors</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-justify:inter-ideograph'><b>Pro-Dex,
Inc.: </b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-justify:inter-ideograph'>We
have audited the accompanying consolidated balance sheets of Pro-Dex, Inc. and
Subsidiaries (the Company) as of June 30, 2009 and 2008 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, 2009.&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;text-justify:inter-ideograph'>&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-justify:inter-ideograph'>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, 2009 and 2008, and the results of their operations and their
cash flows for each of the two years in the two-year period ended June 30, 2009
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";'>&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";'>&nbsp;</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 17, 2009 </p>

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

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 32 -</p>
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  <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,&nbsp;INC.&nbsp;and&nbsp;SUBSIDIARIES</font></b></p>
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  <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&nbsp;BALANCE&nbsp;SHEETS_">CONSOLIDATED&nbsp;BALANCE&nbsp;SHEETS</a></font></b></p>
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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
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  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><i>
	<font size="2">30-Jun-09</font></i></p>
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  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><i>
	<font size="2">30-Jun-08</font></i></p>
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 <tr style='height:12.15pt'>
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  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'><b>
	<font size="2">ASSETS</font></b></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Current&nbsp;assets:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Cash&nbsp;and&nbsp;cash&nbsp;equivalents</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1,124,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">517,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:13.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Accounts&nbsp;receivable,&nbsp;net&nbsp;of&nbsp;allowance&nbsp;for&nbsp;doubtful&nbsp;accounts</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;of&nbsp;$52,000&nbsp;in&nbsp;2009&nbsp;and&nbsp;$144,000&nbsp;in&nbsp;2008</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">2,515,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">2,842,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Other&nbsp;Current&nbsp;Receivables</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">16,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">205,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Inventories</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">3,365,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">5,101,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Prepaid&nbsp;expenses</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">117,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">214,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Prepaid&nbsp;income&nbsp;taxes</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">118,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">860,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Deferred&nbsp;income&nbsp;taxes</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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 colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">1,176,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Total&nbsp;current&nbsp;assets</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">7,255,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">10,915,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:6.45pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Property,&nbsp;plant,&nbsp;equipment&nbsp;and&nbsp;leasehold&nbsp;improvements,&nbsp;net</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">5,981,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">6,470,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Other&nbsp;assets:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Goodwill</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">2,997,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">2,997,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Intangibles&nbsp;-&nbsp;Patents,&nbsp;net</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">147,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">1,221,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Other</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">87,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">68,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Total&nbsp;other&nbsp;assets</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">3,231,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">4,286,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:5.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Total&nbsp;assets</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:white; padding:1.1pt; '>
  <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-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">16,467,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">21,671,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:2.85pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'><b>
	<font size="2">LIABILITIES&nbsp;AND&nbsp;SHAREHOLDERS'&nbsp;EQUITY</font></b></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Current&nbsp;liabilities:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Line&nbsp;of&nbsp;credit</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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='background:white;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">2,000,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Accounts&nbsp;payable</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">827,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">1,736,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Accrued&nbsp;expenses</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">1,394,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">2,053,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Income&nbsp;taxes&nbsp;payable</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">53,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">114,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Current&nbsp;portion&nbsp;of&nbsp;term&nbsp;note</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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 colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">396,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Current&nbsp;Portion&nbsp;of&nbsp;T.I.&nbsp;Loan</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">400,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Current&nbsp;portion&nbsp;of&nbsp;real&nbsp;estate&nbsp;loan</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">33,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">30,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Total&nbsp;current&nbsp;liabilities</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">2,707,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">6,329,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:6.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:10.75pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Long-term&nbsp;liabilities:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Notes&nbsp;Payable&nbsp;-&nbsp;T.I.&nbsp;Loan</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">1,367,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Real&nbsp;estate&nbsp;loan</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">1,528,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">1,560,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Patent&nbsp;deferred&nbsp;payable</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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 colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">44,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Deferred&nbsp;income&nbsp;taxes</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">171,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">290,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Deferred&nbsp;rent</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">212,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">150,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Total&nbsp;long-term&nbsp;liabilities</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">3,278,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">2,044,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:6.45pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Total&nbsp;liabilities</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">5,985,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">8,373,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Commitments&nbsp;and&nbsp;contingencies</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Shareholders'&nbsp;equity:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Common&nbsp;shares;&nbsp;no&nbsp;par&nbsp;value;&nbsp;50,000,000&nbsp;shares&nbsp;authorized;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:left; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,964,366&nbsp;shares&nbsp;issued&nbsp;and&nbsp;9,668,671&nbsp;outstanding&nbsp;June&nbsp;30,&nbsp;2009</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;9,879,066&nbsp;shares&nbsp;issued&nbsp;and&nbsp;9,803,366&nbsp;outstanding&nbsp;June&nbsp;30,&nbsp;2008</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">16,574,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">16,545,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Accumulated&nbsp;deficit</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">(6,092,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">(3,247,000)</font></p>
  </td>
 </tr>
 <tr style='height:9.3pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Total&nbsp;shareholders'&nbsp;equity</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">10,482,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">13,298,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:6.45pt'>
  <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; background:white; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <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; background:white; padding:1.1pt; '>
  <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;Total&nbsp;liabilities&nbsp;and&nbsp;shareholders'&nbsp;equity</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">16,467,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">21,671,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.9pt'>
  <td colspan=5 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><i>
	<font size="2">See&nbsp;notes&nbsp;to&nbsp;consolidated&nbsp;financial&nbsp;statements.</font></i></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td width=390 valign=bottom style='width:292.55pt;background:white;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=92 colspan=2 valign=bottom style='width:69.35pt;background:white;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=90 colspan=2 valign=bottom style='width:67.75pt;background:white;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.15pt'>
  <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";text-align:center'><b>&nbsp;</b></p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 33 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=588
 style='width:90%;border-collapse:collapse'>
 <tr style='height:14.8pt'>
  <td colspan=5 valign=bottom style='background:#FFFFFF;
  padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in' align="center"><b>
	<font size="2">PRO-DEX,&nbsp;INC.&nbsp;and&nbsp;SUBSIDIARIES</font></b></p>
  </td>
 </tr>
 <tr style='height:14.8pt'>
  <td colspan=5 valign=bottom style='background:white;
  padding:1.1pt; height:12pt'>
  <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&nbsp;STATEMENTS&nbsp;OF&nbsp;OPERATIONS_">CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;OPERATIONS</a></font></b></p>
  </td>
 </tr>
 <tr style='height:14.8pt'>
  <td colspan=5 valign=bottom style='background:#FFFFFF;
  padding:1.1pt; height:12pt'>
  <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&nbsp;ended&nbsp;June&nbsp;30</font></b></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:23.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><i>
	<font size="2">2009</font></i></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><i>
	<font size="2">2008</font></i></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;sales</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">21,122,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">25,126,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Cost&nbsp;of&nbsp;sales</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">14,374,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">16,917,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Gross&nbsp;profit</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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">6,748,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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">8,209,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Operating&nbsp;expenses:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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;Selling&nbsp;expense</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:12pt'>
  <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">1,295,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:12pt'>
  <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">1,482,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;General&nbsp;and&nbsp;administrative&nbsp;expenses</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">3,157,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">3,265,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Irvine&nbsp;facility&nbsp;move&nbsp;related&nbsp;general&nbsp;and&nbsp;administrative&nbsp;expenses</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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 colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">274,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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;Impairment&nbsp;of&nbsp;intangible&nbsp;asset</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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">997,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Research&nbsp;and&nbsp;development&nbsp;costs</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">2,791,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">2,732,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Total&nbsp;operating&nbsp;expenses</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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">8,240,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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">7,753,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">(Loss)&nbsp;Income&nbsp;from&nbsp;operations</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">(1,492,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">456,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:12pt'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:12pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Other:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Other&nbsp;(expense),&nbsp;net</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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 colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">(9,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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;Royalty&nbsp;income</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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">14,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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">35,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Interest&nbsp;income</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">2,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">17,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Interest&nbsp;(expense)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">(228,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">(181,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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 colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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">(212,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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">(138,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">(Loss)&nbsp;Income&nbsp;before&nbsp;provision&nbsp;for&nbsp;income&nbsp;taxes</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:12pt'>
  <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">(1,704,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; height:12pt'>
  <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">318,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Benefit&nbsp;(Provision)&nbsp;for&nbsp;Income&nbsp;Taxes</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">1,100,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">(1,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Allowance&nbsp;for&nbsp;deferred&nbsp;tax&nbsp;asset</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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">(2,241,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Total&nbsp;Provision&nbsp;for&nbsp;Income&nbsp;taxes</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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">(1,141,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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">(1,000)</font></p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;(Loss)&nbsp;Income</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; background:white; padding:1.1pt; height:12pt'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:white; padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">(2,845,000)</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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">317,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;(Loss)&nbsp;Income&nbsp;per&nbsp;share:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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;Basic</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; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">(0.29)</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <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">0.03&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:24.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1px solid #000000;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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;Diluted</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1px solid windowtext; background:white; padding:1.1pt; height:12pt'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1px solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">(0.29)</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1px solid windowtext; background:white; padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1px solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt; height:12pt'>
  <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">0.03&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:24.0pt'>
  <td valign=bottom style='border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt; border-top-color:inherit'>
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt; border-top-color:inherit'>
  &nbsp;</td>
  <td valign=bottom style='border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt; border-top-color:inherit'>
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:12pt; border-top-color:inherit'>
  &nbsp;</td>
  <td valign=bottom style='border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt; border-top-color:inherit'>
  &nbsp;</td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt; height:12pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Weighted&nbsp;average&nbsp;shares&nbsp;outstanding&nbsp;-&nbsp;basic</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt; height:12pt'>
  <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">9,710,755&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt; height:12pt'>
  <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">9,736,249&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <font size="2">Weighted&nbsp;average&nbsp;shares&nbsp;outstanding&nbsp;-&nbsp;diluted
  </font>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <p align="right"><font size="2">9,710,755&nbsp;</font></td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:12pt'>
  <p align="right"><font size="2">9,924,350&nbsp;</font></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-bottom:.0001pt;font-size:9pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
<i>&nbsp;</i></p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 34 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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";text-align:center'>&nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=625
 style='width:90%;border-collapse:collapse'>
 <tr style='height:14.2pt'>
  <td colspan=11 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; background:#FFFFFF; padding:1.1pt'>
  <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,&nbsp;INC.&nbsp;and&nbsp;SUBSIDIARIES</font></b></p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td colspan=11 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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&nbsp;STATEMENTS&nbsp;OF&nbsp;SHAREHOLDERS&nbsp;EQUITY_">CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;SHAREHOLDERS'&nbsp;EQUITY</a></font></b></p>
  </td>
 </tr>
 <tr style='height:14.2pt'>
  <td colspan=11 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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&nbsp;ended&nbsp;June&nbsp;30</font></b></p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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&nbsp;Shares</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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='background:white;
  padding:1.1pt;'>
  <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 valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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&nbsp;Shares</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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 colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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 valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:12.15pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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; background:white; padding:1.1pt; '>
  <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; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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; background:white; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Balance&nbsp;2006</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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&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; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">16,066,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</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; background:#CBDBD1; padding:1.1pt; '>
  <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">(3,995,000)</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; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">12,071,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Options&nbsp;exercised</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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">93,574&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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">32,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">32,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:22.95pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Issuance&nbsp;of&nbsp;restricted&nbsp;shares&nbsp;and&nbsp;Stock-</font></p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Based&nbsp;compenstion</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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">85,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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">242,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">242,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:22.95pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;Income</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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">506,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">506,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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; background:white; padding:1.1pt; '>
  <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; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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; background:white; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Balance&nbsp;2007</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; background:#CBDBD1; padding:1.1pt; '>
  <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:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">16,340,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">(3,489,000)</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">12,851,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.15pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:34.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Cumulative&nbsp;retained&nbsp;earnings&nbsp;adjustment</font></p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">for&nbsp;prior&nbsp;years&nbsp;due&nbsp;to&nbsp;accounting</font></p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">standards&nbsp;change&nbsp;(FIN&nbsp;48)</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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 colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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">(75,000)</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">(75,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:22.95pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Issuance&nbsp;of&nbsp;restricted&nbsp;shares&nbsp;and&nbsp;Stock-</font></p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Based&nbsp;compenstion</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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">85,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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">205,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">205,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;Income</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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">317,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">317,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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; background:white; padding:1.1pt; '>
  <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; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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; background:white; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Balance&nbsp;2008</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; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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">9,803,366&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; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">16,545,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</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; background:#CBDBD1; padding:1.1pt; '>
  <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">(3,247,000)</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; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">13,298,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Repurchase&nbsp;of&nbsp;Common&nbsp;Stock</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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">(219,695)</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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">(137,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">(137,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:22.95pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Issuance&nbsp;of&nbsp;restricted&nbsp;shares&nbsp;and&nbsp;Stock-</font></p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Based&nbsp;compenstion</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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">85,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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">166,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">166,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;(Loss)</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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">(2,845,000)</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">(2,845,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.45pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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; background:white; padding:1.1pt; '>
  <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; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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; background:white; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Balance&nbsp;2009</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; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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">9,668,671&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; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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">16,574,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">(6,092,000)</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">10,482,000&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'><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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	- 35 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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";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=689
 style='width:90%;border-collapse:collapse'>
 <tr style='height:11.9pt'>
  <td colspan=5 valign=bottom style='background:#FFFFFF;
  padding:1.1pt'>
  <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,&nbsp;INC.&nbsp;and&nbsp;SUBSIDIARIES</font></b></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td colspan=5 valign=bottom style='background:white;
  padding:1.1pt;'>
  <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&nbsp;STATEMENTS&nbsp;OF&nbsp;CASH&nbsp;FLOWS_">CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;CASH&nbsp;FLOWS</a></font></b></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td colspan=5 valign=bottom style='background:#FFFFFF;
  padding:1.1pt'>
  <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&nbsp;ended&nbsp;June&nbsp;30</font></b></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><i>
	<font size="2">2009</font></i></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><i>
	<font size="2">2008</font></i></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Cash&nbsp;Flows&nbsp;from&nbsp;Operating&nbsp;Activities:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;Income</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">(2,845,000)</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">317,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Adjustments&nbsp;to&nbsp;reconcile&nbsp;net&nbsp;income&nbsp;to&nbsp;net&nbsp;cash&nbsp;used&nbsp;in&nbsp;operating&nbsp;activities:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Depreciation&nbsp;and&nbsp;amortization</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">810,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">538,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Loss&nbsp;on&nbsp;Disposal</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">25,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Impairment&nbsp;of&nbsp;intangible&nbsp;asset</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">997,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;(Recovery&nbsp;of)&nbsp;Provision&nbsp;for&nbsp;doubtful&nbsp;accounts</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">(92,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">(9,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Stock&nbsp;based&nbsp;compensation</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">166,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">205,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Retained&nbsp;earnings&nbsp;adjustment&nbsp;for&nbsp;prior&nbsp;years&nbsp;due&nbsp;to&nbsp;accounting&nbsp;standard&nbsp;change</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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 colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">(75,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Deferred&nbsp;taxes</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">1,058,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">434,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Changes&nbsp;in:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Decrease&nbsp;in&nbsp;accounts&nbsp;receivable</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">609,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">396,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Decrease&nbsp;(increase)&nbsp;in&nbsp;inventories</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">1,737,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">(478,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;Decrease&nbsp;(increase)&nbsp;in&nbsp;prepaid&nbsp;expenses</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">97,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">(9,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;(Increase)&nbsp;in&nbsp;other&nbsp;assets</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">(20,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">(43,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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;(Decrease)&nbsp;increase&nbsp;in&nbsp;accounts&nbsp;payable&nbsp;and&nbsp;accrued&nbsp;expenses</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">(1,505,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">1,645,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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;Increase&nbsp;(decrease)&nbsp;in&nbsp;income&nbsp;taxes&nbsp;payable</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">681,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">(903,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;Cash&nbsp;provided&nbsp;by&nbsp;Operating&nbsp;Activities</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">1,718,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">2,018,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:4.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Cash&nbsp;Flows&nbsp;From&nbsp;Investing&nbsp;Activities:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt'>
  <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;Purchase&nbsp;of&nbsp;equipment&nbsp;and&nbsp;leasehold&nbsp;improvements</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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">(269,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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">(3,130,000)</font></p>
  </td>
 </tr>
 <tr style='height:4.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;Cash&nbsp;used&nbsp;in&nbsp;Investing&nbsp;Activities</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">(269,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">(3,130,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  &nbsp;
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  &nbsp;</td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  &nbsp;</td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Cash&nbsp;Flows&nbsp;from&nbsp;Financing&nbsp;Activities:</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <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;Principal&nbsp;payments&nbsp;of&nbsp;patent&nbsp;deferred&nbsp;payable</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt'>
  <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">(45,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt'>
  <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">(196,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt'>
  <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;Net&nbsp;(payments)&nbsp;borrowing&nbsp;on&nbsp;Line&nbsp;of&nbsp;Credit</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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">(2,000,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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">1,700,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <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;Principal&nbsp;(payments)&nbsp;on&nbsp;Term&nbsp;Note</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt'>
  <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">(396,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt'>
  <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">(250,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt'>
  <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;Net&nbsp;Principal&nbsp;borrowing&nbsp;on&nbsp;TI&nbsp;Loan</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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">1,767,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <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;Principal&nbsp;payments&nbsp;on&nbsp;Real&nbsp;Estate&nbsp;Loan</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt'>
  <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">(31,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt'>
  <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">(28,000)</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt'>
  <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;Stock&nbsp;Repurchases</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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">(137,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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:4.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;Cash&nbsp;(used&nbsp;in)&nbsp;provided&nbsp;by&nbsp;Financing&nbsp;Activities</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">(842,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">1,226,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:4.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Net&nbsp;increase&nbsp;&nbsp;in&nbsp;Cash&nbsp;and&nbsp;Cash&nbsp;Equivalents</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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">607,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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">114,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Cash&nbsp;and&nbsp;Cash&nbsp;Equivalents,&nbsp;beginning&nbsp;of&nbsp;year</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <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">517,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt'>
  <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">403,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:4.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#FFFFFF;padding:1.1pt'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Cash&nbsp;and&nbsp;Cash&nbsp;Equivalents,&nbsp;end&nbsp;of&nbsp;year</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1,124,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">517,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:4.2pt'>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <td colspan=5 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><i>
	<font size="2">Supplemental&nbsp;Information</font></i></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Cash&nbsp;paid&nbsp;for&nbsp;interest</font></p>
  </td>
  <td valign=bottom style='border:medium none;background:#CBDBD1;
  padding:1.1pt;'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">230,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border:medium none;background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">181,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:11.9pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Cash&nbsp;paid&nbsp;for&nbsp;income&nbsp;taxes</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; background:white; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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">560,000&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:4.2pt'>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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;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";'><font style="font-size: 10.0pt">&nbsp;</font></p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 36 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'><a
name="prodex10q_htm_notes_to_consolidated_fina"></a><b>NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS </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, 2009 and 2008</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 miniature rotary drive systems, embedded motion control 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, but does not accrue an
allowance for sales returns.&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-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>We seek customer-funded projects to customize
generic rotary drive, motion control, and electric motor technology platforms
to specific customer requirements.&nbsp; For customer-funded development projects,
costs are capitalized and recognized as a cost of sales when specific
deliverables within the development contracts are earned, matching the costs to
the revenue.&nbsp; Revenue related to these fees can vary greatly due to the timing
of contract milestones that prompt the revenue recognition.&nbsp; The results of
customer-funded development work are intended to provide long-term exclusive
manufacturing agreements and may provide the customer with the retention of the
intellectual property developed.&nbsp; The identity of our customers is generally
protected by a non-disclosure agreement.&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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 37 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Contract revenue
for customer funded research and development is principally recognized based on
the achievement of contractual milestones and the COS is recognized as the
ratio of total actual incurred costs to date to total estimated costs for each
contract (cost-to-cost method) in accordance with Statement of Position
No.&nbsp;81-1, &#147;Accounting for Performance of Construction-Type and Certain
Production-Type Contracts.&#148; Generally, the Company reviews cost performance and
estimates to complete on its ongoing contracts at least annually.&nbsp; The impact
of revisions of profit estimates are recognized on a cumulative catch-up basis in
the period in which the revisions are made.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'>&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 estimates of
contract costs are based on expectations of costs to deliver the milestone. &nbsp;These
estimates can change based on unforeseen technology and integration issues, but
known risk factors and contract challenges are generally allowed for in the
initial scope and cost estimate of the program. &nbsp;Revisions in profit estimates
are charged to income in the period in which the facts that give rise to the
revision become known. In certain circumstances, specific contracts in which
the Company cannot reliably make estimates of total revenues and expenses are
accounted for under the completed contract method. &nbsp;Under the completed
contract method, all revenue and expenses attributable to the specific contract
are deferred until the end of the project. </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'><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'>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, 2009 and 2008:</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=539
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <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='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;Ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance&nbsp;at&nbsp;the&nbsp;beginning&nbsp;of&nbsp;the&nbsp;year</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>144,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>153,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Write&nbsp;off&nbsp;of&nbsp;doubtful&nbsp;accounts</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(39,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(3,000)</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Collection&nbsp;of&nbsp;doubtful&nbsp;accounts</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(53,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(6,000)</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance&nbsp;at&nbsp;the&nbsp;end&nbsp;of&nbsp;the&nbsp;year</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>52,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>144,000&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, 2009 and 2008:</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=529
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.05pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;Ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:13.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:13.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Raw&nbsp;Materials</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,290,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,874,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Work&nbsp;in&nbsp;process</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>866,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>992,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Development&nbsp;costs&nbsp;under&nbsp;contract</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>207,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.35pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Finished&nbsp;goods</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,208,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,028,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.05pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;inventories</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,364,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,101,000&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-autospace:none'><b>Warranties</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";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 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 in Cost of Sales (&#147;COS&#148;).&nbsp; The warranty
accrual and expenses for the years ended June 30, 2009 and 2008 are presented
below:</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>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 38 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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=585
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;Ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Beginning&nbsp;Balance</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>861,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>469,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Warranties&nbsp;issued&nbsp;during&nbsp;period</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>664,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,337,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Adjustments&nbsp;to&nbsp;pre-existing&nbsp;warranties</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;due&nbsp;to&nbsp;assumption&nbsp;changes</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(406,000)</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(39,000)</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Settlements&nbsp;(actual&nbsp;expenditures)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(601,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(906,000)</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Ending&nbsp;Balance</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>518,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>861,000&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'><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'>Accrued warranty expense was reduced during fiscal year ending June 30,
2009 compared to fiscal year ending June 30, 2008 due to fewer units shipped that
were eligible for warranty coverage, reduced expected future per unit repair
costs and reduced expected return percentages.&nbsp; The reduced repair costs
reflect the average per unit actual cost to repair warranty eligible units and
the reduced return percentage reflects expected return activity based on a
rolling twelve month period.&nbsp; The repair costs and return profile assumptions
are reviewed quarterly.&nbsp; The table below reflects the effects on the fiscal
year ending June 30, 2009 and 2008 net income (loss) and net income (loss) per share
for the assumption changes.</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>

