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<SEC-DOCUMENT>0001003297-09-000054.txt : 20090625
<SEC-HEADER>0001003297-09-000054.hdr.sgml : 20090625
<ACCEPTANCE-DATETIME>20090304174242
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001003297-09-000054
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090304

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:		CORRESP

	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>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<html>

<head>
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<title>Correspondence</title>



</head>

<body lang=EN-US>

<div style='page:Section1;'>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:right; margin-left:0in; margin-right:0in; margin-top:0in'>March
4, 2009</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt' align="right">&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Mr. Eric Atallah</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Division of Corporate Finance</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Securities and Exchange
Commission</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Mail Stop: 3030</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>100 F. Street N.E.</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Washington D. C. 20549-7010</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Re:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro-Dex Inc.</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify;text-indent:-.5in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form
10-KSB for fiscal year ended June 30, 2008</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Filed September
22, 2008</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form 10-Q for
quarter ended December 31, 2008</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; File No. 0-14942</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Dear Mr. Atallah:</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>On behalf of
Pro-Dex Inc., I am responding to your letter dated February 13, 2009 relating
to the above-referenced quarterly and annual reports.&nbsp; Our responses are named
and numbered to correspond with the names and numbers of the comments contained
in your letter.&nbsp; For your convenience, we have included a copy of the text of
your comment above each of the responses.</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><b><u>Form 10-KSB for the fiscal
year ended June 30, 2008</u></b></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><u>Item 8A(T) &#150; Controls and
Procedures, page 25</u></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>The language that is currently
     included after the word &#147;effective&#148; in your disclosure appears to be
     superfluous, since the meaning of &#147;disclosure controls and procedures&#148; is
     established by Rule 13a-15(e) of the Exchange Act.&nbsp; Please revise your
     future filings to remove the language or to revise the disclosure so that
     the language that appears after the word &#147;effective&#148; is substantially
     similar in all material respects to the language that appears in the entire
     two-sentence definition of &#147;disclosure controls and procedures&#148; set forth
     in Rule 13a-15(e).&nbsp; this comment also applies to your Item 4 disclosures
     in your forms 10-Q for the quarters ended September 30 and December 31,
     2008.</li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify;text-indent:-.25in'><i>Company&#146;s
Response: </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>We note the staff&#146;s comment and will revise future filings to
eliminate the excess language.&nbsp; It will appear as below with the strikethrough
language deleted:</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";'><b><i>&nbsp;</i></b></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
22.5pt'><i>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 December 31, 2008, the Chief Executive Officer
and Chief Financial Officer concluded that the disclosure controls and
procedures are effective. <strike>to ensure that information required to be
disclosed by use in the reports filed or submitted by us under the Exchange Act
is accumulated, recorded, processed, summarized and reported to management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, and to allow timely decisions regarding whether or not disclosure
is required.</strike></i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><u>Note 2. summary of Significant
Accounting Policies, page 33</u></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><u>Revenue recognition, page 33</u></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<div style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;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;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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


<ol style='margin-bottom:0in;margin-top:0in' start="2">
 <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>We note that you recognize
     revenue under research and development agreements as certain deliverables
     are met as specified in each development contract.&nbsp; Please address the
     following: </li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <ul style='margin-bottom:0in;margin-top:0in'>
  <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>
	Revise future filings to
      disclose the significant terms of our research and development contracts
      and explain how you account for the agreements.</li>
 </ul>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response:&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>We discuss the terms of the research and development contracts in
Item 1. Description of Business (page 4) and we note the staff&#146;s comment and will
revise future filings to include the following in the Note 2 disclosure.&nbsp; It is
as follows:</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:54.7pt;margin-bottom:.0001pt;text-align:justify;text-indent:-27.35pt;punctuation-wrap:simple;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:17.3pt'><i><font style="font-size: 10.0pt">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; </font></i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <ul style='margin-bottom:0in;margin-top:0in'>
  <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Tell us why such funding is classified
      as revenue instead of presented as a reimbursement against research and
      development expenses.</li>
 </ul>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response:&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>In the terms of certain research and development contracts, part of
the technology that we are contracted to produce is not retained by us, but rather
transferred to the funding company for future economic benefit.&nbsp; Therefore, as
cited by FAS 68 paragraph 10, we view the transaction as an obligation to
perform contractual services.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <ul style='margin-bottom:0in;margin-top:0in'>
  <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>As appropriate, revise future
      filings to explain how you apply any relevant authoritative literature,
      such as SOP 81-1, EITF 00-21, EITF 07-01, etc.</li>
 </ul>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response:&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>We note the staff&#146;s comment and will revise future filings as
appropriate to reflect the application of relevant authoritative literature as
it applies to our contracts, specifically including language referencing SOP
81-1 as it is most relevant to our operations.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>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)</i> <i>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.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";' align="center">-2-</p>

