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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001003297-09-000106.txt : 20090625
<SEC-HEADER>0001003297-09-000106.hdr.sgml : 20090625
<ACCEPTANCE-DATETIME>20090430170553
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001003297-09-000106
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090430

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>
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<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'>
April 30, 2009</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; &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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Filed
February 12, 2009</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 March 31, 2009 relating to our
March 4, 2009 response to the questions concerning 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 March
31, 2009 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>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>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";margin-left:.5in;text-align:justify;text-indent:-.5in'>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We note your response to our prior comment 3.&nbsp; Please tell us and revise
the Critical Accounting Estimates section of your M, D&amp;A in future filings
to address the following: </p>
<ul>
	<li>
	<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:0.5in;text-align:justify;margin-right:0in; margin-top:0in'>Disclose the number of reporting units that you have identified
for purposes of testing goodwill for impairment.</p></li>
</ul>
<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 note the staff&#146;s comment and will revise future filings to include
the following information:</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>The Company identifies two reporting units for purposes of its annual
goodwill impairment testing, based on the SFAS 142 requirements arising from
its acquisitions of Micro Motors and Astromec. 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;</i></p>
<ul>
	<li>
	<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:0.5in;text-align:justify;margin-right:0in; margin-top:0in'>Disclose the valuation methodology used to value goodwill and
intangible assets.&nbsp; Provide a qualitative and quantitative description of the
material assumptions used and a sensitivity analysis of those assumptions based
on reasonably likely changes.</p></li>
</ul>
<p style='margin:0in;margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:2.0in;text-align:justify;text-indent:
- -2.0in'>&nbsp;</p><hr color="#000080"><p style="page-break-after: always"></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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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'>&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'>&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:58.5pt;text-align:justify;text-indent:
13.5pt'><i>Goodwill and Intangible assets are tested for impairment annually on
April 1 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;</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:2.0in;text-align:justify;text-indent:
- -2.0in'>&nbsp;</p>
<p style="text-indent: -30px; margin-left: 150px; margin-top: 0; margin-bottom: 0"><i>
<font size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The assumed capital structure is based upon the Company's actual capital
structure and debt to equity ratio at the time of analysis.</font></i></p>
<p style="text-indent: -30px; margin-left: 150px; margin-top: 0; margin-bottom: 0">
<i><font size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The cost of debt is based on the Company's actual contracted rates.</font></i></p>
<p style="text-indent: -30px; margin-left: 150px; margin-top: 0; margin-bottom: 0">
<i><font size="2">c.&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.</font></i></p>
<p style="text-indent: -30px; margin-left: 150px; margin-top: 0; margin-bottom: 0">
<i><font size="2">d.&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.</font></i></p>
<p style="text-indent: -30px; margin-left: 150px; margin-top: 0; margin-bottom: 0">
<i><font size="2">e.&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.</font></i></p>
<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:2in;text-align:justify;text-indent:
..5in; margin-right:0in; margin-top:0in'><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:58.5pt;text-align:justify;text-indent:
..25in'><i>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 33 percent.&nbsp; In the case of Micro
Motors, the goodwill impairment test is not failed until the discount rate is
increased 240 percent. </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:63.0pt;text-align:justify;text-indent:
13.5pt'><i>Additionally, the material
assumptions relied upon in the discounted cash flow analysis used to value the
Company&#146;s Intraflow patents are shown below.</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-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>a.&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.</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>b.&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;</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>c.&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.</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>d.&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, based on a 12 to 24 person sales force replacing the 1
person sales force used by Pro-Dex.</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were transaction and/or start-up costs associated with the
Market Participants valuation.</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:1.75in;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:1.75in;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:1.75in;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:1.75in;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";margin-left:2.0in;text-align:center;text-indent:
- -2.0in; margin-right:0in; margin-top:0in'>-2-</p><hr color="#000080"><p style="page-break-after: always"></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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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:58.5pt;text-align:justify;text-indent:
22.5pt'><i>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.</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-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>a.&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.</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Motor sales to existing customers are assumed to decline, but are
more than replaced by revenue growth from new customers and increased intercompany
sales for medical hand piece products.
</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>c.&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.
</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the value of the goodwill held in the Carson City reporting
unit based on that unit as a stand alone business unit, 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;
</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>e.&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.
</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>&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.</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-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>a.&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.</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>b.&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.</i></p>
<p style='margin-bottom:0;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:150px;text-align:justify;text-indent:
- -30px; margin-right:0in; margin-top:0'><i>c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.