<table class=MsoNormalTable border=0 cellpadding=0 width=730
 style='width:100%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=top style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;Ended&nbsp;June&nbsp;30,</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;(Loss)&nbsp;before&nbsp;provision&nbsp;for&nbsp;income&nbsp;taxes&nbsp;-&nbsp;before&nbsp;estimate&nbsp;change</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,979,000)</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>292,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;Add:&nbsp;&nbsp;Impact&nbsp;of&nbsp;change&nbsp;in&nbsp;warranty&nbsp;reserve&nbsp;estimate&nbsp;assumptions</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>406,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>39,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;Less&nbsp;:&nbsp;Tax&nbsp;effect</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(272,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(14,000)</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Income&nbsp;(Loss)&nbsp;after&nbsp;provision&nbsp;of&nbsp;income&nbsp;taxes&nbsp;-&nbsp;after&nbsp;estimate&nbsp;change</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,845,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>317,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>EPS&nbsp;-&nbsp;before&nbsp;provision&nbsp;for&nbsp;income&nbsp;taxes&nbsp;-&nbsp;before&nbsp;estimate&nbsp;change</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.31)</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.03&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;Add:&nbsp;&nbsp;Impact&nbsp;of&nbsp;change&nbsp;in&nbsp;warranty&nbsp;reserve&nbsp;estimate&nbsp;assumptions</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.04&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.00&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;Less&nbsp;:&nbsp;Tax&nbsp;effect</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.03)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.00)</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>EPS&nbsp;-&nbsp;after&nbsp;provision&nbsp;of&nbsp;income&nbsp;taxes&nbsp;-&nbsp;after&nbsp;estimate&nbsp;change</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.29)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.03&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>Property, Plant, Equipment
&amp; Leasehold Improvements, Net</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, 2009
and 2008: </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=495
 style='width:55%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;Ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Land</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>757,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:12.3pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Building</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,470,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,470,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Leasehold&nbsp;Improvements</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,283,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,259,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Equipment</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,620,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,416,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11,130,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10,902,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Accumulated&nbsp;Depreciation</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(5,149,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(4,432,000)</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;property,&nbsp;land&nbsp;&amp;&nbsp;equipment,&nbsp;net</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,981,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,470,000&nbsp;</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";'>&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-indent:.5in;text-autospace:none'>Depreciation is
provided using the straight-line method over the estimated useful lives of the
assets as follows: Building - 39 years, equipment - 3 to10 years; and leasehold
improvements are depreciated over the shorter of the term of the lease or their
estimated useful lives.<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'><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;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	- 39 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'><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
identifies two reporting units for purposes of its annual goodwill impairment
testing arising from its acquisitions of Micro Motors and Astromec. In
accordance with SFAS No.&nbsp;142, goodwill is not amortized and is assessed
annually for impairment (as of April 1) or whenever events or changes in
circumstances indicate that the carrying value of such assets may not be
recoverable. &nbsp;The Company&#146;s Carson City reporting unit corresponds to the
operations resulting from the Astromec acquisition, while its Irvine reporting
unit corresponds to the operations resulting from the Micro Motors
acquisition.&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 monitor
current market conditions and review for potential triggering events quarterly
to determine if there is a need for interim impairment testing. We did not
determine that a triggering event for the Astromec and Micro Motors goodwill
occurred in the past 12 months. Our standard annual impairment testing is done
April 1 of each year.</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 determining
if a triggering event has occurred, we consider not only expectations for
growth in the entire US economy, but also expectations for regional growth
specific to our sales markets and specific to our industry and product lines. &nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=490
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;Ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Goodwill&nbsp;Associated&nbsp;With&nbsp;Micro&nbsp;Motors</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,110,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,110,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Goodwill&nbsp;Associated&nbsp;With&nbsp;Astromec</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,887,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,887,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;goodwill</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,997,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,997,000&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'>&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'>With regard to
our patent, however, we did determine that a triggering event occurred, due to
market conditions affecting its expected value.&nbsp; Intangible assets include the
patents associated with the October, 2005 Intravantage asset purchase.&nbsp; Management
tested the carrying amount of the Intravantage asset purchase for
recoverability as of March 31, 2009.&nbsp; The result of management&#146;s analysis
(based on several scenarios with varying probabilities of occurring) was that
the asset&#146;s value was impaired and, accordingly a charge of $997,000 was taken
in the fiscal 2009 third quarter.&nbsp; See Note 10 for additional information.&nbsp;
Total amortization expense in 2009 and 2008 was $1,075,000 and $99,000,
respectively.&nbsp; Intangible assets consist of the following as of June 30, 2009
and 2008: </p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=490
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <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='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;Ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Intangible&nbsp;assets</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4,178,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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>
 </tr>
 <tr style='height:12.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(997,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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 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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Accumulated&nbsp;amortization</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(3,034,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,956,000)</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;Intangible&nbsp;Assets</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>147,000&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; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,222,000&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'>&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'>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 cellpadding=0 width=198
 style='width:35%;border-collapse:collapse' id="table7">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width=158 valign=top style='padding:1.1pt;
  '>
  <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 valign=top style='padding:1.1pt;
  '>
  <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 width=157 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2010</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td width=157 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2011</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=157 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2012</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td width=157 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2013</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=157 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>2014&nbsp;-&nbsp;2021</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>95,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td width=157 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>147,000&nbsp;</p>
  </td>
 </tr>
</table>