<div style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;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;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;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;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>The Company&#146;s 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 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. </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><u>Goodwill and Intangible
Assets, page 34</u></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in' start="3">
 <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>We note that you performed your
     annual goodwill testing on April 1, 2008 and did additional testing as of
     June 30, 2008.&nbsp; We note that your common share price and your overall
     market capitalization have significantly declined during the interim
     periods since the completion of your fiscal year ended June 30, 2008.&nbsp; We
     also note that your total market capitalization of approximately $4.2
     million is significantly below your book value at December 31, 2008 ($13.2
     million).&nbsp; This decline in your market capitalization may be indicative of
     an impairment of your recorded investment in its intangible assets and
     goodwill.&nbsp; Given this significant decline in market capitalization, please
     address the following matters with respect to your most recent impairment
     analysis of goodwill:</li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <ul style='margin-bottom:0in;margin-top:0in'>
  <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>We note that you updated your
      annual impairment analysis for goodwill on June 30, 2008.&nbsp; In this
      regard, please explain the method(s) and provide us with a summary of
      material relevant facts, assumptions and estimates you used in your
      impairment analysis for each of your various reporting units and further
      explain to us why you concluded that no impairment of goodwill was
      necessary.</li>
 </ul>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response: &nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>We have one amortizing intangible asset (patent) and two other
goodwill assets associated with the stock acquisition of Micro Motors, acquired
in 1995, and the asset acquisition of Astromec in 2006.&nbsp; &nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>The Micro Motors goodwill is carried at approximately $1.1 million.&nbsp;
Its value is the remaining unamortized goodwill from the purchase of Micro
Motors in 1995.&nbsp; The Micro Motors business is the basis for the Pro-Dex rotary
motion technology, which represents the largest group of revenue producing
products for Pro-Dex.&nbsp; We believe that this asset retains its book value since,
if it did not exist, there would be no basis for the overall market value of
the Company.&nbsp; As the Company continues as a viable entity, no impairment
exists.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>The Astromec goodwill is carried at approximately $1.9 million.&nbsp; This
goodwill is the result of the purchase of certain assets of Astromec, Inc in
2006.&nbsp; Astromec develops and produces small DC motors that can withstand harsh
environments, and these motors can be used in the Company&#146;s rotary motion
products.&nbsp; This valuation is supported by the increased growth available to the
Company through the enablement of our value proposition to the Company&#146;s
customers of bringing a product to market faster.&nbsp; Astromec was purchased
because it greatly enables Pro-Dex&#146;s core business model of bringing powered
products to market faster.&nbsp; In the development of any powered product, motor
development is a long-lead item.&nbsp; Pro-Dex&#146;s ability to develop its own motors
has greatly shortened our lead time, enabling us to improve our speed, which
has in turn, enabled us to land more business.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>The value of the Astromec goodwill is therefore supported by two
elements:</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";' align="center">-3-</p>
<div style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;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;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;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;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:1.5in;text-align:justify;text-indent:
- -.25in'><i>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a discounted cash flow valuation of base Astromec business plus
</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:1.25in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:1.5in;text-align:justify;text-indent:
- -.25in'><i>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the additional business Pro-Dex has gained as a result of being
able to produce its end product of medical devices faster.&nbsp; We believe that Pro-Dex
had gained three new contracts in its FY 2008 due to the ability to produce
motors internally through the Astromec asset.&nbsp;
</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>The forecast cash flows from the standalone business were added to
the increased margin forecast cash flows from the three new contracts for a 5
year period and discounted back to present at the weighted average cost of capital.&nbsp;
This cash flow model produced a value greatly above the carrying value of the
asset, therefore no impairment was necessary.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>The remaining intangible is associated with a patent acquired in
2005.&nbsp; Pro-Dex has developed this patented technology into a finished product
and has completed its incubation of the product (clinical effectiveness,
thought-leader support, etc.).&nbsp; We are currently seeking a partner who has the
dental distribution channels to fully exploit its value.&nbsp; Our relationship with
this partner may be the sale of product to them or an outright sale of the
assets to the partner.&nbsp; Either way, the product&#146;s (and therefore the patent&#146;s)
value is substantially higher than its carrying value when coupled with the
proper distribution channel</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>&nbsp; This conclusion is supported by a discounted cash flow valuation
using forecasts that assume the broader product distribution network. Whether
we ultimately sell products to the partner or the entire asset to another
party, both models easily support the value of the goodwill currently carried
on Pro-Dex&#146;s books, verifying that no impairment was necessary. In the event
that it becomes evident that we will not be able to secure a partner in any
form, it would be management&#146;s opinion that the asset may be impaired.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <ul style='margin-bottom:0in;margin-top:0in'>
  <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>In light of the significant decrease
      in your market capitalization, please indicate if you plan to perform or
      have performed an impairment analysis since your year ended June 30,
      2008.</li>
 </ul>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response:&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>We believe we are in an unusual economic environment where the market
capitalization, especially for small, thinly traded securities, may not reflect
the true value of the underlying assets or indicate impairment.&nbsp; That being
said, we constantly evaluate the assumptions to our valuation models to
determine if anything material has changed that would necessitate performing an
off cycle impairment analysis.&nbsp; At this time, there has been no triggering
event that would indicate our assumptions surrounding the valuation of the
intangibles would change.&nbsp;&nbsp;&nbsp; &nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <ul style='margin-bottom:0in;margin-top:0in'>
  <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>If an updated impairment analysis
      was performed, please provide us with a summary of the results of the
      most recently completed impairment analysis.</li>
 </ul>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response:&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>There have been no circumstances or triggering events that would
indicate that additional impairment testing is warranted.&nbsp; If and when one
occurs, we will review and retest.&nbsp; Otherwise we will retest again as of April
1, 2009.&nbsp; &nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";' align="center">-4-</p>