</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>
<ul>
	<li>
	<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:0.5in;text-align:justify;margin-right:0in; margin-top:0in'>To the extent the valuation assumptions and methodologies used
for valuing goodwill and intangible assets have changed since prior periods,
disclose the reasons for the changes and the impact of the changes.</p></li>
</ul>
<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;punctuation-wrap:hanging;text-autospace:ideograph-numeric ideograph-other'>
<i>Due
to 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 became a significant possibility that
no distribution partner would be found.&nbsp; As a result of these changes, we
determined that the carrying value of the intangible asset may not be
recoverable and we therefore tested the intangible asset for recoverability as
of March 31, 2009. </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;punctuation-wrap:hanging;text-autospace:ideograph-numeric ideograph-other'>
<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;punctuation-wrap:hanging;text-autospace:ideograph-numeric ideograph-other'>
<i>&nbsp;There
have been minor changes in the model to better reflect the cost of capital of
Pro-Dex as well as expected returns of potential investors in this
economy.&nbsp; However, the overall model and scenarios remain essentially the
same.&nbsp; The most significant modification involves the introduction of an
expected value calculation, weighting the possible scenarios by their
probability of occurring.&nbsp; A heavily-weighted scenario is one where no
distribution partner is found, significantly impairing its value.&nbsp; The
expected disclosure related to this issue in our 3<sup>rd</sup> quarter Form
10Q 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;text-indent:
..25in;punctuation-wrap:hanging;text-autospace:ideograph-numeric ideograph-other'>
<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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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:2.0in;text-align:justify;text-indent:
- -2.0in'>&nbsp;</p>
<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:2.0in;text-align:center;text-indent:
- -2.0in; margin-right:0in; margin-top:0in'>-3-</p><hr color="#000080"><p style="page-break-after: always"></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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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-top:0in;margin-right:.35in;margin-bottom:0in;
margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;punctuation-wrap:
hanging;text-autospace:ideograph-numeric ideograph-other'><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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 is $150,000 and, accordingly
a charge of $997,280 was taken in the fiscal 2009 third quarter.&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.</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-indent:.5in;punctuation-wrap:
hanging;text-autospace:ideograph-numeric ideograph-other'><i>
<font style="font-size: 12.0pt">&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";margin-left:.75in;text-align:justify;text-indent:
..25in'><i>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; </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>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.</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>
<ul>
	<li>
	<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:0.5in;text-align:justify;margin-right:0in; margin-top:0in'>To the extent you continue to believe that your external market
capitalization does not represent the true value of the company, please revise
your disclosures in future filings to explain the facts and circumstances which
you believe are responsible for the significant disparity between your market
capitalization and the book value of your net assets.</p></li>
</ul>
<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'>&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>We note the staff&#146;s comment and will revise future filings as
appropriate to disclose facts and circumstances which we believe are
responsible for the significant disparity between our market capitalization and
the book value of our net assets.</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'>&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'>&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'>&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'>&nbsp;</p>
<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:2.0in;text-align:center;text-indent:
- -2.0in; margin-right:0in; margin-top:0in'>-4-</p><hr color="#000080"><p style="page-break-after: always"></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:2.0in;text-align:justify;text-indent:
- -2.0in'>&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:2.0in;text-align:justify;text-indent:
- -2.0in'>&nbsp;</p>
<ul>
	<li>
	<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:0.5in;text-align:justify;margin-right:0in; margin-top:0in'>As a related matter we note that you do not believe the current
&#147;unusual economic environment&#148; represents a &#147;circumstance or triggering event
that would indicate that additional impairment testing is warranted.&#148;&nbsp; Please
note that paragraph 28(a) of SFAS 142 indicates that an adverse change in the
business climate would be a triggering event.&nbsp; Please tell us and revise future
filings to discuss how you consider current&nbsp; market conditions in determining
if a triggering event has occurred: </p></li>
</ul>
<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";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:.75in;text-align:justify;text-indent:
..25in'><i>We note the staff&#146;s comment and will revise future filings as
appropriate to disclose how we determine if current market conditions are a
triggering event that would indicate additional impairment testing as it
relates to the intangible assets at Pro-Dex.</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>We review the 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.
but did determine that a triggering event occurred for the patent intangible
asset. &nbsp;Our standard annual impairment testing is done April 1 of each year, and
will &nbsp;be completed by the filing of our next 10Q.&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 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 niche product lines. While our reporting 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. 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. Declines within the industry&#146;s
outlook are reflected in the units&#146; revenue projections.&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;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;</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'>
<b><u>The Company acknowledges
that:</u></b></p>
<ul>
	<li>
	<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:0.5in;text-align:justify;margin-right:0in; margin-top:0in'>The Company is responsible for the adequacy and accuracy of the
disclosure in the filing;</p></li>
	<li>
	<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:0.5in;text-align:justify;margin-right:0in; margin-top:0in'>Staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission form taking any action with respect to
the filing; and</p></li>
	<li>
	<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";margin-left:0.5in;text-align:justify;margin-right:0in; margin-top:0in'>The Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.</p></li>
</ul>
<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";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'>We trust the
foregoing is responsive to the staff&#146;s comments.&nbsp; If you have any questions, or
require further information please contact Jeff Ritchey, Chief Financial
Officer, at (949) 769-3250.</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'>&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'>
<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";text-align:justify'>Jeffery J. Ritchey, CFO</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'>&nbsp;</p>
<p style='margin-bottom:.0001pt;punctuation-wrap:simple;text-autospace:none;font-size:10.0pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
- -5-</p>

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