</div>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <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";'>- 40 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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;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, our Board of Directors authorized the repurchase on the open
market of up to 500,000 shares of our outstanding Common Stock at a share price
no greater than $1.25, subject to compliance with applicable laws and
regulations.&nbsp; There is no requirement that we repurchase all or any portion
of such shares.&nbsp; The maximum total value of the repurchase is not to exceed
$500,000.&nbsp; From the inception of the repurchase authorization through the
fiscal year-end date of June 30, 2003, we repurchased 75,700 shares of Common
Stock for $43,741, at an average price of $0.58 per share.&nbsp; No additional
shares were repurchased in fiscal years 2004 through 2008.&nbsp; During the 2009
fiscal year, we repurchased 219,695 shares of common stock for $133,472, at an
average price of $0.61 per share. Since the initiation of the buyback program in
2002 through June 30, 2009, we have repurchased 295,395 shares for $177,213 at
an average price of $0.60 per share. &nbsp;Our Board suspended the buyback
authorization in May 2009 and has not set a reinitiation date for the purchase of our shares pursuant to this
program.</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>

<table class=MsoNormalTable border=0 cellpadding=0 width=708
 style='width:100%;border-collapse:collapse'>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:medium none windowtext;border-right:medium none windowtext;
  background:#FFFFFF;padding:1.1pt;'>
  &nbsp;</td>
  <td valign=bottom style='border-right:medium none windowtext; border-top:1px solid windowtext; border-bottom:medium none windowtext; border-left:medium none; background:#FFFFFF; padding:1.1pt; '>
  <p align="center"><b>(a)</b></td>
  <td valign=bottom style='border-top:1px solid windowtext;
  border-left:medium none;border-bottom:medium none windowtext;border-right:medium none;
  background:#FFFFFF;padding:1.1pt;'>
  <p align="center"><b>(b)</b></td>
  <td valign=bottom style='border-right:medium none windowtext; border-top:1px solid windowtext; border-bottom:medium none windowtext; border-left:medium none; background:#FFFFFF; padding:1.1pt; '>
  <p align="center"><b>(c)</b></td>
  <td valign=bottom style='border-right:medium none windowtext; border-top:1px solid windowtext; border-bottom:medium none windowtext; border-left:medium none; background:#FFFFFF; padding:1.1pt; '>
  <p align="center"><b>(d)</b></td>
 </tr>
 <tr style='height:13.25pt'>
  <td style='border-top:1px solid;border-left:
  1px solid;border-bottom:1px solid windowtext;border-right:1px solid windowtext;
  background:#FFFFFF;padding:1.1pt;' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Period</b></p>
  </td>
  <td style='border-right:1px solid windowtext; border-top:1px solid windowtext; border-bottom:1px solid windowtext; border-left:1px solid; background:#FFFFFF; padding:1.1pt; ' bordercolor="#000000">
  <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'><b>Total&nbsp;Number&nbsp;of</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Shares</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Purchased</b></p>
  </td>
  <td style='border-top:1px solid windowtext;
  border-left:1px solid;border-bottom:1px solid windowtext;border-right:1px solid;
  background:#FFFFFF;padding:1.1pt;' bordercolor="#000000">
  <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'><b>Average&nbsp;Price</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Paid&nbsp;Per&nbsp;Share</b></p>
  </td>
  <td style='border-right:1px solid windowtext; border-top:1px solid windowtext; border-bottom:1px solid windowtext; border-left:1px solid; background:#FFFFFF; padding:1.1pt; ' bordercolor="#000000">
  <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'><b>Total&nbsp;Number&nbsp;of&nbsp;Shares</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Purchased&nbsp;as&nbsp;Part&nbsp;of</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Publicly&nbsp;Announced&nbsp;Plans</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>or&nbsp;Programs</b></p>
  </td>
  <td style='border-right:1px solid windowtext; border-top:1px solid windowtext; border-bottom:1px solid windowtext; border-left:1px solid; background:#FFFFFF; padding:1.1pt; ' bordercolor="#000000">
  <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'><b>Maximum&nbsp;Number</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>(Approximate&nbsp;Dollar&nbsp;Value)&nbsp;of</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Shares&nbsp;that&nbsp;May&nbsp;Yet&nbsp;be</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Purchased&nbsp;Under&nbsp;the&nbsp;Plans&nbsp;or</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Programs</b></p>
  </td>
 </tr>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:left; margin-left:0in; margin-right:0in; margin-top:0in'>July&nbsp;1-31,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	15,700</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.99</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	91,400</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">408,600&nbsp;($440,719)</p>
  </td>
 </tr>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>August&nbsp;1-31,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	7,000</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.94</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	98,400</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">401,600&nbsp;($434,109)</p>
  </td>
 </tr>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>September&nbsp;1-30,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	42,229</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$0.87&nbsp;</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	140,629</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <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'>359,371&nbsp;($397,335)</p>
  </td>
 </tr>
 <tr style='height:13.2pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>October&nbsp;1-31,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	36,149</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.69</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	176,778</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <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'>323,222&nbsp;($372,311)</p>
  </td>
 </tr>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>November&nbsp;1-30,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	8,549</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.56</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	185,327</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">314,673&nbsp;($367564)</p>
  </td>
 </tr>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>December&nbsp;1-31,&nbsp;2008</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	24,462</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.42</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	209,789</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">290,211&nbsp;($357,235)</p>
  </td>
 </tr>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>January&nbsp;1-31,&nbsp;2009</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>8,352&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.44</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	218,141</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">281,859&nbsp;($352,324)</p>
  </td>
 </tr>
 <tr style='height:13.2pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>February&nbsp;1-28,&nbsp;2009</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	13,252</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.41</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	231,393</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>268,607&nbsp;($349,190)</p>
  </td>
 </tr>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>March&nbsp;1-31,&nbsp;2009</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	21,897</p>
  </td>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.37</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	253,290</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>246,710&nbsp;($343,994)</p>
  </td>
 </tr>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:white; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>April&nbsp;1-30,&nbsp;2009</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	42,105</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.40</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	295,395</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:white; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>204,605&nbsp;($322,787)</p>
  </td>
 </tr>
 <tr style='height:13.25pt'>
  <td valign=bottom style='border-left:1px solid; border-top:1px solid; border-bottom:1px solid; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; ' bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>FY&nbsp;2009&nbsp;Total</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	219,695</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	$0.61</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>295,395&nbsp;</p>
  </td>
  <td valign=bottom style='border-style:solid; border-width:1px; background:#CBDBD1; padding:1.1pt; ' align="right" bordercolor="#000000">
  <p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>204,605&nbsp;($322,787)</p>
  </td>
 </tr>
</table>

<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;page-break-after:avoid;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman Bold";font-weight:bold;'>&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. &nbsp;Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment. </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-indent:.5in;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;) 00-10, <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-indent:.5in;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, 2009 and 2008 and at various
times throughout 2009 and 2008 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; Such
receivables are not collateralized, but we do monitor our customer&#146;s payment
history.&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>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 41 -</p>
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</div>