<div style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;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;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <ul style='margin-bottom:0in;margin-top:0in'>
  <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Given the significant
      disparity between you current market capitalization and your book value,
      please explain the facts and circumstances which management believes are
      responsible for the significant disparity between your market
      capitalization and the book values for your equity.</li>
 </ul>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response:&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>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 <a name=Verdatum></a>environment in which we operate.&nbsp;
We believe our market capitalization does not reflect the true value of the
Company and we believe our market capitalization is not indicative our the true
economic value of our assets.&nbsp; As you note, our market capitalization is
significantly below metrics such as our total book value. We further note that
it is also trading below our tangible book value as well, a further indication
that the market capitalization does not reflect the true value of the company.&nbsp;
</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>In a research report prepared by SMH Capital investment banking group
dated February 13, 2009, an analysis is prepared examining different trading
multiples for orthopedic related companies.&nbsp; The companies are broken down by
market capitalization into large, medium and small cap companies.&nbsp; Pro-Dex is included
as a &#147;Small-Cap Orthopedic Company.&#148; The analysis shows a strong difference in
the valuations of the companies based on total market capitalization, with the
small caps being most adversely affected.&nbsp; The companies classified as &#147;large
Cap&#148; are trading at 70% of their 52 week high, 2.4x revenues and 7.9x 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, 1.5x revenues and 8.2x
EBITDA, &#147;Small Cap&#148; companies are trading at 29% of their 52 week high, 1.5x
revenues and 11.4x EBIDTA.&nbsp; The EBITDA multiple can be misleading for the small
caps as of the 15 companies in the sample size, only 4 had a positive EBITDA,
of which Pro-Dex was one.&nbsp; Of the large caps, all 7 companies exhibited a
positive EBITDA.&nbsp; We feel this analysis confirms that the current market
environment exhibits a significant disproportionately unfavorable effect against
small public companies in general and Pro-Dex in particular.&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><u>Note 7, Net Income per Share,
page 43</u></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in' start="4">
 <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Please revise future filings to
     provide the disclosures required by paragraph 40&copy; of SFAS 128.&nbsp; Please
     note that this disclosure should include disclosure of the number of
     securities that could potentially dilute the basic EPS in the future but
     were specifically excluded because to do so would have been antidilutive.</li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response:&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>We note the staff&#146;s comment and will revise future filings to report
the number of securities based on &#147;out of the money options&#148; or options with no
intrinsic value, that could potentially dilute the basic EPS in the future but
were specifically excluded because to do so would have been antidilutive.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><b><u>Form 10-Q for the quarter
ended December 31, 2008</u></b></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><u>Note 3, Warranty, page 6</u></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in' start="5">
 <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>We note the material change in
     estimate related to your warranty accrual.&nbsp; Please revise your future
     filings to address the following:</li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";' align="center">-5-</p>

<div style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;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;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <ul style='margin-bottom:0in;margin-top:0in'>
  <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Revise the Critical Accounting
      Policies section of your MD&amp;A to discuss the significant judgments
      and assumptions involved in your warranty accrual.&nbsp; Explain how your
      results could differ had you made different judgments or should
      management&#146;s judgments be incorrect.</li>
 </ul>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response:&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>We note the staff&#146;s comment and will revise future filings to include
the significant judgments and assumptions involved in our warranty accrual and
explain how our results could differ had we made different judgments or should
management&#146;s judgments be incorrect.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<ol style='margin-bottom:0in;margin-top:0in'>
 <ul style='margin-bottom:0in;margin-top:0in'>
  <li style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Revise your warranty
      rollforward to separately disclose the aggregate changes in your
      liability for accruals related to preexisting warranties (including
      adjustments related to changes in estimates), as required by paragraph
      14(b) of FIN 45.</li>
 </ul>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.25in;text-align:justify;text-indent:
..25in'><i>Company&#146;s Response:&nbsp; </i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify'><i>&nbsp;</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>We note the staff&#146;s comment and will revise future filings for the
warranty rollforward to separately disclose the aggregate changes in our
liability for accruals related to preexisting warranties (including adjustments
related to changes in estimates), as required by paragraph 14(b) of FIN 45.</i></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>
<u>/S/ Mark 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>Mark Murphy, CEO</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>
<u>/S/ 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</u></p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";'>Jeffery J. Ritchey, CFO&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";' align="center">-6-</p>

<div style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;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;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

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