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

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<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-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'>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 applies to us in the recognition
of the cost of stock options awarded based on the grant-date fair value of
those awards.</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'>Under SFAS No. 123(R), the fair value of stock-based awards to employees can
be 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 volatility assumption
is based on historical actual activity, with the future volatility expected to
equal the past volatility.&nbsp; The expected time to exercise is based on the
simplified model of the vesting time plus &frac12; the option life.&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.&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'>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 49% to 57% in 2009,
of 58% to 63% in 2008; risk-free interest rates of approximately 3.3% to 4.9%
in 2009 and 4.4% to 5.1% in 2008; 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-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>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: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: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; 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;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>&nbsp;</p>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 42 -</p>
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<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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<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-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;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; <i>Fair
Value Measurements</i>&nbsp;&#151; Effective July&nbsp;1, 2008, the Company adopted
Statement of Financial Accounting Standards No.&nbsp;157, &#147;Fair Value
Measurements&#148; (SFAS&nbsp;157)&nbsp;for financial assets and liabilities
measured at fair value on a recurring basis. &nbsp;(See note 9) &nbsp;FAS 157 defines
fair value, establishes a framework for measuring fair value in accordance with
generally accepted accounting principles, and expands disclosures about fair
value measurements. </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b><i>&nbsp;</i></b></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'><font style="font-size: 7.0pt">&nbsp;</font></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 generic
rotary drive, motion control, and electric motor technology platforms to
specific customer requirements.&nbsp; For customer-funded development projects,
costs are capitalized and recognized as a cost of sales when specific
deliverables within the development contracts are earned, matching the costs to
the revenue.&nbsp; Revenue related to these fees can vary greatly due to the timing
of contract milestones that prompt the revenue recognition.&nbsp; The results of
customer-funded development work are intended to provide long-term exclusive
manufacturing agreements and may provide the customer with the retention of the
intellectual property developed.&nbsp; The identity of our customers is generally
protected by a non-disclosure agreement.&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";text-indent: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'>Contract revenue
for customer funded research and development is principally recognized based on
the achievement of contractual milestones and the COS is recognized as the
ratio of total actual incurred costs to date to total estimated costs for each
contract (cost-to-cost method) in accordance with Statement of Position
No.&nbsp;81-1, &#147;Accounting for Performance of Construction-Type and Certain
Production-Type Contracts.&#148; Generally, the Company reviews cost performance and
estimates to complete on its ongoing contracts at least annually.&nbsp; The impact
of revisions of profit estimates are recognized on a cumulative catch-up basis
in the period in which the revisions are made.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'>&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 estimates of
contract costs are based on expectations of costs to deliver the milestone.
These estimates can change based on unforeseen technology and integration issues,
but known risk factors and contract challenges are generally allowed for in the
initial scope and cost estimate of the program. Revisions in profit estimates
are charged to income in the period in which the facts that give rise to the
revision become known. In certain circumstances, specific contracts in which we
cannot reliably make estimates of total revenues and expenses are accounted for
under the completed contract method. Under the completed contract method, all
revenue and expenses attributable to the specific contract are deferred until
the end of the project. </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;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>In the year ended June 30, 2009, $475,000 was
recognized as research and development related cost of sales, compared to $119,000 recognized as
such costs in the prior year ended.&nbsp; As of the end of fiscal year 2009, all engineering
fee billings associated with customer projects have been completed and the
capitalized expenses related to the projects were expensed. </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;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>Advertising</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-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>Advertising costs are not capitalized, as all
advertising expenditures are recognized in the period incurred as a selling
expense.&nbsp; In the year ended June 30, 2009, we recognized $102,000 for
advertising, compared to $140,000 in the year ended June 30, 2008.&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>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'>As of June 30,
2009, the Wells Fargo credit facility had two components:&nbsp; </p>

<ul>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.25in;text-align:justify;margin-right:0in; margin-top:0in'>a revolving Credit Line Note (&#147;line of credit&#148;) of up to $1,000,000
in borrowing availability, and</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.25in;text-align:justify;margin-right:0in; margin-top:0in'>a Five year Term Note (the &#147;TI Loan&#148;) with an initial balance of&nbsp;
$2,000,000, of which $1,766,667 was outstanding as of June 30, 2009. </p></li>
</ul>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 43 -</p>
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<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;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The line of
credit borrowing availability is a maximum of $1,000,000.&nbsp; If borrowings
under the Credit Line exceed $500,000, the maximum amount of borrowing is limited
to 70% of the eligible accounts receivable plus 40% of the eligible inventory. &nbsp;Its
terms require monthly interest payments at either (i) the prime rate of
interest (3.25% at June 30, 2009) plus 1.50%, or (ii) three month LIBOR (.60%
at June 30, 2009) plus 2.50%, at our discretion, based on outstanding
borrowings.&nbsp; The credit facility expires on November 1, 2009.&nbsp;
&nbsp;We are charged an unused credit line fee of 0.25% per annum payable
quarterly on the average balance of the line of credit that is not used.<font style="font-size: 10.0pt"> </font>There was no outstanding balance under the
credit line as of June 30, 2009 and there continues to be no borrowing under
such credit line as of September 11, 2009.&nbsp; Therefore, the total eligible
additional borrowing capacity under the line of credit as of June 30, 2009 was
$1,000,000 and as of September 11, 2009 is $1,000,000.</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'>The TI Loan had
an initial balance of $2,000,000.&nbsp; The borrowings from this term
commitment were used for construction of tenant improvements for our Irvine, California facility.&nbsp; Its terms require monthly principal and interest
payments over the 60 month life of the loan, based on outstanding
borrowings.&nbsp; The interest rate is fixed at 5.72% over the life of the
loan.&nbsp; There was a $1,766,667 outstanding balance under the TI Loan as of June
30, 2009.&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'>All assets of
the Company except our Carson City land and building secure the outstanding
borrowings under the Wells Fargo credit facility.</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'>In March 2006, we entered into a ten year mortgage with Union Bank for
$1,650,000.&nbsp; The principal balance of the mortgage bears interest at a
fixed annual rate of 6.73%.&nbsp; Payments on the mortgage are $11,379 per
month (based on a 25 year amortization), with the balance of $1,291,666 in
principal due on April&nbsp;1, 2016.&nbsp; The mortgage is secured by our Carson City land and building.&nbsp; There was $1,561,000 in principal outstanding under
the mortgage as of June 30, 2009.</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'>There are
certain financial and non-financial covenants that the Company must meet to be
in compliance with the terms of the Wells Fargo credit facility and mortgage
with Union Bank.&nbsp; As of the year ended June 30, 2009, we were in compliance
with the Wells Fargo covenants, however, we were in violation of the cash flow
coverage covenant with Union Bank, with the violation resulting in an event of
default under the facility.&nbsp; On August 25, 2009, we entered into a letter
agreement with Union Bank pursuant to which Union Bank agreed to waive the
covenant violation.&nbsp; </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-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 Irvine, California and Beaverton, Oregon.&nbsp; The Irvine lease expires in March 2018 and the Beaverton lease expires in April
2014. &nbsp;These leases require the Company to pay insurance, taxes, and other
expenses related to the leased space.&nbsp; Total rent expense in 2009 and 2008 was
$572,000 and $625,000, respectively.&nbsp; Future minimum lease payments for the
fiscal year ending June 30 are: </p>

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  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=96 valign=top style='padding:1.1pt;
  '>
  <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 width=133 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2010</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=95 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>469,137&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=133 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2011</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=95 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>488,325&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=133 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2012</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=95 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>507,585&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=133 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2013</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=95 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>526,917&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.6pt'>
  <td width=133 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2014</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=95 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>531,847&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=133 valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>2015-2018</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=95 valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,876,788&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width=133 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=95 valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4,400,599&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-autospace:none'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 44 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'>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;
Other than the case pending with the Orange County Water District discussed
below, 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-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'>On June 23, 2009,
the Orange County Water District (&#147;OCWD&#148;) filed a complaint in the Superior
Court of the State of California in the County of Orange concerning remediation
of alleged ground water contamination in the Orange County Groundwater South
Basin; <u>Orange County Water District v. Sabic Innovative Plastics U.S. LLC, et
al.</u>, Case No. 00078246.&nbsp; The South Basin underlies parts of Santa Ana, California and adjacent cities.&nbsp; The complaint identifies 17 named defendants,
including Pro-Dex, and also designates 400 unnamed Doe defendants.&nbsp; We moved
out of this Santa Ana site in April, 2008 and have no remaining operations
there.</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'>The complaint
alleges that the defendants contaminated the South Basin with volatile organic
chemicals (&#147;VOCs&#148;) and perchlorate through various activities at properties
each defendant now controls or has controlled in the past.&nbsp; Through its
lawsuit, the OCWD seeks compensatory relief for all its own remedial
activities, and injunctive relief to compel the defendants to undertake
remedial activities in general.&nbsp; The complaint does not, however, specify any remedial
activities that the OCWD has undertaken to date or any remedial activities that
it seeks any particular defendants to undertake.&nbsp; Moreover, from our
investigation of OCWD&#146;s remedial activities to date, we have determined that
the OCWD is in the early stages of its remedial investigation for the South Basin groundwater contamination.</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 noted above,
16 other entities are named defendants in this case along with Pro-Dex.&nbsp; While
some are small businesses, others are larger corporations or their subsidiaries.&nbsp;
Further, as this case progresses, the OCWD is likely to add at least a few more
named defendants to the case from the 400 Doe defendants it has designated in
the current complaint.&nbsp; In the indeterminable event that we would be held
liable in the case, OCWD&#146;s total recovery probably would be allocated among
several defendants, each of which would pay only a proportionate share of that
total recovery.</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'>One of our past
insurers has committed to pay most of our defense costs for the lawsuit, while
reserving its rights as to whether it will cover any damages awarded against us,
or any settlement payment to which Pro-Dex agrees to resolve the lawsuit, under
past policies issued to us for a three-year period, March 31, 1983 to March 31,
1986.&nbsp; The policies for these three years have occurrence payment limits
of $500,000 for each annual term.&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'>Overall, the OCWD complaint remains vague, the OCWD is in an early stage
of its remedial activities in the South Basin, the lawsuit is in the early
stages of discovery, one of our insurers has committed to pay most defense
costs and has reserved rights under one&nbsp;three-year set of&nbsp;policies
and is continuing to consider extending coverage to us under other past
policies, and any recovery the OCWD may gain through the lawsuit is likely to be
allocated among several defendants.&nbsp; Therefore, our liabilities, as well
as our costs of defending, monitoring and concluding our involvement in this
case are uncertain, and those costs cannot now be estimated. </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'>&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, 2009 and 2008 are as follows: </p>

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 45 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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'>


<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=382
 style='width:50%;border-collapse:collapse'>
 <tr style='height:12.65pt'>
  <td width="21%" valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="27%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td width="21%" valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="27%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width="21%" valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Current:</p>
  </td>
  <td width="27%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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 width="21%" valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="27%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Federal</p>
  </td>
  <td width="3%" valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="23%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>97,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="21%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(403,000)</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td width="21%" valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="27%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(14,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(29,000)</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td width="21%" valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Deferred:</p>
  </td>
  <td width="27%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td width="21%" valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="27%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Federal</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>587,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>425,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.4pt'>
  <td width="21%" valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="27%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>471,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Provision&nbsp;for&nbsp;Income&nbsp;taxes</p>
  </td>
  <td width="3%" valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="23%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,141,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="21%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,000&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";'>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='margin:0in;margin-bottom:.0001pt;text-indent:.5in;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=585
 style='width:75%;border-collapse:collapse'>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Federal&nbsp;income&nbsp;tax&nbsp;provision&nbsp;at&nbsp;the&nbsp;statutory&nbsp;rate</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(579,000)</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>108,000&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:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Change&nbsp;in&nbsp;valuation&nbsp;allowance&nbsp;for&nbsp;deferred&nbsp;tax&nbsp;assets</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,241,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State&nbsp;income&nbsp;taxes,&nbsp;net&nbsp;of&nbsp;federal&nbsp;tax&nbsp;benefit</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(275,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>39,000&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:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Tax&nbsp;Incentives</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(255,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(122,000)</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Non-deductible&nbsp;items</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>28,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>51,000&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:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>FIN&nbsp;48&nbsp;Liability</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(19,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(84,000)</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Other</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Provision&nbsp;for&nbsp;Income&nbsp;taxes</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,141,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,000&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'>&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, 2009 and 2008 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=484
 style='width:65%;border-collapse:collapse' id="table9">
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="5%">
  <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;
  background:#CBDBD1;padding:1.1pt;' width="50%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Current&nbsp;Deferred&nbsp;income&nbsp;tax&nbsp;assets</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="50%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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 colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Deferred&nbsp;tax&nbsp;assets</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="50%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Accrued&nbsp;expenses</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;' width="3%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="18%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>403,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;' width="2%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="19%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>535,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="50%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Inventories</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>830,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>660,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="50%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Operating&nbsp;Losses</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>680,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>73,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="50%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State&nbsp;Taxes</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>87,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(92,000)</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="50%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;tax&nbsp;credit&nbsp;carry&nbsp;forwards</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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:12.7pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;deferred&nbsp;tax&nbsp;assets&nbsp;(current)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,000,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,176,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Valuation&nbsp;Allowance</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,000,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="50%">
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Deferred&nbsp;tax&nbsp;assets,&nbsp;net</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; ' width="3%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;' width="18%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; ' width="2%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;' width="19%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,176,000&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>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=556
 style='width:65%;border-collapse:collapse' id="table10">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Long&nbsp;Term&nbsp;Deferred&nbsp;income&nbsp;tax&nbsp;assets/(liabilities)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Intangible&nbsp;assets</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>493,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>268,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Non&nbsp;cash&nbsp;stock&nbsp;based&nbsp;compensation</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>16,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>113,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;tax&nbsp;credit&nbsp;carry&nbsp;forwards</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>569,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>351,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State&nbsp;Taxes</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(76,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(57,000)</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Depreciation</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(932,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(965,000)</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;deferred&nbsp;tax&nbsp;assets&nbsp;(non-current)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>70,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(290,000)</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Valuation&nbsp;Allowance</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(241,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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 colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Deferred&nbsp;tax&nbsp;assets,&nbsp;net</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(171,000)</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(290,000)</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Deferred&nbsp;tax&nbsp;assets/(liabilities)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(171,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>886,000&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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 46 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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-indent:.5in;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'>We have federal net operating loss carry forwards for June 30, 2009 and
2008 of $1,515,000 and $0, respectively.&nbsp; We have state net operating loss
carry forwards for June 30, 2009 and 2008 of $2,305,000 and $1,002,000,
respectively.&nbsp; The Company has federal tax credits of $276,000 and $103,000 for
June 30, 2009 and 2008, respectively, and state tax credits of $285,000 and
$248,000 for June 30, 2009 and 2008, respectively.</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'>Significant management judgment is required in determining our provision
for income taxes and the recoverability of our deferred tax asset.&nbsp; Such
determination is based primarily on our historical taxable income, with some
consideration given to our estimates of future taxable income by jurisdictions
in which we operate and the period over which our deferred tax assets will be
recoverable.&nbsp; Due to cumulative taxable losses during the past three years, we
recorded $2,241,000 valuation allowance against our deferred tax assets in the
year ended June 30, 2009.&nbsp; This reduction in deferred tax assets is adjusted
through income tax expense.&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'>A reconciliation of the beginning and ending amount of valuation
allowance is 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 cellspacing=0 cellpadding=0 width=602
 style='width:451.35pt;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.95pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=18 valign=top style='width:13.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=90 valign=top style='width:67.8pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.55pt'>
  <td width=212 colspan=3 valign=bottom style='width:158.7pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance&nbsp;at&nbsp;July&nbsp;1,&nbsp;2008</p>
  </td>
  <td width=71 valign=bottom style='width:52.95pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=18 valign=bottom style='width:13.2pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=90 valign=bottom style='width:67.8pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt'>
  <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:14.55pt'>
  <td width=282 colspan=4 valign=bottom style='width:211.65pt;background:white;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Increase&nbsp;in&nbsp;tax&nbsp;asset&nbsp;valuation&nbsp;allowance</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=108 colspan=2 valign=bottom style='width:81.0pt;border:none;
  border-bottom:solid windowtext 1.0pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,241,000)</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td width=212 colspan=3 valign=bottom style='width:158.7pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance&nbsp;at&nbsp;June&nbsp;30,&nbsp;2009</p>
  </td>
  <td width=71 valign=bottom style='width:52.95pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=18 valign=bottom style='width:13.2pt;border:none;border-bottom:
  double windowtext 2.25pt;background:#CBDBD1;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=90 valign=bottom style='width:67.8pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  background:#CBDBD1;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,241,000)</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;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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

<p 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, 2009, pursuant to FASB<font style="font-size: 10.0pt"> </font>Interpretation
No.&nbsp;48, &#147;Accounting for Uncertainty in Income Taxes, we have accrued
$54,000 of uncertain tax positions related state income tax matters that would
reduce the Company&#146;s income tax expense if recognized and would result in a
corresponding decrease in the Company&#146;s effective tax rate.&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'>&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'>During the year ended June 30, 2009, the Internal Revenue Service settled
its audit of our federal income tax returns for the fiscal years ended June 30,
2004 through June 30, 2006.&nbsp; This settlement resulted in the reversal of
$41,000 of unrecognized tax benefits associated with Section 263A costs we
reported, which reduced our tax expense by $6,000.&nbsp; During the year, we filed
amended state returns for the fiscal years ended June 30, 2004 through June 30,
2006 to report the related changes to the Section 263A costs.&nbsp; The filing of
the amended state tax returns resulted in the reversal of $9,000 of
unrecognized tax benefits associated with the Section 263A costs we reported,
which reduced our tax expense by $1,000.&nbsp; Our remaining liability for uncertain
tax positions, related to the fiscal years ended June 30, 2005 through June 30,
2009, is $54,000 as of June 30, 2009.&nbsp; We have not identified any new
unrecognized tax benefits.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

<p 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>

<div align="center">

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=602
 style='width:451.35pt;border-collapse:collapse' id="table11">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.95pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=top style='width:52.9pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=18 valign=top style='width:13.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=90 valign=top style='width:67.8pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.65pt'>
  <td width=212 colspan=3 valign=bottom style='width:158.7pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance&nbsp;at&nbsp;July&nbsp;1,&nbsp;2008</p>
  </td>
  <td width=71 valign=bottom style='width:52.95pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=18 valign=bottom style='width:13.2pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=90 valign=bottom style='width:67.8pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>114,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.65pt'>
  <td width=423 colspan=6 valign=bottom style='width:317.45pt;background:white;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Additions&nbsp;based&nbsp;on&nbsp;tax&nbsp;positions&nbsp;related&nbsp;to&nbsp;the&nbsp;current&nbsp;year</p>
  </td>
  <td width=108 colspan=2 valign=bottom style='width:81.0pt;background:white;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.65pt'>
  <td width=282 colspan=4 valign=bottom style='width:211.65pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Additions&nbsp;for&nbsp;tax&nbsp;positions&nbsp;of&nbsp;prior&nbsp;years</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=108 colspan=2 valign=bottom style='width:81.0pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.65pt'>
  <td width=282 colspan=4 valign=bottom style='width:211.65pt;background:white;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Reductions&nbsp;for&nbsp;tax&nbsp;positions&nbsp;of&nbsp;prior&nbsp;years</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=108 colspan=2 valign=bottom style='width:81.0pt;background:white;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(16,000)</p>
  </td>
 </tr>
 <tr style='height:14.65pt'>
  <td width=141 colspan=2 valign=bottom style='width:105.8pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Settlements</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.95pt;background:#CBDBD1;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:#CBDBD1;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=108 colspan=2 valign=bottom style='width:81.0pt;border:none;
  border-bottom:solid windowtext 1.0pt;background:#CBDBD1;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(50,000)</p>
  </td>
 </tr>
 <tr style='height:15.35pt'>
  <td width=212 colspan=3 valign=bottom style='width:158.7pt;background:white;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Balance&nbsp;at&nbsp;June&nbsp;30,&nbsp;2009</p>
  </td>
  <td width=71 valign=bottom style='width:52.95pt;background:white;padding:
  1.1pt 1.1pt 1.1pt 1.1pt;height:15.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=71 valign=bottom style='width:52.9pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=18 valign=bottom style='width:13.2pt;border:none;border-bottom:
  double windowtext 2.25pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width=90 valign=bottom style='width:67.8pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>54,000&nbsp;</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-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 recognize accrued interest and penalties related to unrecognized tax
benefits in income tax expense. As of June 30, 2009, the Company had
approximately $12,000 in accrued interest and penalties which is included as a
component of the $54,000 unrecognized tax benefit noted above. The liability
for the payment of interest and penalties has increased by approximately $6,000
for the twelve months ended June 30, 2009.</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 47 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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";text-align:justify;text-indent:.5in;text-autospace:
none'>Pro-Dex and its subsidiaries are subject to U.S. federal income tax, as
well as income tax of multiple state tax jurisdictions. We are currently open
to audit under the statute of limitations by the Internal Revenue Service for
the years ended June 30, 2007 and June 30, 2008.&nbsp; Our state income tax
returns are open to audit under the statute of limitations for the years ended
June 30, 2005 through June 30, 2008. We do not anticipate a significant change
to the total amount of unrecognized tax benefits within the next 12 months.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

<p 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 - SHARE-BASED
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-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 i)&nbsp; options to
purchase common stock or ii) restricted shares, may be granted up to an
aggregate amount of<a name=Verdatum></a> 2,500,000 shares of common stock to
officers, directors, and employees of the Company.&nbsp; Upon its adoption, the
employee stock option plan had 2,000,000 shares of common stock available for
issuance and the directors&#146; plan had 500,000 shares of common stock available
for issuance.&nbsp; 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 and are forfeited 90
days after the holder ceases to be director<font style="font-size: 9.5pt">.&nbsp; </font>There
are options to purchase 346,045 shares remaining under the employee option
plan, and options to purchase 130,000 shares remaining under the directors
option plan for a total of 476,045 shares remaining under both option plans at
June 30, 2009, that are available to grant in future years.&nbsp; New shares are issued
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>
<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=633
 style='width:80%;border-collapse:collapse' id="table12">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  ' width="5%">
  <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>
  <td valign=top style='padding:1.1pt;
  ' width="58%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  ' width="14%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  ' width="13%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="58%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Fiscal&nbsp;Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="5%">
  <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;
  background:white;padding:1.1pt;' width="58%">
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Share-based&nbsp;compensation&nbsp;expense&nbsp;recognized:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="58%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative,&nbsp;options</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>49,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>87,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="58%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative,&nbsp;restricted&nbsp;stock</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>117,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>117,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Subtotal&nbsp;expense</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>166,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>204,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="58%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Related&nbsp;deferred&nbsp;tax&nbsp;benefit</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(47,000)</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;net&nbsp;income</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>166,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>157,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:7.25pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="5%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="58%">
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;basic&nbsp;earnings&nbsp;per&nbsp;share</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="14%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.02&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:1.1pt;
  ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; ' width="13%">
  <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:12.3pt'>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;diluted&nbsp;earnings&nbsp;per&nbsp;share</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;' width="14%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.02&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;' width="13%">
  <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:12.3pt'>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;' width="5%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border:medium none;background:
  #CBDBD1;padding:1.1pt;' width="58%">
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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;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, 2009, there was $48,000 of total unrecognized compensation
cost related to 102,250 non vested outstanding stock options with a per share
weighted average value of $1.08.&nbsp; The unrecognized expense is anticipated to be
recognized on a straight-line basis over a weighted average period of 0.9
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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 48 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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;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";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<table class=MsoNormalTable border=0 cellpadding=0 width=708
 style='width:100%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=100 valign=top style='width:74.7pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <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">2009</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <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">2008</font></p>
  </td>
 </tr>
 <tr style='height:25.4pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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>
  <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 valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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>
  <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>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt;'>
  <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">Fixed&nbsp;Options</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; background:#CBDBD1; padding:1.1pt; '>
  <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">Shares</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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&nbsp;Price</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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">Shares</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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&nbsp;Price</font></p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Outstanding&nbsp;at&nbsp;beginning&nbsp;of&nbsp;year</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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">1,109,500&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border:medium none;background:white;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.58&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1,038,500&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td width=100 valign=bottom style='width:74.7pt;border:none;border-right:
  solid windowtext 1.0pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.7pt'>
  <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>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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;Granted</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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">106,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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">0.62&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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">101,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">1.50&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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;Exercised</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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 colspan=2 valign=bottom style='background:white;
  padding:1.1pt;'>
  <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='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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 colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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:14.9pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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;Forfeited</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; background:#CBDBD1; padding:1.1pt; '>
  <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">(282,500)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">1.75&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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">(30,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">1.86&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Outstanding&nbsp;at&nbsp;end&nbsp;of&nbsp;year</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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">933,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border:medium none;background:white;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.42&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1,109,500&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td width=100 valign=bottom style='width:74.7pt;border:none;border-right:
  solid windowtext 1.0pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.7pt'>
  <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">1.58&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Exercisable&nbsp;at&nbsp;end&nbsp;of&nbsp;year</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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">830,750&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.46&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">986,500&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td width=100 valign=bottom style='width:74.7pt;border:none;border-right:
  solid windowtext 1.0pt;background:white;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.7pt'>
  <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">1.58&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Weighted-average&nbsp;fair&nbsp;value&nbsp;per</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt;'>
  <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;Option&nbsp;granted&nbsp;during&nbsp;the&nbsp;year</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; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">0.28&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td width=100 valign=bottom style='width:74.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  background:#CBDBD1;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.7pt'>
  <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">0.79&nbsp;</font></p>
  </td>
 </tr>
</table>

<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-align:justify;text-indent:.5in;text-autospace:
none'>The following table summarizes information regarding options outstanding
and options exercisable at June 30, 2009: </p>

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

<table class=MsoNormalTable border=0 cellpadding=0 width=684
 style='width:100%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'><b>
	<font size="2">&nbsp;</font></b></p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <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:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <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-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <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&nbsp;Outstanding</font></p>
  </td>
  <td 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;
  background:#CBDBD1;padding:1.1pt;'>
  <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-bottom:medium none; border-top:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=5 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; background:#CBDBD1; padding:1.1pt; '>
  <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&nbsp;Exercisable</font></p>
  </td>
 </tr>
 <tr style='height:22.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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>
  <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:medium none;
  background:white;padding:1.1pt;'>
  <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>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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>
  <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-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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&nbsp;of</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:white;padding:1.1pt;'>
  <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&nbsp;Price</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; background:white; padding:1.1pt; '>
  <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-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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&nbsp;Life</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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='background:white;padding:
  1.1pt;'>
  <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; background:white; padding:1.1pt; '>
  <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-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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:12.65pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">$0.42&nbsp;to&nbsp;$0.81</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">296,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">4.1.&nbsp;years</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border:medium none;background:#CBDBD1;
  padding:1.1pt;'>
  <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">0.66&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border:medium none;background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1,200&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">250,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border:medium none;background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">1,200&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">$1.00&nbsp;to&nbsp;$1.56</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">357,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">4.9&nbsp;years</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:white;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.33&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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">307,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:white;
  padding:1.1pt;'>
  <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">1.31&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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">$1.74&nbsp;to&nbsp;$2.18</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">190,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2.2&nbsp;years</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2.07&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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">190,000&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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">2.07&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:14.95pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">$2.55&nbsp;to&nbsp;$3.30</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">90,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">6.0&nbsp;years</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">2.89&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</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; background:white; padding:1.1pt; '>
  <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='background:white;padding:
  1.1pt;'>
  <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; background:white; padding:1.1pt; '>
  <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">83,750&nbsp;</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">2.91&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; background:white; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">-&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Total</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">933,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">4.2&nbsp;years</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</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; background:#CBDBD1; padding:1.1pt; '>
  <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">1.42&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; background:#CBDBD1; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1,200&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">830,750&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</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; background:#CBDBD1; padding:1.1pt; '>
  <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">1.46&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; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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">1,200&nbsp;</font></p>
  </td>
 </tr>
</table>

<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>&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";'>&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 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 of 25% or 85,000 shares
per year over 4 years.&nbsp; The common stock price at the date of the grant was
$1.38.&nbsp; New shares are issued with the vesting 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 $117,000 in compensation
expense for the restricted stock was recognized in fiscal year 2009.</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 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:95%;border-collapse:collapse' id="table13">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; background:#CBDBD1; padding:1.1pt; '>
  <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-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <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">2009</font></p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <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-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <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">2008</font></p>
  </td>
 </tr>
 <tr style='height:25.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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:medium none;
  background:white;padding:1.1pt;'>
  <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>
  <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 valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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>
  <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>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt;'>
  <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">Restricted&nbsp;shares</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; background:#CBDBD1; padding:1.1pt; '>
  <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">Shares</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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&nbsp;Price</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <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">Shares</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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&nbsp;Price</font></p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Outstanding&nbsp;at&nbsp;beginning&nbsp;of&nbsp;year</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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">170,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border:medium none;background:white;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.38&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">255,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">1.38&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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;Granted</font></p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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 colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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 colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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;Vested</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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">(85,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='background:white;
  padding:1.1pt;'>
  <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">1.38&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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">(85,000)</font></p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">1.38&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:14.9pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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;Forfeited</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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 colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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='background:#CBDBD1;padding:
  1.1pt;'>
  <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:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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 colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Outstanding&nbsp;at&nbsp;end&nbsp;of&nbsp;year</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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">85,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border:medium none;background:white;
  padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">1.38&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">170,000&nbsp;</font></p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">1.38&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:white;padding:1.1pt;'>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">Exercisable&nbsp;at&nbsp;end&nbsp;of&nbsp;year</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; background:white; padding:1.1pt; '>
  <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-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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">$</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">-&nbsp;</font></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>
	<font size="2">$</font></p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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>
</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>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	- 49 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'>&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, 2009, there was $78,200 of total unrecognized compensation
cost related to 85,000 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 0.7
years.&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-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, 2009, warrants to acquire 100,000 shares of common stock expired.
&nbsp;There are no remaining warrants outstanding.</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=628
 style='width:80%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <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>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt;'>
  <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-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:24.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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; background:white; padding:1.1pt; '>
  <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-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Average</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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; background:white; padding:1.1pt; '>
  <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-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  <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:12.35pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Warrants</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise&nbsp;Price</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise&nbsp;Price</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding&nbsp;at&nbsp;beginning&nbsp;of&nbsp;year</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.25&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.25&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Granted</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Exercised</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.55pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Forfeited</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(100,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.25&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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:2.25pt double windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding&nbsp;at&nbsp;end&nbsp;of&nbsp;year</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.25&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <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='background:#CBDBD1;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Exercisable&nbsp;at&nbsp;end&nbsp;of&nbsp;year</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.25&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'><b>&nbsp;</b></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>
<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=691
 style='width:90%;border-collapse:collapse' id="table14">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width=424 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;</p>
  </td>
  <td width=19 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=105 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=20 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=104 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;income&nbsp;(loss)</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(2,845,000)</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>317,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic&nbsp;net&nbsp;income&nbsp;per&nbsp;common&nbsp;share:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Weighted&nbsp;average&nbsp;number&nbsp;of&nbsp;common&nbsp;shares&nbsp;outstanding</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,710,755&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,736,429&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic&nbsp;net&nbsp;income&nbsp;per&nbsp;common&nbsp;share</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.29)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.03&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted&nbsp;net&nbsp;income&nbsp;per&nbsp;share:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Weighted&nbsp;average&nbsp;of&nbsp;common&nbsp;shares&nbsp;outstanding</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,710,755&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,736,429&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect&nbsp;of&nbsp;potentially&nbsp;dilutive&nbsp;securities&nbsp;(options)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>169,761&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect&nbsp;of&nbsp;potentially&nbsp;dilutive&nbsp;securities&nbsp;(restricted&nbsp;shares)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8,160&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect&nbsp;of&nbsp;potentially&nbsp;dilutive&nbsp;securities&nbsp;(warrants)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted&nbsp;weighted&nbsp;average&nbsp;number&nbsp;of&nbsp;common&nbsp;and&nbsp;shares</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,710,755&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,924,350&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted&nbsp;net&nbsp;income&nbsp;per&nbsp;common&nbsp;share</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.29)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.03&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td valign=bottom style='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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:right'><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'>Potentially dilutive securities not included in the diluted loss per
share calculation due to net losses from continuing operations and for options
that have a strike price higher than the market price for our common stock (no
intrinsic value) are as follows:</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=711
 style='width:90%;border-collapse:collapse' id="table15">
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width="70%" valign=top style='padding:1.1pt;
  '>
  <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 width="15%" valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="15%" valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td width="70%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="15%" 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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td width="15%" 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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:13.95pt'>
  <td width="70%" valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Options&nbsp;to&nbsp;purchase&nbsp;common&nbsp;shares</p>
  </td>
  <td width="15%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>835,793&nbsp;</p>
  </td>
  <td width="15%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>945,503&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td width="70%" valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Restricted&nbsp;Shares</p>
  </td>
  <td width="15%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>50,993&nbsp;</p>
  </td>
  <td width="15%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>101,986&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td width="70%" valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Warrants&nbsp;to&nbsp;purchase&nbsp;common&nbsp;shares</p>
  </td>
  <td width="15%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width="15%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>59,993&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.95pt'>
  <td width="70%" 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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;potentially&nbsp;dilutive&nbsp;securities&nbsp;not&nbsp;included</p>
  </td>
  <td width="15%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>886,786&nbsp;</p>
  </td>
  <td width="15%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,107,482&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:justify'><b>&nbsp;</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;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 50 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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'>
<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'>We had two major customers (defined as a customer that represented
greater than 10% of the Company&#146;s total revenues) in the year ended June 30, 2009
and 2008.&nbsp;&nbsp;<br>
&nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=519
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=5 valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Year&nbsp;ended&nbsp;June&nbsp;30,</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  background:#CBDBD1;padding:1.1pt;'>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Revenues</p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Accts.&nbsp;Rec.</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Revenues</p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Accts.&nbsp;Rec.</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  background:white;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Customer&nbsp;1</p>
  </td>
  <td valign=bottom style='background:white;padding:
  1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4,232,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>513,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4,429,000&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:white; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>408,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Customer&nbsp;2</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,530,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>730,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <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; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8,075,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</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;
  background:#CBDBD1;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>621,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.3pt'>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='background:white;padding:1.1pt;
  '>
  <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='background:white;
  padding:1.1pt;'>
  <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='background:white;
  padding:1.1pt;'>
  <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-autospace:none'><b>&nbsp;NOTE 9.&nbsp;- FAIR VALUE MEASUREMENTS</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";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'><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><i>Fair Value
Measurements</i>&nbsp;&#151; Effective July&nbsp;1, 2008, the Company adopted
Statement of Financial Accounting Standards No.&nbsp;157, &#147;Fair Value
Measurements&#148; (SFAS&nbsp;157)&nbsp;for financial assets and liabilities
measured at fair value on a recurring basis. &nbsp;SFAS 157 defines fair value,
establishes a framework for measuring fair value in accordance with generally
accepted accounting principles, and expands disclosures about fair value
measurements. &nbsp;In addition to expanding the disclosures surrounding fair value
measurements, SFAS&nbsp;157 indicates that fair value represents the amount
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. As such, fair value is
determined based upon assumptions that market participants would use in pricing
an asset or liability. As a basis for considering such assumptions,
SFAS&nbsp;157 establishes a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value as follows: </p>

<ul>
	<li>
	<p style='margin-bottom:.0001pt;text-autospace:none;font-size:12.0pt;font-family:"HelveticaNeue LT 55 Roman";margin-left:0.2in;text-align:justify;margin-right:0in; margin-top:0in'>Level 1 - Valuations based on unadjusted quoted prices in
active markets for identical assets or liabilities that the Company has the
ability to access. <br>
&nbsp;</p></li>
	<li>
	<p style='margin-bottom:.0001pt;text-autospace:none;font-size:12.0pt;font-family:"HelveticaNeue LT 55 Roman";margin-left:0.2in;text-align:justify;margin-right:0in; margin-top:0in'>Level 2 - Valuations
based on quoted prices in markets that are not active or for which all
significant inputs are observable, either directly or indirectly. <br>
&nbsp;</p></li>
	<li>
	<p style='margin-bottom:.0001pt;text-autospace:none;font-size:12.0pt;font-family:"HelveticaNeue LT 55 Roman";margin-left:0.2in;text-align:justify;margin-right:0in; margin-top:0in'>Level 3 - Valuations
based on inputs that are unobservable and significant to the overall fair value
measurement.</p></li>
</ul>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In many cases, a
valuation technique used to measure fair value includes inputs from multiple
levels of the fair value hierarchy described above. The lowest level of
significant input determines the placement of the entire fair value measurement
in the hierarchy. </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;text-autospace:
none'>The following valuation methodology was used for the company&#146;s assets
to measure fair value at June 30, 2009:</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'><i>Cash and cash equivalents:&nbsp; </i>The carrying value of cash and cash
equivalents is considered to be representative of their fair values based on
the short term nature of these instruments.&nbsp; As such these investments are
classified within level 1 of the valuation hierarchy.</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'>&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'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center id="table16">
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 51 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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";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;</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 following fair value hierarchy table presents information about the
company&#146;s assets measured at fair value on a recurring basis as of June 30,
2009:</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=523
 style='width:70%;border-collapse:collapse'>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-right:medium none; background:#CBDBD1; padding:1.1pt; height:18.25pt' width="43%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Description</p>
  </td>
  <td 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;
  background:#CBDBD1;padding:1.1pt; height:18.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Level&nbsp;1</p>
  </td>
  <td 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;
  background:#CBDBD1;padding:1.1pt; height:18.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Level&nbsp;2</p>
  </td>
  <td 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;
  background:#CBDBD1;padding:1.1pt; height:18.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Level&nbsp;3</p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; background:#CBDBD1; padding:1.1pt; height:18.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Total</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt; height:18.25pt' width="43%">
  &nbsp;</td>
  <td valign=bottom style='background:#FFFFFF;padding:
  1.1pt; height:18.25pt; border-bottom-style:none; border-bottom-width:medium' width="2%">
  &nbsp;</td>
  <td valign=bottom style='background:#FFFFFF;
  padding:1.1pt; height:18.25pt; border-bottom-style:none; border-bottom-width:medium' width="13%">
  &nbsp;</td>
  <td colspan=2 valign=bottom style='background:#FFFFFF;
  padding:1.1pt; height:18.25pt; border-bottom-style:none; border-bottom-width:medium'>
  &nbsp;</td>
  <td colspan=2 valign=bottom style='background:#FFFFFF;
  padding:1.1pt; height:18.25pt; border-bottom-style:none; border-bottom-width:medium'>
  &nbsp;</td>
  <td valign=bottom style='border-right:medium none #000000; background:#FFFFFF; padding:1.1pt; height:18.25pt; border-bottom-style:none; border-bottom-width:medium' width="4%">
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1px solid windowtext; background:#FFFFFF; padding:1.1pt; height:18.25pt' width="13%">
  &nbsp;</td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:18.25pt' width="43%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;and&nbsp;cash&nbsp;equivalents</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;padding:
  1.1pt; height:18.25pt; 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'>$</p>
  </td>
  <td valign=bottom style='background:#CBDBD1;
  padding:1.1pt; height:18.25pt; border-bottom-style:none; border-bottom-width:medium' width="13%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,124,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt; height:18.25pt; border-bottom-style:none; border-bottom-width:medium'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='background:#CBDBD1;
  padding:1.1pt; height:18.25pt; border-bottom-style:none; border-bottom-width:medium'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-right:medium none #000000; background:#CBDBD1; padding:1.1pt; height:18.25pt; border-bottom-style:none; border-bottom-width:medium' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1px solid windowtext; background:#CBDBD1; padding:1.1pt; height:18.25pt' width="13%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,124,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none windowtext;border-right:
  medium none;background:#FFFFFF;padding:1.1pt; height:18.25pt' width="43%">
  &nbsp;
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt; height:18.25pt' width="2%">
  &nbsp;</td>
  <td valign=bottom style='border-top:medium none windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#FFFFFF;padding:1.1pt; height:18.25pt' width="13%">
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt; height:18.25pt' width="5%">
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt; height:18.25pt' width="7%">
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt; height:18.25pt' width="3%">
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt; height:18.25pt' width="7%">
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#FFFFFF; padding:1.1pt; height:18.25pt' width="4%">
  &nbsp;</td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1px solid windowtext;
  background:#FFFFFF;padding:1.1pt; height:18.25pt' width="13%">
  &nbsp;</td>
 </tr>
 <tr style='height:12.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;background:#CBDBD1;padding:1.1pt; height:18.25pt' width="43%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:18.25pt' width="2%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  background:#CBDBD1;padding:1.1pt; height:18.25pt' width="13%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,124,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:18.25pt' width="5%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:18.25pt' width="7%">
  <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:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:18.25pt' width="3%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:18.25pt' width="7%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>
	-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none #000000; border-top:medium none; border-bottom:1.0pt solid windowtext; background:#CBDBD1; padding:1.1pt; height:18.25pt' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1px solid windowtext;
  background:#CBDBD1;padding:1.1pt; height:18.25pt' width="13%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>
	&nbsp;1,124,000&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";'><b>NOTE 10.
- - INTANGIBLE
ASSET IMPAIRMENT</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'>In accordance with Statement of Financial Accounting
Standards (&#147;SFAS&#148;), SFAS&nbsp;No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal for Long-Lived Assets&#148; (&#147;SFAS&nbsp;144&#148;) long-lived assets and
intangible assets with definite lives are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Impairment indicators include, among other
conditions, cash flow deficits, historic or anticipated declines in revenue or
operating profit and adverse legal or regulatory developments. If it is
determined that such indicators are present and the review indicates that the
assets will not be fully recoverable, based on undiscounted estimated cash flow
over the remaining amortization periods, their carrying values are reduced to
estimated fair market value. Estimated fair market value is determined
primarily using the anticipated cash flow discounted at a rate commensurate
with the risk involved. For the purposes of identifying and measuring
impairment, long-lived assets are grouped with other assets and liabilities at
the lowest level for which identifiable cash flow are largely independent of
the cash flow of other assets and liabilities.&#148;&nbsp; Our standard annual
impairment testing is done April 1 of each year.</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 monitor
current market conditions and review for potential triggering events quarterly
to determine if there is a need for interim impairment testing. We did not
determine that a triggering event for the Astromec and Micro Motors goodwill
occurred in the past 12 months. We did however; determine that a triggering
event occurred with the patent intangible asset. &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'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 52 -</p>
  </td>
 </tr>
</table>

</div>

<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; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</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";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 determining
if a triggering event has occurred, we consider not only expectations for
growth in the entire US economy, but also expectations for regional growth
specific to our sales markets and specific to our industry and product lines. &nbsp;While
our operating units are influenced by changes in the general economic outlook
of the United States, they are most heavily influenced by changes specific to
the medical device industry.&nbsp; Furthermore, the magnitude of economic changes
within the industry is viewed alongside the outlooks and forecasts specific to
the reporting units to obtain a better sense of the likelihood that goodwill
may be impaired.&nbsp; Declines within the industry&#146;s outlook are reflected in the
unit&#146;s revenue projections. &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'>We identify two
reporting units for purposes of our annual goodwill impairment testing arising
from its acquisitions of Micro Motors and Astromec. &nbsp;In accordance with SFAS
No.&nbsp;142, goodwill is not amortized and is assessed annually for impairment
(as of April 1) or whenever events or changes in circumstances indicate that
the carrying value of such assets may not be recoverable. &nbsp;Our Carson City
reporting unit corresponds to the operations resulting from the Astromec
acquisition, while our Irvine reporting unit corresponds to the operations
resulting from the Micro Motors acquisition.&nbsp; Our intangible asset is related
to the interosseous patents associated with the &#147;Intraflow&#148; acquisition.</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'>Goodwill and
Intangible assets are tested for impairment using a discounted cash flow
analysis. The discounted cash flow analysis relies upon estimates of the
entity&#146;s future revenue and expenses to ultimately project the future cash
flows resulting from the business activity of each entity. The projected future
cash flows are discounted to present value at an appropriate discount rate.&nbsp; An
appropriate discount rate is reached by calculating the weighted average cost
of capital &#147;WACC,&#148; which is determined by the assumptions underlying the
Capital Asset Pricing Model &#147;CAPM&#148; and is considered to reflect the view of
&#147;Market Participants,&#148; as required under SFAS 157. The inputs used in calculating
the WACC are described below.&nbsp; </p>

<div>

<p style="font-size: 12.0pt; font-family: Times New Roman; text-align: justify; text-indent: .5in; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&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";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The assumed capital structure is based upon the Company&#146;s actual capital
structure and debt to equity ratio at the time of analysis.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of debt is based on the Company&#146;s actual contracted rates.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of equity is equal to the risk free rate represented by the 10
year Treasury note, plus the Company&#146;s historical correlation to market
movement &#147;beta&#148; times the historical equity risk premium, plus an additional
small stock premium.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In valuing the Company&#146;s patents, an additional risk premium is added to
reflect the increased risk inherent in intangible assets.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also in valuing the patents, an expected value calculation was performed
that weighted the values of different scenarios based on their expected
probability of occurrence.</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 performed
separate calculations to determine the sensitivity of our intangible asset
impairment conclusions to increases in the assumed discount rates. In the case
of Astromec, the goodwill impairment test is not failed until the discount rate
is increased to 33 percent.&nbsp; In the case of Micro Motors, the goodwill impairment
test is not failed until the discount rate is increased to 240 percent. </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'>Additionally,
the material assumptions relied upon in the discounted cash flow analysis used
to value the Company&#146;s Intraflow patents are shown below.</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";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The patent is valued from the perspective of &#147;Market Participants,&#148;
which are believed to possess sales and marketing expertise in the dental and
medical device field.&nbsp; Management&#146;s financial analysis of the intangible asset
was performed from the perspective of a potential acquirer and estimates what a
Market Participant would be willing to pay for the asset.&nbsp; This methodology is
consistent with FAS 157 requirements for Fair Value estimates to be estimates
of the price that would be received to sell an asset, or an &#147;Exit Price.&#148; In
these scenarios, the patents&#146; value is based on the assumed greater
distribution capabilities and lower incremental costs that would be held by
Market Participants.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The patent was also valued as a ongoing product line without any
additional distribution partner or &#147;Market Participant&#148; value.&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A premium for the increased riskiness of intangible assets was included
in the asset&#146;s discount rate.</p>

<p style="font-size: 12.0pt; font-family: Times New Roman; text-align: justify; text-indent: .5in; 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; text-align: justify; text-indent: .5in; 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; text-align: justify; text-indent: .5in; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">&nbsp;</p>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 53 -</p>
  </td>
 </tr>
</table>

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

<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-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We performed separate calculations to determine the sensitivity of the
asset&#146;s impairment conclusion to variances in sales growth, gross margin, and
discount rate. Sales growth forecasts ranged from growth of 6 times to 12 times
2008 levels.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were transaction and/or start-up costs associated with the Market
Participants valuation.</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 material
assumptions relied upon in the discounted cash flow analysis used to value the
goodwill held in the Carson City reporting unit are shown below.</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";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill resulting from the Company&#146;s acquisition of Astromec is tested
for impairment under its Carson City motor manufacturing operations.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Motor sales of existing products are assumed to decline as products age,
but are more than replaced by revenue growth from new products and increased
intercompany sales for medical hand piece products. </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The existing fixed cost structure of the motor manufacturing operations
will be better absorbed by the higher forecasted volume of production,
resulting in increased profit margins. </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the value of the goodwill held in the Carson City
reporting unit as if it stands alone, an additional analysis is performed to
estimate a value to Pro-Dex of having an in-house motor manufacturer for the
medical device product line.&nbsp; This captive capability enables development speed
and focus, which produces revenue in other operating units.&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";'>&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-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The value of the Carson City manufacturing operation is added to the
value of the additional capability provided to Pro-Dex for the total value of
the goodwill. </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'>&nbsp;The material
assumptions relied upon in the discounted cash flow analysis used to value the
goodwill held in the Micro Motors reporting unit are shown below.</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";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill resulting from the Company&#146;s acquisition of Micro Motors is
tested for impairment under its Irvine reporting unit, which houses the
operations resulting from the base technology acquired from Micro Motors.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales to existing customers are assumed to decline, but are more than
replaced by revenue growth from new customers.</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 existing
fixed cost structure of the Irvine operations will be better absorbed by the
higher forecasted volume of medical products, resulting in increased profit
margins.</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'>Given the
company&#146;s lack of a direct dental distribution channel, it has stopped actively
promoting the product based on the intangible asset resulting from the purchase
of certain assets from IntraVantage, Inc. in October 2005.&nbsp; Any
substantial future value therefore stems from the possibility that a company
with a direct dental distribution channel (a &#147;Market Participant&#148;) might be
interested in access to the technology through product purchases, licenses,
acquisition, joint venture, or other means.&nbsp; Given the current economic
environment, the general lack of investment in new products, the limited number
of Market Participants to whom this technology relates, the time and expense
necessary to consummate a transaction, and other factors considered by
management, there is also a significant possibility that no distribution
partner will be found, resulting in effectively no value of the asset.&nbsp;
Given this change in circumstance, in accordance with FAS 144 &#147;Accounting for
the Impairment or Disposal of Long-Lived Assets,&#148; management tested the
carrying amount of the intangible asset for recoverability as of March 31,
2009.&nbsp; The result of management&#146;s analysis based on several scenarios (with
varying probability of occurring) was that the asset&#146;s expected value at that
date was $150,000 and, accordingly a charge of $997,280 was taken in the fiscal
2009 third quarter.&nbsp; The asset continued to amortize its remaining value over
the remaining patent&#146;s life.&nbsp; As to June 30, 2009, the patent&#146;s intangible
carrying value was $147,000. &nbsp;Management remains committed to optimizing
the value of this technology for our shareholders, and will continue to pursue
any opportunity to accomplish that end.</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";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center id="table18">
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>- 54 -</p>
  </td>
 </tr>
</table>

</div>

<br clear=ALL>

<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;text-indent:.5in'>&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'>For the Astromec
reporting unit&#146;s impairment testing there was an assumption of decreased
external sales growth compared to 2008, which was more than offset by an
increased sales growth rate of motors for internal (Pro-Dex) use.&nbsp; In addition
to the value of the reporting unit as an internal supplier and stand alone
business, the unit has additional strategic value by enabling Pro-Dex to gain
additional customers under other reporting units that is considered in the
valuation. It should be noted that the unit passes its goodwill impairment test
without the inclusion of this additional &#147;enablement&#148; value.&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'>For the Micro
Motors reporting unit&#146;s impairment testing, there was an assumption of a slower
than historical sales growth rate than in the previous valuation.&nbsp; The total 5
year growth rate in the 2008 valuation was equal to the historical 5 year
growth rate of the Company, but the growth rate was reduced by 50% for the 2009
valuation. The reason for the reduced sales growth is the current and forecast
near and medium term market conditions.&nbsp; The effect of this sales growth
decrease was to decrease the unit&#146;s calculated value, but not to an extent that
it fails the goodwill impairment test.&nbsp; The computed reporting unit value
exceeds the carrying value of the unit by more than 100 percent.</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'><b>NOTE 11. SUBSEQUENT EVENTS</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-indent:.5in;text-autospace:none'>We have evaluated events or transactions that occurred after
the balance sheet date of June 30, 2009 through September 16, 2009.&nbsp; There were
no subsequent events to recognize.</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 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>

<table class=MsoNormalTable border=0 cellpadding=0 width=726
 style='width:100%;border-collapse:collapse' id="table19">
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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=1297 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 width="8%">
  <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=1297 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 width="8%">
  <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=1297 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, 2008). </font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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=1297 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, 2008). </font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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=1297 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 width="8%">
  <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=1297 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 width="8%">
  <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=1297 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 width="8%">
  <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=1297 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, 2008 ).</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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=1297 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 width="8%">
  <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=1297 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-K filed October 1, 2002).</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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</font></p>
  </td>
  <td width=1297 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 width="8%">
  <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=1297 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 width="8%">
  <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&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=1297 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 width="8%">
  <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</font></p>
  </td>
  <td width=1297 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 width="8%">
  <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</font></p>
  </td>
  <td width=1297 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 width="8%">
  <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=1297 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>
</table>

<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">
- -55-</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";text-align:center;text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<table class=MsoNormalTable border=0 cellpadding=0 width=726
 style='width:100%;border-collapse:collapse'>
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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=1299 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 width="8%">
  <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=1299 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, 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 width="8%">
  <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=1299 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, 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 width="8%">
  <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*<sup> </sup></font></p>
  </td>
  <td width=1299 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-K filed September 28,
  2006).</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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<sup> </sup></font></p>
  </td>
  <td width=1299 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, 2008&nbsp;
  (incorporated herein by reference to Exhibit 10.1 to the Company&#146;s Form 8-K
  filed August 23, 2008).</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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* </font></p>
  </td>
  <td width=1299 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 style='height:35.1pt'>
  <td valign=top style='padding:0in;
  ' nowrap width="8%">
  <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</font></p>
  </td>
  <td width=1299 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
  Amendment, dated April 9, 2009, between Pro-Dex, Inc. and Wells Fargo Bank,
  National Association (incorporated herein by reference to Exhibit 10.1 to the
  Company&#146;s Form 8-K filed April 15, 2009).</font></p>
  </td>
 </tr>
 <tr style='height:.5in'>
  <td valign=top style='padding:0in;
  ' nowrap width="8%">
  <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=1299 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
  Amendment, dated June 30, 2009, between Pro-Dex, Inc. and Wells Fargo Bank,
  National Association (incorporated herein by reference to Exhibit 99.1 to the
  Company&#146;s Form 8-K filed July 6, 2009).</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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> </sup></font></p>
  </td>
  <td width=1299 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 (incorporated herein by reference to Exhibit 21.1 to the
  Company&#146;s Form 10-K filed September 28, 2008).</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; ' nowrap width="8%">
  <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=1299 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 width="8%">
  <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=1299 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 width="8%">
  <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=1299 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 width="8%">
  <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=1299 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";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: 11.0pt">*
Denotes management contract or compensatory arrangement required to be filed as
an exhibit to the Form 10-K. </font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><sup>xx</sup> <font style="font-size: 11.0pt">Filed
  Herewith</font></p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
	<b> &nbsp;</b>- 56 -</p>
  </td>
 </tr>
</table>

</div>

&nbsp;<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'>


<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'>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>

<table class=MsoNormalTable border=0 cellpadding=0
 style='border-collapse:collapse' width="50%">
 <tr>
  <td width=305 valign=top style='width:229.1pt;padding:0in 0in 0in 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 width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width=305 valign=top style='width:229.1pt;padding:0in 0in 0in 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 width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width=305 valign=top style='width:229.1pt;padding:0in 0in 0in 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 width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width=305 valign=top style='width:229.1pt;padding:0in 0in 0in 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 width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width=305 valign=top style='width:229.1pt;padding:0in 0in 0in 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 width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width=305 valign=top style='width:229.1pt;padding:0in 0in 0in 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 width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
 </tr>
</table>

<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>

<table class=MsoNormalTable border=0 cellpadding=0 width=744
 style='width:100%;border-collapse:collapse'>
 <tr>
  <td width=609 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: 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='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
  16,
  2009</font></p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">---------------------------------&nbsp;
  </font></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'><font style="font-size: 10.0pt">&nbsp;------------------------------------
  </font></p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">Mark
  P. Murphy&nbsp;</font></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'><font style="font-size: 10.0pt">Date
  </font></p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">President,
  Chief Executive Officer and Director</font></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'><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 width=609 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: 10.0pt">(Principal
  Executive Officer)</font></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'><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 width=609 valign=top style='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='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 width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">/
  s / Jeffrey J. Ritchey&nbsp; </font></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'><font style="font-size: 10.0pt">September
  16,
  2009</font></p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">---------------------------------&nbsp;
  </font></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'><font style="font-size: 10.0pt">&nbsp;-------------------------------------
  </font></p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">Jeffrey
  J. Ritchey&nbsp;</font></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'><font style="font-size: 10.0pt">Date
  </font></p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">Treasurer,
  Chief Financial Officer &amp; Secretary</font></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'><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 width=609 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: 10.0pt">(Principal
  Financial and Accounting Officer) </font></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'><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 width=609 valign=top style='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='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 width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 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 / George J. Isaac&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">George
  J. Isaac&nbsp;</font></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'><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">&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
  16,
  2009</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 width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">Director</font></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'><font style="font-size: 10.0pt">Date
  </font></p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 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 / William L. Healey&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">William
  L. Healey&nbsp;</font></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'><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">&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
  16,
  2009</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 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 width=609 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: 10.0pt">Director</font></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'><font style="font-size: 10.0pt">Date
  </font></p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 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 J. Berthelot&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">Michael
  J. Berthelot&nbsp; </font></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'><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">&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
  16,
  2009</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 width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">Director</font></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'><font style="font-size: 10.0pt">Date
  </font></p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 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 / David Holder&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">David
  Holder&nbsp; </font></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'><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">&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
  16,
  2009</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 width=24 valign=top style='width:.25in;padding:0in 0in 0in 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 width=609 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: 10.0pt">Director</font></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'><font style="font-size: 10.0pt">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>

&nbsp;</div>

<br clear=ALL>

<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: 16.0pt">End of Filing</font></b></p>

<p>&nbsp;</p>
<p align="center">-57-</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>2
<FILENAME>es23-1.htm
<TEXT>
<html>

<head>
<!-- Document Prepared With IDEAxfiler Software-->
<!-- Copyright 2009 IDEAxfiler TRADEMARK-->
<!-- All rights reserved EDGAR2.com -->



<title>Exhibit 23.1</title>



</head>

<body lang=EN-US>

<div style='page:Section1;'>

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

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

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

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";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:0in;margin-bottom:.0001pt;text-align:justify;text-justify:
inter-ideograph'>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 17, 2009 with respect to
the consolidated financial statements of Pro-Dex, Inc. and Subsidiaries
included in this Annual Report (Form 10-K) for the year ended June&nbsp;30, 2009.</p>

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

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

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin:0in;margin-bottom:.0001pt'>September 17, 2009</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>

</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>ex31-1.htm
<TEXT>
<html>

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

<body>

<div style='page:Section1;'>

<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-family:"Times New Roman"'><b>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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="table3">
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">1.</font></td>
		<td colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">&nbsp;I have reviewed this Form 10-K of
Pro-Dex, Inc.;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">2.</font></td>
		<td colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">3.</font></td>
		<td width="96%" colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">4.</font></td>
		<td width="96%" colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">The registrant&#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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">a)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font size="2" face="Times New Roman">b)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">c)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">d)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">5.</font></td>
		<td width="96%" colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">a)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">b)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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 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: September 16, 2009</font></p>

<div align="right">
	<table border="0" style="border-collapse: collapse" width="50%" id="table4">
		<tr>
			<td>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<u>
<font size="2">/s/
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>
<font size="2" style="font-size: 10.0pt">MARK P. MURPHY&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>
</u></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">Mark
P. Murphy</font></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">Chief
Executive Officer</font></p>

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

</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>ex31-2.htm
<TEXT>
<html>

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

<body>

<div style='page:Section1;'>

<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>EXHIBIT 31.2</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";'><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";'><font style="font-size: 10.0pt">&nbsp;</font></p>
<table border="0" style="border-collapse: collapse" width="100%" id="table3">
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">1.</font></td>
		<td colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">&nbsp;I have reviewed this Form 10-K of
Pro-Dex, Inc.;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">2.</font></td>
		<td colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">3.</font></td>
		<td width="96%" colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">4.</font></td>
		<td width="96%" colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">The registrant&#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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">a)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font size="2" face="Times New Roman">b)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">c)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">d)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">5.</font></td>
		<td width="96%" colspan="2" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">a)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'><font style="font-size: 10.0pt">&nbsp;</font></p>

		</td>
	</tr>
	<tr>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="3%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">
		<font style="font-size: 10.0pt" face="Times New Roman">b)</font></td>
		<td width="93%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<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 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";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">Date: September 16, 2009</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></p>
<div align="right">
	<table border="0" style="border-collapse: collapse" width="50%" id="table4">
		<tr>
			<td>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">&nbsp;</font><u>/s/
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; JEFFREY J. RITCHEY</u><font style="font-size: 10.0pt"> _______</font></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">Jeffrey
J. Ritchey</font></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<font style="font-size: 10.0pt">Chief
Financial Officer</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>

<div>

&nbsp;</div>

</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>ex32.htm
<TEXT>
<html>

<head>

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

<body>

<div style='page:Section1;'>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</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>EXHIBIT 32</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";margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:3.0in;margin-bottom:.0001pt;text-indent:-3.0in'>&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";margin-top:0in;margin-right:0in;
margin-bottom:0in;margin-left:3.0in;margin-bottom:.0001pt;text-align:center;
text-indent:-3.0in'>&nbsp;</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";margin-top:0in;text-align:center'><b>CERTIFICATIONS
OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER</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";margin-top:0in;text-align:center'><b>PURSUANT
TO 18 U.S.C. SECTION 1350, <br>
AS ADOPTED PURSUANT TO <br>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</b></p>

<p 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";margin-top:0in;text-align:center'><b>&nbsp;</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";margin-top:0in;text-align:center'><b>Certifications
of Chief Executive Officer and Chief Financial Officer</b></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-indent:.5in;font-size:11.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-indent:.5in;font-family:"Times New Roman";margin-top:0in;text-align:justify'>In connection with the
annual report on Form 10-K of Pro-Dex Inc. (the &#147;Company&#148;) for the annual
period ended June 30, 2009 (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:</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-indent:.5in;font-family:"Times New Roman";text-align:justify'>1.&nbsp;&nbsp; The Report fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended; and</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-indent:.5in;font-family:"Times New Roman";text-align:justify'>2.&nbsp;&nbsp; The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Courier New";text-align:justify'>&nbsp;</p>

<table border="0" style="border-collapse: collapse" width="100%" id="table1">
	<tr>
		<td width="45%">Dated: September 16, 2009</td>
		<td width="55%">

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>By:<u>
/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; </u></p>

		</td>
	</tr>
	<tr>
		<td width="45%">&nbsp;</td>
		<td width="55%">

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>Mark
P. Murphy</p>

		</td>
	</tr>
	<tr>
		<td width="45%">&nbsp;</td>
		<td width="55%">

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>Chief
Executive Officer and President<u><br>
</u></p>

		</td>
	</tr>
	<tr>
		<td width="45%">&nbsp;</td>
		<td width="55%">

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Courier New";text-align:justify'>&nbsp;</p>

		</td>
	</tr>
	<tr>
		<td width="45%">Dated: September 16, 2009</td>
		<td width="55%">

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>By:<u>
/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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>

		</td>
	</tr>
	<tr>
		<td width="45%">&nbsp;</td>
		<td width="55%">

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>Jeffrey
J. Ritchey</p>

		</td>
	</tr>
	<tr>
		<td width="45%">&nbsp;</td>
		<td width="55%">

<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="3">Chief Financial Officer</font></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Courier New";'>&nbsp;</p>

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

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